The National Audit Office’s (NAO) Value for Money report examines Department for Education (DfE) expenditure on support for young people with special educational needs (SEN).
It recognises the importance of identifying children’s needs and supporting them as early as possible, particularly within early years.
In January, around 1.9 million children and young people up to the age of 25 in England were identified as having special educational needs. Of these, 1.7 million are at school.
The report reveals there has been no ‘consistent improvement’ in outcomes for children and young with SEN in the last five years. Also, without action, local authorities’ budgets will fall further into the red as Government funding isn’t enough to provide support for rising numbers of children with Education and Health Care Plans (EHCP).
Key findings include:
- While the DfE increased the amount it gives local authorities for high-needs between 2014-15 and 2024-25, because of an increase in Education Health Care Plance (EHCP), funding actually fell in real terms by 35 per cent. Between 2015 and 2024 there was a 140 per cent increase (to 576,000) in children with an Education, Health and Care (EHC) plan. Most of this increase related to autistic spectrum disorders; speech, language and communication needs; and social, emotional and mental health needs.
- Without a solution, the DfE estimates that a significant proportion (on current estimates, some 43 per cent) of local authorities will have deficits exceeding or close to their reserves in March 2026. DfE estimates that the cumulative deficit will be between £4.3 billion and £4.9 billion at that time, with a central estimate of £4.6 billion.
- Longer term, local authorities face a worsening financial situation. Looking ahead, for 2027-28 there is an estimated mismatch of between £2.9 billion and £3.9 billion when comparing current funding, maintained in real terms, against forecast costs.
The report also finds that the DfE does not know ‘with confidence’ how much capacity for children with SEN should be planned and where to meet future needs – mainstream schools or special schools.
On top of this, it highlights a lack of confidence among families and children in the SEN system which often falls short of statutory and quality expectations. Long waiting times for an EHC plan was one example of families’ declining confidence in the system, as only half of EHC plans were issued within the statutory 20-week target in 2023.
While the NAO recognises the DfE has taken steps to improve the system and reduce financial pressures, in most cases it says there is no evidence this action will fully address the ‘challenges’.
'Government needs to think urgently about how its current investment can be better spent'.
Gareth Davies, head of the NAO, said, ‘Although DfE has increased high-needs funding, the SEN system is still not delivering for children and their families, and DfE’s current actions are unlikely to resolve the challenges.
‘The Government has not yet identified a solution to manage local authority deficits arising from SEN costs, which ongoing savings programmes will not address.
‘Given that the current system costs over £10 billion a year, and that demand for SEN provision is forecast to increase further, Government needs to think urgently about how its current investment can be better spent, including through more inclusive education, and developing a cohesive whole system approach.’
The NAO concludes by making a number of recommendations, they are:
- For a whole system reform, including work to understand the ‘root’ causes behind increases in SEN and demand for EHC Plans and making the system more integrated.
- To make better use of funding with DfE ‘urgently’ working with the Treasury and the Ministry of Housing, Communities and Local Government to share with local authorities its plans for ensuring they can achieve a sustainable financial position.
- Consider routine reviews of individual EHC Plans to assess if they are working, and benchmarks for local authorities to assess how much specialised provision should cost.
- Improve data, incentives and processes to ensure children’s needs are identified and supported as early as possible, particularly within early years.
'I am determined to rebuild families’ confidence in a system so many rely on'.
Education secretary Bridget Phillipson said, ‘The NAO’s report exposes a system that has been neglected to the point of crisis, with children and families with SEND quite simply being failed on every measure.
‘I am determined to rebuild families’ confidence in a system so many rely on – so, there will be no more sticking plaster politics and short-termism when it comes to the life chances of some of our most vulnerable children. The reform families are crying out for will take time, but with a greater focus on mainstream provision and more early intervention, we will deliver the change that is so desperately needed.’
The National Day Nurseries Association (NDNA) called the report 'alarming, but not surprising' for those working in early education.
Chief executive Purnima Tanuku said more training is needed for early years staff to be able to identify more children who need help.
The Children's Commissioner, Dame Rachel de Souza, commented, 'Now is the time for bold leadership with a focus on joining up education, health and care services, to drive better planning and earlier intervention so that fewer children reach crisis point that requires costly acute care. Mainstream schools should be equipped to provide all the core services children need, including those with disabilities, and we need a system that responds to a child's individual needs, instead of one that requires diagnosis to unlock help and support.'
Speech and Language UK’s chief executive Jane Harris said, ‘With some minor investment in teacher training, school-based group programmes and specialist support, children with speech and language challenges can go on to be productive and happy members of society.’
