(England) Once SPED override is lifted, 9 in 10 councils could be forced to declare bankruptcy
- The end of childhood
- 8 minutes ago
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Nov 14, 2025 Sky News: 'Ticking time bomb': Warning that spiralling spending on special needs provision could push councils to breaking point
Some of England's largest councils have warned that the increasing cost of supporting children with special educational needs and disabilities (SEND) could push some local authorities to bankruptcy within a few years.
The County Councils Network said many local authorities were struggling to cope with increased demand and that the money councils receive from central government under the Dedicated Schools Grant (DSG) was not sufficient.
The report states the national high-needs block deficit will hit £6.6 billion [$8.7B] in 2025/26, and, without urgent reform, will more than double to £13.4 billion [$18B] by March 2028, when the statutory override that currently shields councils' balance sheets is due to end.
One in three councils say they could be forced to effectively declare bankruptcy before the override ends because of increased costs.
That rises to nearly nine in ten once the override is lifted, the report warned.
Kevin McDonnell, headteacher at Stormont House School (a school for children with SEND in Hackney, London) said: "If we truly want a high-quality, inclusive education system we will need to resource it properly. The current system is adversarial and often unhelpful."
Even with the override currently in place, councils are experiencing severe financial pressures. Lost interest, borrowing requirements and other associated costs are expected to total £400 million [$526M] this year, rising to nearly £1 billion [$1.3B] by 2028/29. Finance officers warn this is already eroding day-to-day budgets at a time when councils are struggling to maintain core services.
Mr McDonnell said: "The statutory override is hiding the scale of the problem and in March 2028 we risk an implosion of local authority services through bankruptcy. This is surely something all political parties would wish to avoid. Wouldn't it be great if politicians could agree how to address this before we reach the point of crisis, taking into account the views of those directly involved?"
Ninety percent of councils could declare bankruptcy
By 2026/27, the national SEND deficit is expected to exceed all local authorities' usable reserves. Two years later, it will surpass both usable and ring-fenced reserves combined, leaving councils without the financial capacity to absorb the losses.
Finance leaders say that without government intervention, deficits currently concealed within ring-fenced accounts will soon overwhelm the entire local government system.
Warnings from senior finance leaders
Owen Mapley, chief executive of CIPFA (The Chartered Institute of Public Finance and Accountancy), said the latest figures confirm the severity of the crisis: "CIPFA has long warned that the broken SEND funding system threatens councils' financial stability.
The latest ALATS, (Association of Local Authority Treasurers' Societies), data confirms the situation is now critical.
"Even with the statutory override, some authorities could face effective bankruptcy unless the government sets out how these deficits will be resolved and the system reformed," said Lorna Baxter, the President of ALATS. She added that councils can no longer sustain the financial strain:
"The ALATS survey has clearly demonstrated the scale of the financial crisis in SEND.
"We often hear of the black hole in public finances but SEND deficits totalling billions of pounds are being hidden in local authority accounts. Without prompt government intervention, we risk an unprecedented local authority financial crisis."
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