Councils across England face millions in SPED debt

April 17, 2025, Plymouth Live: Fears Plymouth City Council could go bust over skyrocketing special educational needs bill

SW England

There are fears Plymouth City Council could go bust because of a £48m [$64M] debt caused by overspending on special educational needs. The council is among local authorities across England lobbying the Government for a solution before a deadline pitches the huge debt onto its balance sheet next year.

Plymouth is among more than 40 councils forecasting a special educational needs and disability (Send) deficit running into millions of pounds. The Guardian recently reported Plymouth’s deficit to be £47.7m [$64M], with Cornwall’s at £71.1m [$95M] and Devon’s at £161.8m [$216M].

Already, 18 councils have warned publicly that they are at risk of insolvency because of the Send debts, with estimates suggesting even more than this number are on the brink.

Overspending on Send services across England is forecast to rise by nearly £2bn in the next year. The Chartered Institute of Public Finance and Accountancy (CIPFA) has estimated that as many as 75 councils are at risk of going bust.

Plymouth City Council has seen a 40% increase in request for special educational care plans with more than 3,000 youngsters now receiving one. It is forecasting an overspend on its Dedicated Schools Grant (DSG) of £21m by the end of 2024/25.

But the debts, including for Plymouth, have been kept off council books by an accounting fix called a "statutory override”, created under the previous Tory government. However, this is due to end on March 31 next year and the debt will return to council balance sheets.

The Labour Government now has to decide how to tackle this. I could clear the debt or extend the override until the deficits can be dealt with.

A Plymouth City Council spokesperson said: “Acknowledging these pressures, the Government has previously allowed councils to keep their DSG ‘high needs deficits’, where the cost of providing support outstrips the DSG High Needs budgets available to councils, off their main revenue accounts. However, this ‘statutory override’ is due to expire in March 2026. Plymouth City Council, along with other councils and the LGA are lobbying the new Government to provide a longer-term funding solution before the deadline expires.”

The Send deficit has ballooned nationally thanks to rapid increases in the cost of meeting education and health care plans (EHCPs) which give youngsters aged up to 25 the legal right to school support, paid for by councils, for conditions such as autism and speech and language difficulties. The number of EHCPs in England rose, under the Conservative Government, to 576,000 last year, from 240,000 in 2015.

Plymouth City Council received nearly 1,000 requests for new EHCPs in 2024 - a 40% increase since 2022. A spokesperson said: “The number of young people in Plymouth’s population with an EHCP has grown from 2,678 in 2023 to 3,173 as of March 2025, which is nearly a 20% increase.”

The spokesperson stressed: “This is not unique to Plymouth, indeed almost all councils in the country are facing growing pressures to respond to the rising pressures facing the Send system. These pressures mean that the council is projecting an overspend on its cumulative DSG of £21m [$28M] at the end of 2024/25. Whilst this is considerably lower than in other places across the country, it is more than it had anticipated, with additional demand year-on-year, driving additional costs.”

Cllr Andy Lugger, leader of the opposition Tory group on Plymouth City Council, said he was concerned that if the override was not dealt with it could put the council in “bankruptcy territory”. He has criticised the council for running up debt from borrowing close to £1bn and said it had “dodged the bullet” after the Government said it was minded to grant a capitalisation direction, needed after a controversial £72m transaction to wipe out a pension deficit, which meant the council could this year set a balanced budget.

Cllr Lugger told PlymouthLive: “Plymouth City Council is already in financial difficulties with debt creeping over the £1bn [$1.3B] mark, but this could be the tip of the iceberg. The council’s administration has just dodged a bullet with the capitalisation direction, thanks to a supportive Labour Government. Let us hope that the Send statutory override does not put the council back into bankruptcy territory.”