SEND spend could hit £15bn without reform, warns IFS

According to a report, the spending oversight body is recommended to produce yearly estimates for high-needs funding and the associated deficits, as the financial burden of the SEND system is projected to surpass that of many government departments.

The Institute for Fiscal Studies (IFS) anticipates that high-needs expenditures will hit £15 billion annually by 2029, with local governments’ SEND deficits expected to grow to £8 billion by 2028.

This expenditure on SEND will exceed the total budgets of multiple government departments, including the Ministry of Justice.

The IFS states that, “Given the magnitude and rate of increased spending, and associated risks, the Office for Budget Responsibility should generate and make public annual projections for high-needs spending and deficits.”

Moreover, the think tank cautioned that local councils have “limited control” over SEND costs, which are dictated by statutory mandates detailed in the education, health, and care plans (EHCPs).

The number of EHCPs in England has nearly doubled since 2016, while spending has not kept pace with increasing demand and costs.

Deficits might reach £8 billion

Local authorities have accrued significant deficits, with the IFS predicting total liabilities to approach £8 billion by 2028.

This coincides with the “statutory override” — a budgeting strategy enabling councils to exclude their SEND deficits from their main balance sheets — which is set to conclude after a recent government extension.

The government is already under fire regarding SEND reforms, expected to be detailed in a white paper this term. An adviser indicated that removing EHCPs is being considered.

The Local Government Association has requested that SEND deficits of councils be canceled as part of the reform process.

Amanda Hopgood, chair of its committee for children, young people, and families, stated: “We require an inclusive system where an EHCP is not always essential, supported by a workforce equipped with the right skills and sufficient capacity, alongside investment in early intervention.”

The government must also address outdated laws that burden councils with escalating and unmanageable expenses, particularly regarding home-to-school transport, where demand has surged yet councils have little legislative leeway.

Significant increase in EHCPs

Funding for high-needs education has surged by 66 percent, from £7.5 billion in 2016 to at least £12 billion this year.

Without reforms, an additional £3 billion increase by 2029 is on the horizon, warned the IFS.

The dramatic rise in EHCPs, particularly among students diagnosed with autism spectrum disorder (ASD) or attention deficit hyperactivity disorder (ADHD), is a major driver of this increase.

The count of children receiving EHCPs for ASD nearly tripled from 54,000 in 2015 to 149,000 by 2025, which comprises 40% of the total growth in EHCPs.

Moreover, the number of students with EHCPs for social, emotional and mental health needs, including ADHD, has more than doubled from 28,000 to 71,000.

The IFS noted that a “significant part of the increase in recognized need can be attributed to greater awareness of these conditions, though there may also be rises in underlying prevalence.”

It cautioned that ongoing funding pressures, “without additional resources for school funding plans, will likely result in real-term cuts to mainstream school funding per pupil.”

A ‘disjointed system’

As the number of children receiving EHCPs has risen significantly, so has the number qualifying for child disability living allowance.

The IFS highlighted a “notable overlap” between children receiving special educational provisions and those receiving disability assistance through the welfare system.

“This overlap implies that common driving factors are influencing the substantial increase in identified needs for both categories,” the report added.

Mark Franks, the Nuffield Foundation’s welfare director, commented that the current system is “fragmented and has not adapted to the evolving needs of the population.”

As demand and expenses continue to grow, a comprehensive review of the system is warranted to ensure resources are allocated where they are most needed for optimal impact.

The IFS report discovered that boys, older children, and those from disadvantaged backgrounds are more likely to have EHCPs, indicating that any adjustments would have considerable implications on support distribution to these demographics.

Additionally, it was observed that there are “substantial differences across ethnic groups in the proportion of children receiving extra assistance.”

For instance, 2% of Indian 12 to 15-year-olds have an EHCP compared to 4.3% of white British students and 5.7% of black Caribbean students.