Ministers face calls to explain how £6bn Send funding hole will be paid for | Special educational needs

Ministers are preparing to cut the rising cost of special educational needs provision by overhauling the system as they face calls to explain how a £6bn funding gap will be paid.

The government is under pressure to explain how it will meet skyrocketing special educational needs and disability (Sending) spending after Rachel Reeves said in the budget she would take full responsibility for costs from local councils from 2028.

Ministers have been working on changes to the Send system for months, with a technical report due to be published in early 2026. Both Chancellor Rachel Reeves and education minister Bridget Phillipson say it is not aimed at saving money but rather to benefit children and parents frustrated by a broken system.

But senior government sources said changes to the system would also significantly reduce growth in the Send budget as a side effect. Council spending on the Send system has reached £12bn this year (a 66% increase over the last decade); Billions of pounds have also gone beyond their budgets to meet their legal duties to children.

The Office for Budget Responsibility highlighted the funding gap of £6bn in 2028/29 rising to £9bn in 2030/31. This comes on top of a cumulative £14bn of extra spending since 2020 that is still being kept off the balance sheet by English local authorities.

The watchdog said this was a “significant financial risk” as the Treasury did not say how it would be paid for, which could be equivalent to a 4.9% cut in the school budget per pupil.

Phillipson reassured Labor MPs on Thursday that the extra costs of Posting would fall on the government budget overall, not the allocation of core schools, and suggested the OBR’s presentation was misleading.

He told a WhatsApp group of Labor MPs on Thursday, in comments first reported by PoliticsHome, that the changes would “cut costs – for example more local specialist venues would reduce travel demand/offer a more costly private service”.

Another area for cost reduction was identified as early speech and language interventions, which reduce the need for support later on.

Around £740 million is currently being spent on increasing more mainstream specialist places; Figures show the cost of a child’s education at a specialist state school is £26,000 per year, compared to £63,000 for funded private education.

The issue is already a major concern for Labor MPs, who say parents are worried about the possibility of changes to the Send system, which already makes help slow and difficult to access.

The government is also uneasy about Labor MPs reacting to the Send overhaul in a similar way to attempts to cut the disability benefits bill, which was abandoned after a riot in Downing Street.

Labor MP and education committee chair Helen Hayes said the deficits created by councils were “a symptom of the wider crisis in the Send system which is failing children and families across the country”.

He said his committee had “identified how the government could reform sending services to meet the needs of children and young people, but we are clear that this will require investment in the large-scale transformation required to achieve a more sustainable funding position over time” and that this “will not come for free”.

“In light of the budget announcement, it is important that the government provides urgent clarity on how the Send reform will be implemented,” he said.

The Treasury has so far refused to say where the money for the Send will come from; It seems unlikely that changes to the system will cover the entire gap.

There are questions about whether Reeves’ current vacancy in 2028 is realistic if the Treasury is forced to inject cash into the Department for Education.

The Institute for Fiscal Studies (IFS) said on Thursday that the government had three options: reduce the growth of the sent-in budget, give more money to the Ministry of Education or make cuts to the school budget.

IFS research fellow Luke Sibieta said: “Firstly, a white paper expected in the new year could slow growth in Send spending through reforms to the system – but it will take time for changes to be felt. Given that Send spending is expected to rise by a whopping 14% in real terms this year, this seems a natural priority. Given the poor outcomes for families and schools under the current system, getting better value for money is particularly important.”

“Secondly, it could supplement the general schools budget by finding the money elsewhere in the government budget. Thirdly, it could reduce general school funding for high needs funding. To illustrate the impact of these choices, £6bn is equivalent to around 9% of the general schools budget in 2028-29, or around 11% of the general schools budget in that year.”

The Liberal Democrats said one solution could be to impose profit caps on private providers and divert “millions of public money from the pockets of private capital to frontline support”.

MP and Liberal Democrat education spokeswoman Munira Wilson said the £6bn funding gap was “an indictment of this government’s failure to get the system under control”.

“The government must stop the scandalous profiteering in this sector which is costing taxpayers millions and damaging children’s education,” he said. “We know from the government’s own admission that it is almost two and a half times more expensive to place a child in a private private school than in the public sector. This is simply indefensible.”

The Conservative Party’s shadow education secretary, Laura Trott, said the “£6bn hidden black hole will either lead to cuts to schools and mass teacher redundancies or a £6bn cut to special educational needs provision.”

“Bridget Phillipson needs to clarify what this is; teachers and parents have a right to know,” he added.