The pound;5 billion a year spent on special educational needs fails to make any significant difference to SEN pupils' life chances, Ofsted's top official in the area has warned.
Speaking at a conference, Janet Thompson, Ofsted's national SEN adviser, claimed the vast investment had not helped pupils with difficulties to achieve better exam results.
Current outcomes for children with special needs are "not good enough", she said.
Ms Thompson's comments were supported by Hardip Begol, the deputy director for SEN and disabilities at the Department for Children, Schools and Families (DCSF), who said headteachers were not putting SEN budgets to good use - for example, paying for unskilled teaching assistants rather than specialist training for staff.
He predicted that SEN initiatives might be the first to be culled by cash- strapped councils as public- sector budgets get squeezed.
Just 5 per cent of children with a statement of special educational needs achieved five good GCSEs including English and maths this summer, compared with 47 per cent of all pupils.
And recent research has concluded that pupils who receive intensive support from teaching assistants make less progress than their classmates.
In 2008, there was a gap of 39 percentage points between children with SEN and all pupils at foundation stage. At key stage 1, the gap was 32 percentage points. This has remained virtually unchanged since 2002.
At KS2, the gap is growing wider: 53 percentage points in 2006, then 51 in 2007 and 2008.
At GCSE in 2008, 65 per cent of all pupils got five good grades, with 47 per cent achieving the benchmark including English and maths. By contrast, just 10 per cent of SEN pupils achieved five A*-C grades; 5.3 per cent achieved five passes including English and maths.
Ms Thompson said: "pound;5 billion a year is spent on SEN, but the long-term outcomes have not shifted fast enough. Too often schools just employ a number of support staff, but they never look at the progress the child is making.
"If they do something to help children, then it has to make a difference. If it's not, then they should think about changing it. When we are not doing it right, we have got to get better at challenging this."
Mr Begol agreed. "Schools have got to look at how efficiently money is being used," he said. "Financial cuts are affecting every council and one area which could be difficult is the SEN agenda.
"There are decisions teachers have made and we need to know the impact of how money is spent. Most is tied up in staff resources."
Mr Begol also said schools were too influenced by exam results and that this masked underachievement by pupils who struggle.
"We need to change this culture," he said. "What's so good about children getting A* grades if they were always going to achieve that?
"Hopefully, the school report cards will end this obsession."
Lorraine Petersen, the chief executive of the special-needs organisation Nasen, said many youngsters had been left behind in the quest for top grades.
"Teachers have been pushing children to reach the national average and we've not been pushing vulnerable children as much as we might," she said. "To be fair, inspectors have been to blame for that, with the culture of league tables. It's good that Ofsted is not just looking at results, but at value for money, and rightly so."
A DCSF spokesman said: "The facts speak for themselves when it comes to improving outcomes for children with SEN, with a rise of nearly 4 per cent in the proportion of children achieving five good GCSEs including English and maths in the past three years alone.
"While good progress has been made, we are not complacent. That is why we are investing in better workforce training - for example, funding for 4,000 dyslexia specialist teachers and the launch of the pound;31 million Achievement for All pilot in 10 local authorities last month to improve outcomes."