Source · Select Committees · Public Accounts Committee
Recommendation 5
5
While the Government has now announced plans to write off 90% of the historic deficit...
Conclusion
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.
Government Response
Response Pending
HM Government
Response Pending
The government agrees with the Committee’s recommendation. Override in March 2028 At the Local Government Finance Settlement, the government confirmed the first phase of support for SEND deficits. This phase addresses historic High Needs-related deficits accrued up to the end of 2025-26. Every local authority with SEND deficits will be eligible for a High Needs Stability Grant covering 90% of their High Needs-related SEND deficit, projected to be worth over £5 billion nationally. This grant will be paid once each local authority has secured the Department for Education’s approval of their local area’s Local SEND Reform Plan. Payments will be made from Autumn 2026 for local authorities whose plans are approved in the first round of assessment. Where a plan does not meet the approval threshold, the local authority will be required to revise and improve it, with continued support from advisers. Where revised plans meet the required standard, payments will be made in Spring 2027, within the 2026-27 financial year. The government recognises that SEND reform will take time to fully embed and local authorities will need further support. For deficits arising in 2026-27 and 2027-28, local authorities can expect the government to take an appropriate and proportionate approach, though it will not be unlimited. Future support will take account of local authorities' successful delivery of their approved Local SEND reform plan, including appropriate use of investment to establish an Experts at Hand offer. The government will confirm the detail on further support for deficits arising in 2026-27 and 2027-28 before the Statutory Override ends in March 2028.