UK's Labour party plans major overhaul of special educational needs system amid council budget crisis

British Prime Minister Keir Starmer.

UK’s Labour government is preparing significant changes to special educational needs and disabilities (SEND) provision in England as councils face mounting deficits that threaten financial collapse. A Guardian analysis has found that most upper-tier councils in England have accumulated substantial deficits in their SEND budgets, with at least 12 forecasting shortfalls exceeding £100 million. Some councils, such as Hampshire, project deficits as high as £312 million by next year.

UK ministers are working on a white paper, expected in late spring, which will outline what insiders describe as a "complete recalibration" of the SEND system. The government is considering legislative changes that councils hope will alleviate their financial burdens, including prioritising state school provision over expensive private specialist schools. Local authorities have called for the government to write off an estimated £5 billion in collective SEND budget deficits. These deficits, which have been temporarily excluded from council balance sheets since 2018, are set to hit financial records on March 31, 2026, potentially pushing more than 60 councils into insolvency.

SEND spending has surged in recent years, creating a deficit between the funding councils receive from the government and the legally mandated services they must provide. This has become one of the most pressing financial threats to local government, comparable to the ongoing social care crisis. Most councils have turned to huge loans to cope with the cash flow crisis, with an estimated £600 million paid out each year on interest payments that could otherwise have funded frontline services.

Local authorities are lobbying for legal changes that would grant them more control over SEND costs, including limiting parental rights to appeal SEND assessments and reducing the power of SEND tribunals to dictate how a child's needs must be met within the school system. Labour councillor Kate Foale, spokesperson for the County Councils Network, emphasised that these legal changes must be paired with additional investment to ensure a functioning system. “The SEND system is adversarial, and it doesn’t work for children and their families. We are in a really bad place,” she stated.

The marked surge in children who have autism, ADHD, and speech, language, and communication needs saw the number of EHCPs leap by 140% during 2015 to 2024, increasing from 240,000 to 576,000. All the while, criticism persists that the last administration underestimated and funded shortfalls badly created by resulting high demand despite legal reforms underpinned through parliament in 2014 on clarification of access to S.

Efforts to rein in spending via "safety valve" schemes at 42 councils have mostly come up short, with the majority of councils missing their savings targets, even after being awarded tens of millions of pounds in government grants. There have also been heightened tensions between councils and schools, as councils have sought to divert funding away from local school budgets to help meet high needs deficits, something schools claim will compel them to reduce vital S.

Concerns have also been raised about the high fees charged by private specialist schools, which can range from £50,000 to £100,000 per child per year, often two to three times the cost of state provision. Parents' groups have vowed to fight any attempts to reduce legal rights to SEND support, warning that diminishing entitlement will not erase the needs of affected children. “Reducing SEND entitlement won’t make needs go away. You just end up with lots of children with needs but no support,” said Tania Tirraoro of the campaign group Special Needs Jungle.

The Department for Education has acknowledged longstanding failures in the SEND system and is committed to improving inclusivity in mainstream schools while ensuring special schools cater to children with the most complex needs. A spokesperson highlighted ongoing investments, including £1 billion allocated to SEND and £740 million designated for councils to create additional specialist school places.

While these reforms aim to provide long-term solutions, the financial crisis facing councils is immediate. Experts warn that without substantial intervention, the SEND deficit could rise to £8 billion by 2029, placing further strain on already struggling local authorities. Whether Labour's proposed overhaul can balance financial sustainability with the needs of SEND children remains to be seen.