Recommendation 5

While the Government has now announced plans to write off 90% of the historic deficit from SEND overspending, the plan for deficits arising from now until March 2028 remains unclear. Funding for SEND- related high-needs spending has not kept pace with demand over the past decade, and local authority cumulative SEND deficits are projected to exceed £5 billion by the end of March 2026. In the November 2025 4 Budget, the Government announced that from 2028–29, it would meet SEND costs from central departmental budgets. In June 2025, Government extended the statutory override—the mechanism that has allowed local authorities to keep existing SEND high-needs deficits off council budgets— until March 2028. Acknowledging them as a shared responsibility between central and local government, in February 2026 MHCLG announced that all local authorities would be eligible to receive a grant covering 90% of historic deficits up to the end of 2025–26, subject to the Department for Education’s approval of a local authority SEND reform plan. MHCLG has not yet said what level of support it will offer on deficits arising from overspending which occurs from now to March 2028 or what, if any, support it will give to local authorities that avoided running up SEND deficits by making cuts to other services. While new funding arrangements will address SEND cost pressures for local authorities from 2028–29, they do not cover associated home to school transport costs, which will continue to put pressure on local authority budgets. recommendation a. MHCLG should, at the earliest opportunity, clarify the level of support it will provide to local authorities with ongoing deficits from overspending on high-needs budgets. b. MHCLG should explain the basis on which it will decide to write off historic deficits and how this will work in practice including what, if any, support it will give to local authorities that avoided running up SEND deficits by making cuts to other services.