Spending on SEND becoming unsustainable, IFS finds

A new report by the Institute for Fiscal Studies (IFS) has concluded that spending on special educational needs (SEND) is becoming unsustainable due to the rise in high needs.

The report found that the number of school pupils with EHCPs has risen by 180,000 or 71% between 2018 and 2024.

As a result, nearly 5% of pupils now have EHCPs. This rise in pupils with EHCPs has been driven by three specific types of needs: autistic spectrum disorder (ASD); social, emotional and mental health needs (including ADHD); and speech, language and communication needs. .

The report says that central government funding for high needs currently totals nearly £11 billion and has increased substantially, with a 59% or £4 billion real-terms rise between 2015–16 and 2024–25. This growth can account for about half of the total real-terms rise in school funding over the same period.

However, the report says that even with this substantial rise, funding has not kept pace with the increase in pupils with EHCPs. As a result, per-EHCP funding has fallen by around a third in real terms over this period.

The report finds that 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. As a result, local authorities have accumulated large deficits in their high-needs budgets, estimated to be at least £3.3 billion in total by this year.

An accounting 'fudge' known as the ‘statutory override’ has kept these deficits off local authorities’ balance sheets and prevented many from having to declare bankruptcy. This short-term fix is currently due to end in March 2026.

There are large variations in identified need, funding and deficits across local authorities. Some areas see much higher proportions of pupils with SEND or EHCPs which seem partly due to differences in identification practices. High-needs funding also varies significantly across areas, with some of the largest deficits seen in places with lower levels of per-EHCP funding. This emphasises the need for reform of the funding system to better align with current need, as well as a more uniform approach to SEND identification and support to avoid a ‘postcode lottery’ in provision.

Nearly two-thirds of the increase in spending has been driven by increased spending on pupils in special schools, with a £900 million increase in top-ups for state-funded special schools and a £900 million rise in spending on fees for pupils in independent special schools between 2015–16 and 2022–23. The latter accounts for very few pupils (30,000 in total), but placements are extremely high-cost in independent special schools (£61,500 per year) compared with the state-funded sector (£23,900).

Local authorities have probably had to rely on such provision due to capacity constraints in state-funded special schools and a lack of effective provision in mainstream schools.

Paul Whiteman, general secretary of school leaders’ union NAHT, commented: “It is clear that despite the best efforts of schools and local authorities, too many children with additional needs are not receiving the support they deserve.

“While the extra funding announced by the new government is positive, with demand continuing to rise, much more investment is vital as well as systemic reform to ensure children with additional needs get the right provision, at the right time, and in the right educational setting."