SEND Funding Crisis: Most Councils Face Insolvency Without Long-Term Fix, Warns LGA
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Nearly eight in ten councils in England warn they could face insolvency unless there is a long-term solution to mounting deficits linked to supporting children and young people with special educational needs and disabilities (SEND). This stark conclusion from a recent survey by the Local Government Association (LGA) is more than a financial warning—it is a clear signal that the SEND system, as currently designed and funded, is no longer sustainable.
For councils, schools, families, and young people, the consequences of inaction are immediate and profound.
A SEND system under growing financial strain
Local authorities have a statutory duty to identify, assess, and support children and young people with SEND. Demand has risen sharply due to increased awareness, improved diagnosis, and more complex needs. Funding, however, has failed to keep pace with this reality.
As a result, councils are carrying substantial SEND-related deficits—often reaching tens or even hundreds of millions of pounds. While temporary accounting measures have prevented these deficits from immediately impacting council balance sheets, they remain real liabilities. Councils warn that once these protections end, insolvency will be unavoidable without national intervention.
The LGA survey indicates that nearly 80% of councils believe they will become insolvent if the SEND funding framework is not fundamentally reformed.
Councils are being forced to act in crisis mode
Across England, councils are no longer operating in a space of long-term planning. Instead, they are being pushed into crisis management.
SEND spending decisions are increasingly reactive—driven by statutory pressure, tribunal risk, and the urgent need to secure placements at any cost. This is not a failure of leadership at local level; it is the consequence of a system that intervenes too late, funds too narrowly, and escalates need rather than stabilising it.
When councils are forced to prioritise short-term compliance over long-term outcomes:
- Costs rise sharply
- Inclusion decreases
- Young people disengage
- Families lose confidence in the system
Crisis spending may meet legal thresholds, but it rarely delivers positive educational or life outcomes for young people.
What council insolvency really means for communities
Council insolvency is not an abstract accounting issue. It has tangible consequences for local communities:
- Cuts to non-statutory services, including youth provision, early help, libraries, and community support
- Reduced capacity to invest in prevention and early intervention
- Increased pressure on schools and families navigating stretched SEND systems
- Workforce instability and burnout across education and children’s services
Ironically, these cuts often remove the very services that prevent needs from escalating—driving higher costs and poorer outcomes over time.
Children and families caught in the middle
Behind the figures are families experiencing delays to assessments, inconsistent provision, and shortages of specialist support. Schools are often left managing complex needs without adequate resources, while parents describe systems that feel adversarial rather than supportive.
The LGA has been clear: this is not about councils overspending, but about a national framework that no longer reflects the scale or complexity of need.
Temporary fixes are no longer enough
In recent years, government has introduced short-term measures to shield councils from the immediate impact of SEND deficits. While these have delayed collapse, they have not addressed the underlying causes.
Councils are now warning that once these measures expire, the accumulated deficits will be impossible to absorb. Without reform, financial failure is not a question of if, but when.
Youth Matters 2026: why SEND reform is a youth issue
Under Youth Matters 2026, the SEND funding crisis is understood as far more than an education issue.
Unmet SEND needs are strongly linked to:
- School disengagement and exclusions
- Rising numbers of young people not in education, employment, or training (NEET)
- Mental health challenges
- Increased contact with youth justice and social care systems
When SEND support fails early, young people are pushed further from opportunity—at significant human and financial cost.
Early intervention must be fit, proper, and inspiring
Youth Matters 2026 is clear: early intervention must be more than early—it must be effective.
Too often, early support is underfunded, fragmented, or reduced to minimum compliance. What is needed instead is fit and proper early intervention that:
- Identifies need early and holistically
- Is delivered in trusted, relational environments
- Wraps around the child, family, and school
- Inspires learners rather than labels them
When young people feel understood, supported, and believed in, engagement increases—and long-term costs reduce.
Inspiring learners is a financial necessity
Evidence from community-based, youth-led, and inclusive models shows that when early intervention:
- Builds confidence
- Restores trust in learning
- Creates purpose and belonging
Young people are far less likely to require high-cost crisis provision later.
Inspiring learners is not a “soft” outcome. It is a financial necessity for a sustainable SEND system and a functioning local government settlement.
What needs to change
The LGA is calling for decisive national action, including:
- A long-term, fully funded national solution to existing SEND deficits
- SEND system reform that prioritises early intervention and inclusion
- Sustainable statutory funding aligned to real levels of demand
- Greater flexibility for councils and schools to meet needs locally
Youth Matters 2026 aligns fully with this call—while emphasising that reform must be shaped by lived experience and focused on long-term outcomes, not short-term savings.
Youth Matters 2026 policy position
Youth Matters 2026 Position:
The SEND funding crisis is a warning sign of a system no longer fit for purpose. Without urgent reform, councils will face insolvency, early intervention will collapse, and young people with additional needs will be pushed further from education, employment, and opportunity. A long-term national solution to SEND funding—rooted in fit and proper early intervention that inspires learners—is essential to safeguarding children’s futures and restoring stability to local government.
Act now, not later
Nearly eight in ten councils fearing insolvency should be treated as a national red alert. The cost of delay will be paid by children, families, and communities—not just balance sheets.
A long-term fix to SEND funding is no longer optional. It is essential for:
- Financial stability
- Educational inclusion
- Reducing youth inactivity and exclusion
- Protecting the wider youth support system
Youth Matters 2026 calls for action now—before financial collapse becomes social failure.