Local authorities currently receive a ring-fenced grant from the DfE to pay for special needs support, known as the dedicated schools grant.
But rising demand has led to local councils spending billions more overall on Send than they get from central government.
The number of young people with council-funded education, health and care plans (EHCPs), which set out the support they are entitled to, has doubled across England since 2016.
Since 2020, those Send debts have been kept off local authority books by a “statutory override” – which had been extended to 2027-28, external. Without it, many councils have warned they face rising costs and even bankruptcy.
The OBR has forecast that councils will have cumulative deficits of £14bn by the end of 2027-28, when the statutory override expires. It is not clear how much responsibility for paying this back will stay with councils.
It was announced in Wednesday’s Budget that the full cost of Send provision will be absorbed within departmental budgets by 2028-29, which means the future cost pressures of the Send system will sit on the government’s books, rather than councils’.
But the OBR warned that no savings have been identified yet to offset the estimated £6bn of costs they said this move will create.
If that money had to be taken from existing school budgets, it said it would lead to a 4.9% fall in mainstream school spending per pupil, rather than the 0.5% increase planned by government.
But the DfE strongly refuted those predictions, with a spokesperson saying they “do not account for the much-needed Send reforms this government will bring forward”.
“We inherited a Send system on its knees and our changes will make sure children get support at the earliest stage, while bringing about financial sustainability for councils,” they added.
Full plans for reforms to the Send system are due to be laid out early next year.
