High-needs education spending putting strain on government budgets

Spending on educational support for children with high needs has risen sharply in recent years, creating unsustainable financial pressure on both local authorities and central government, new analysis by the Institute for Fiscal Studies warns.

High-needs spending by councils, which primarily covers additional provision for pupils with Education, Health and Care Plans (EHCPs), has surged by 66% in real terms, increasing from £7.5 billion in 2016 to an estimated £12 billion in 2025.

Without reform, this figure is expected to grow by a further £3 billion by 2029, surpassing the total day-to-day spending of the Ministry of Justice. The rapid growth reflects both rising numbers of EHCPs and the increasing cost of specialist provision.

Local authorities have limited control over these costs, as provision is set out in statutory EHCPs and must be delivered. This has resulted in persistent and widening annual shortfalls, with cumulative debts projected to hit £8 billion by 2028.

The situation is exacerbated by a temporary ‘statutory override’ that allows councils to carry these deficits outside their normal budgets, a mechanism that is due to expire in 2028. Councils are normally barred from borrowing to cover day-to-day spending, meaning that when the override ends, these deficits could impact mainstream school budgets directly.

If unchecked, and without additional funding, this rising burden on high-needs support could result in real-terms cuts to per-pupil spending in mainstream schools, undermining educational provision more broadly.

Given the scale of the financial challenge, experts are calling for the Office for Budget Responsibility (OBR) to produce and publish annual forecasts for high-needs spending and related deficits. They argue that greater transparency and long-term planning are essential to addressing the issue sustainably and preventing widespread disruption to the wider education system.