A spiralling deficit for special educational needs services is set to grow to an ‘unmanageable’ £1.3bn in just two years’ time and needs to be addressed, councils have warned.

The County Councils Network and the Society of County Treasurers has compiled a survey which found that in 40 authorities in county areas, their high-needs deficits have ballooned from £134m in 2018/19 to a projected £1.3bn in 2022/23.

The significant rise is being attributed to a dramatic rise in the number of young people being eligible for Education, Health and Care Plans. However, the eightfold increase in just five years is threatening local authorities’ finances and ability to support recovery from the COVID-19 pandemic.

The government has said that councils do not need to start addressing these deficits until 2023, allowing them to carry over their school budget deficits until April that year, providing a little breathing space.

However, Cllr Keith Glazier, Children and Young People Spokesperson for the County Councils Network, said: “The government’s legislation changes which extended the eligibility of Education, Health, and Care Plans were well intentioned but this dramatic rise in demand has not been met with the necessary increase in funding, whilst reforms remain unpublished two years on from being announced. The ability to roll-over these deficits until 2023 is welcome, but nothing more than a sticking plaster."

Changes in legislation in 2014 increased the number of children being eligible for EHCPs as The Children and Families Act that year extended the age limit, including raising it from 19 to 25, in which councils have a duty to provide support to young people with special educational needs.

The numbers of children in receipt of an EHCP has been rising since 2015. But the survey’s respondents project a further rise of 49% in ECHP recipients from 2018 to 2023 – 74,000 young people – across the 40 council areas in the survey.

The costs average several thousand pounds per annum and include specific support for individuals who are eligible for these plans, home to school transport for eligible young people, and admin costs.

Councils say the size of this deficit in two years’ time will be unmanageable and extremely difficult to pay off without taking large sums of money earmarked for other council services.

CCN is calling for the Spending Review this year to address the issue, including a substantial injection of funding into the system, so councils can begin to address their deficits now and bring them to manageable levels, now rather than let them grow further.

Furthermore, the government’s SEND review announced in 2019 needs to conclude as soon as possible and should address the root cause of growing high needs deficits and provide local authorities with the means and levers to start addressing these huge shortfalls. The review should also address the long-term issues within special educational needs, including placements for pupils and a focus on preventative services.

While the government made an extra £730m available this year for high needs, in addition to a £780m injection last year for high-needs, councils say this funding was used to cover pre-existing shortfalls.

Cllr Keith Glazier said: “We have a statutory and moral obligation to support these young people, but local authorities are building up significant deficits. With limited options and a lack of funding available, we are being backed into a corner and face a financial cliff edge in two years’ time when these deficits will be on our budget books and will need to be addressed. This could mean we take funds from other services or money from our pandemic recovery efforts.

“We need urgent action from the government to provide substantive resource in this year’s Spending Review so we can begin to address these deficits now rather than let them grow to unmanageable levels. Ministers should also publish the special educational needs review as soon as possible – and reform must address the root cause why the vast bulk of councils in the country are building up unsustainable deficits,” he concluded.