Recommendation 25

We have previously highlighted how SEND-related funding—the high-needs block of the Dedicated Schools Grant—has not kept pace with demand over the past decade, and that local authorities have built up substantial deficits.61 Cumulative deficits are projected to exceed £5 billion by the end of March 2026.62 Since 2020, the impact of these deficits on a local authority’s financial position has been deferred through a statutory override which has allowed local authorities to exclude these deficits from their main revenue budgets and continue to deliver a balanced budget. In January 2025, we called on central government to work with local authorities towards a sustainable plan for the end of statutory override in March 2026.63 In June 2025, the Government extended the statutory override until March 2028. In the November 2025 Budget, the Government announced that from 2028–29 it would meet SEND costs from central 57 Q 52, MHCLG, Home to school transport formula technical note , 17 December 2025 58 Q27; C&AG’s Report figure 3, 59 MHCLG, Provisional Local Government Finance Settlement 2026–27 to 2028–29, 17 December 2025; MHCLG, Home to school transport formula technical note , 17 December 2025 60 MHCLG, Final Local Government Finance Settlement: England, 2026–2027 to 2028–2029, 9 February 2026; MHCLG, Home to school transport formula technical note , 17 December 2025 61 Q 53 62 Local Government Finance Settlement 2026–27 to 2028–29, HCWS1315, 9 February 2026 63 Committee of Public Accounts, Support for children and young people with special educational needs, First Report of Session 2024–25, HC 353, 15 January 2025, para 5 16 departmental budgets. It said it would set out further details on its plans to support local authorities with historic and accruing deficits in the Local Government Finance Settlement.64