25 Accepted in Part

We have previously highlighted how SEND-related funding—the high-needs block of the Dedicated Schools Grant—has not...

Recommendation
We have previously highlighted how SEND-related funding—the high-needs block of the Dedicated Schools Grant—has not kept pace with demand over the past decade, and that local authorities have built up substantial deficits.61 Cumulative deficits are projected to exceed £5 billion by the end of March 2026.62 Since 2020, the impact of these deficits on a local authority’s financial position has been deferred through a statutory override which has allowed local authorities to exclude these deficits from their main revenue budgets and continue to deliver a balanced budget. In January 2025, we called on central government to work with local authorities towards a sustainable plan for the end of statutory override in March 2026.63 In June 2025, the Government extended the statutory override until March 2028. In the November 2025 Budget, the Government announced that from 2028–29 it would meet SEND costs from central 57 Q 52, MHCLG, Home to school transport formula technical note , 17 December 2025 58 Q27; C&AG’s Report figure 3, 59 MHCLG, Provisional Local Government Finance Settlement 2026–27 to 2028–29, 17 December 2025; MHCLG, Home to school transport formula technical note , 17 December 2025 60 MHCLG, Final Local Government Finance Settlement: England, 2026–2027 to 2028–2029, 9 February 2026; MHCLG, Home to school transport formula technical note , 17 December 2025 61 Q 53 62 Local Government Finance Settlement 2026–27 to 2028–29, HCWS1315, 9 February 2026 63 Committee of Public Accounts, Support for children and young people with special educational needs, First Report of Session 2024–25, HC 353, 15 January 2025, para 5 16 departmental budgets. It said it would set out further details on its plans to support local authorities with historic and accruing deficits in the Local Government Finance Settlement.64
Government Response Summary
The government agrees with the recommendation and has confirmed a first phase of support, providing a High Needs Stability Grant for 90% of historic SEND deficits accrued up to 2025-26, contingent on DfE approval of local reform plans. The statutory override has been extended to March 2028, and further details on support for deficits arising in 2026-27 and 2027-28 will be confirmed before then.
Government Response
Accepted in Part
HM Government Accepted in Part
5.1 The government agrees with the Committee’s recommendation. Target implementation date: Before the end of the Dedicated Schools Grant Statutory Override in March 2028 5.2 At the Local Government Finance Settlement, the government confirmed the first phase of support for SEND deficits. This phase addresses historic High Needs-related deficits accrued up to the end of 2025-26. Every local authority with SEND deficits will be eligible for a High Needs Stability Grant covering 90% of their High Needs-related SEND deficit, projected to be worth over £5 billion nationally. 5.3 This grant will be paid once each local authority has secured the Department for Education’s approval of their local area’s Local SEND Reform Plan. Payments will be made from Autumn 2026 for local authorities whose plans are approved in the first round of assessment. Where a plan does not meet the approval threshold, the local authority will be required to revise and improve it, with continued support from advisers. Where revised plans meet the required standard, payments will be made in Spring 2027, within the 2026-27 financial year. 5.4 The government recognises that SEND reform will take time to fully embed and local authorities will need further support. For deficits arising in 2026-27 and 2027-28, local authorities can expect the government to take an appropriate and proportionate approach, though it will not be unlimited. Future support will take account of local authorities' successful delivery of their approved Local SEND reform plan, including appropriate use of investment to establish an Experts at Hand offer. 5.5 The government will confirm the detail on further support for deficits arising in 2026-27 and 2027-28 before the Statutory Override ends in March 2028.
Source
Committee Public Accounts Committee
Inquiry Home-to-school transport
Report 70th Report - Home-to-school transport 06 Mar 2026 HC 1238
View on Parliament website
Addressee Bodies
HM Treasury
Timeline
Recommendation age 0.4 yrs
Report published 06 Mar 2026