Funding for pupils with special educational needs and disabilities (SEND) has risen by £4 billion over the past five years, according to a new report which found that nearly 5% of all school pupils now have an education, health and care plan (EHCP).
This means SEND funding has risen by nearly 60% over the last decade, but the Institute of Fiscal Studies (IFS), who published the report, says funding is insufficient and has not kept pace with rises in numbers and needs. In fact, hundreds of local authorities have built up large deficits as a result, with debts totalling around £3.3 billion this year alone.
Darcey Snape, IFS Research Economist and an author of the report, said the findings indicate that the special educational needs system in England “clearly requires urgent, radical change.”
The report, Spending on special educational needs in England: something has to change, complements the recent National Audit Office report showing the significant problems families and children face in accessing SEND provision.
Drawing on data from the Department for Education, it found that the number of school pupils with EHCPs increased by 180,000 (71%) between 2018 and 2024. While funding has increased significantly over the past decade, the report reveals that this funding has failed to cover the cost of these increasing needs. Indeed, high needs spending has been consistently higher than funding by £200–800 million per year between 2018 and 2022, mainly because local authorities have a statutory obligation to deliver the provision set out in EHCPs.
Much of this spending (nearly two thirds) has been driven by increased spending on pupils in special schools. While there are only 30,000 pupils in special schools, there has been a £900 million rise in spending between 2015–16 and 2022–23 on fees for pupils in these private settings. These placements cost more than double compared to state schools (£61,500 per year vs £23,900 per year), with LAs relying on such provision due to capacity constraints in the public sector.
While this has resulted in local authorities accumulating large deficits, the statutory override scheme has prevented many from having to declare bankruptcy. However, the report warns this is a short-term fix which is due to end in March 2026.
The report also highlights that the steep rise in the number of pupils with EHCPs may be partly driven by the fact that there are financial incentives for schools to seek EHCPs. Indeed, mainstream schools can only access local authority ‘top-up’ funding if the additional cost of SEND support is over £6,000, and this can only really be achieved with an EHCP. The authors say this threshold has not been increased over the past 10 years to keep up with inflation, eroding its value in real terms and increasing the number of pupils who require top-up funding and, by extension, EHCPs.
Worryingly, annual spending on high needs is set to rise even further, with government forecasts predicting this to increase by at least £2–3 billion between 2024–25 and 2027–28. Even with the additional £1 billion announced in the 2024 Autumn Budget, these increases in spending could lead to local authority deficits of over £8 billion by 2027, the report warns.
The report therefore calls for ‘meaningful reform’ to the SEND system. This includes expanding the core SEND provision available in mainstream schools and state-funded special school places, redistributing funding so it is more evenly spread across the country, and reducing the statutory obligations currently attached to EHCPs.
The report highlights that there are currently significant delays in obtaining an EHCP assessment, forcing many parents to turn to private assessments or attend legal tribunals. Reform will therefore also have to take a more uniform approach to SEND identification and support to avoid a ‘postcode lottery’ in provision, the authors say.
Darcey Snape, IFS Research Economist and an author of the report, said: “The special educational needs system in England clearly requires urgent, radical change. Without reform, rises in need will push up annual spending up by at least £2–3 billion in the next three years. The government has a clear preference for expanding core provision for special educational needs in mainstream schools. This would represent a massive change to the school system, necessitating major reform of the funding system, increased staffing and training, and much else. Any transition could also entail significant costs in the short run and the public finances are very tight.
“The crucial first step for the government is to set out a clear long-term vision. The transition path to a better system may run slowly, but it is necessary to take it given the present path of financial unsustainability.”
