Special needs support in England is financially ‘unsustainable’, report finds

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

England’s system for helping children with special educational needs is financially “unsustainable” despite a huge increase in funding over the past decade, the UK spending watchdog has found.

The damning assessment by the National Audit Office follows a decade during which the number of children requiring additional support at school has more than doubled, plunging the system into crisis.

The NAO report, released on Thursday, found government’s efforts to stabilise provision had been inadequate despite the Department for Education launching an improvement plan last year, with councils facing cumulative financial deficits of up to £4.9bn by March 2026, according to official figures.

“As such, the current system is not achieving value for money and is unsustainable,” the report said, adding that there was “no evidence” that the government’s improvement plan would fully address the situation.

A total of 1.7mn school-age children are identified as having special educational needs (SEN) in England, 576,000 of whom have an educational, health and care plan, which entitles pupils to support at mainstream schools or a place in a special school.

However, the number of children with EHCs has more than doubled since 2015 when it stood at 240,000, according to the NAO, with demand adding significant strain to council finances and the education system.

Real-terms funding for individual EHC plans fell by 35 per over the past decade, despite a 58 per cent increase in annual central government funding for high-needs children over the same period to £10.7bn in 2024-25.

A shortage of places at government-funded schools was leading many councils to resort to placing children with complex needs in more expensive privately run schools, the report found.

Local authorities spent £2bn in 2022-23 on independent school places — a real-terms increase of 46 per cent from 2018-19. 

The report found that places at private special schools cost an average of £61,500 a space, compared with £23,900 in state-run establishments. 

With demand for EHC plans expected to rise, the watchdog estimated there would be a £3.4bn “funding gap” by 2027-28 between the needs of SEN children and current high-needs funding, adjusted for inflation. 

The NAO found a complete lack of confidence among councils, school leaders and parents that the government was addressing the growing crisis in special education provision.

Of the 60 stakeholders consulted by the NAO, including nine local authorities, it said “none felt that DfE’s improvement plan would sufficiently address the systemic problems they saw”.

The watchdog urged the government to think “urgently” about how to address the crisis, “including through more inclusive education, identifying and addressing needs earlier, and developing a whole-system approach”.

Education secretary Bridget Phillipson said the report “exposes a system that has been neglected to the point of crisis, with children and families with SEN quite simply being failed on every measure”.

She said the system was currently “too skewed towards specialist provision and over-reliant on EHC plans — often only to the benefit of families who have the resources to fight for support”.

But “a greater focus on mainstream provision and more early intervention” would deliver the change that was needed,” she added.

The new government has vowed to integrate inclusion of SEND pupils in the criteria used by Ofsted to assess mainstream schools

The report came after data released by the County Councils Network found that two-thirds of country councils could declare bankruptcy by 2027 as a result of the spiralling costs of meeting special needs provision.

Kate Foale, CCN spokesperson for SEN children, said it was “imperative” the government addressed the problem in the Budget and Spending Review on October 30.

Data visualisation by Amy Borrett