Finally, we’ve got a plan (well, kind of) to defuse the ticking time bomb that would have, when set off, exploded most councils into bankruptcy: the high-needs budgets will be moving on to the government’s books by 2028.
This news appears to be more helpful for local than national government, but it leaves some concerning unanswered questions about what happens now and hereafter in the commissioning of specialist provision.
1. What is happening to the historical debt that the underfunding of high-needs budgets has accumulated over the past decade?
These debts are expected to be hitting the £14 billion mark by the time central government assumes management of the finances, and the OBR says that leaving these deficits on council books “would be very likely to result in many local authorities issuing Section 114s, due to being unable to set a balanced budget”.
The government says it will address these concerns in the local government finance settlement next month.
High-needs deficits alone are higher than the current forecast total borrowing of all councils, so it is impossible to see how these deficits remain local. All roads then lead to Whitehall.
So it’s improbable not to expect more stringent measures being placed on the way specialist provision is funded between now and 2028, to reduce the risk of these deficits climbing higher.
2. How might that look?
Special and alternative provision settings have had either a minus or zero minimum funding guarantee for the majority of the last decade (so successive real-terms cuts year after year), and the prospect of further reductions would be disastrous for the sector.
It would undoubtedly push more pupils into high-cost independent provision, hiking deficits even more.
3. So will reforms really be able to bring costs down in time?
We have the forecast structural in-year deficit of £6 billion for high-needs funding, which the OBR is saying would reduce the overall mainstream schools’ allocation by 4.9 per cent when the finances move in 2028 (something the government denies is the case).
But wherever it sits, those close to government are quick to point to the SEND reforms - coming in early 2026 - as being the solution that means nobody will lose and nobody should be worrying.
OK - let’s think about that…
So we’re expecting to see deficits rise to a forecast £14 billion in eight years, and yet we’re seriously pinning our hopes on the idea that, in two years (less, actually, as the White Paper will need to herald changes to primary legislation that will take many months to execute), reforms to the SEND system will mean it costs £6 billion less?
Is the presumption in central government really that, right now, there are billions of pounds being misspent by local authorities on provision that isn’t needed and can just be ceased over a two-year period, without any consequence for children, families and schools?
Maybe in a consequence-free world it could. Maybe.
But this is a mission-led government with high expectations and unapologetic ambition.
4. What might a system £6bn cheaper look like?
So, let’s imagine more pupils remain in mainstream and that current funding for them is slashed by £6 billion. Let’s just look at that concept through one of our accountability lenses: school inspection.
We not only have a new Ofsted framework that is explicitly grading schools on learner “achievement”; we also have a “secure fit” methodology for grading judgements that risks inclusive schools defaulting into “attention needed” in this area because - guess what! - children with additional needs don’t typically attain at the same level as their mainstream peers, and often need additional help.
Layer on the government’s obsession with national averages being at least met (which ignores the way by which national averages are created in the first place, but hey-ho) and where does that leave schools with their “achievement” grade, in this brave new world where we’re spending £6 billion less? Where will that leave children?
The rhetoric on “higher standards, higher expectations” has direct resourcing implications that come with a real-terms cost: it’s simple arithmetic that you can’t suddenly take £6 billion out of any public service (and ignore another £14 billion that’s accrued over a decade). Nor can you reduce mainstream school budgets by 4.9 per cent. It just can’t be done.
Only 25 per cent of pupils with an education, health and care plan (EHCP) are in a specialist setting. Yes, numbers have shot up, but three-quarters of pupils remain supported in mainstream and, to my knowledge, schools aren’t accumulating huge surpluses on the back of the current funding levels.
5. What does this mean for school leaders?
The overhaul of a system in crisis will take longer than our politics allows. It will require early, skilled and trusted assessment processes openly available from the early years onwards. It will require valued, agile, evidence-based work on the curricula, interventions and support that will deliver for pupils.
That will all require, in the short term at least, more funding, not less, if we are to turn this system into one our country can be proud of - and, ultimately, afford.
While we really need Bobby Ewing to step out of the shower with a big bag of cash, that’s the only thing less likely than there being a £6 billion cost avoidance by 2028.
Still, let us not forget that 2028 is the prequel to an election year, and chancellors always pull the “Ewing Manoeuvre” when their party’s future in government is on the line.
To no one’s surprise, the OBR reminds us that departmental spending tends to spike around that time, too, so I wouldn’t be panicking too much just yet, Captain Mainwaring.
Warren Carratt is CEO of Nexus Multi Academy Trust
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