London Councils forecasts that boroughs’ deficits for Send provision will total £500m by the end of 2026/27

Almost half of London’s local authorities are at “heightened risk” of bankruptcy because of insufficient schools funding from the government, according to London Councils.

The cross-party group, which acts as a representative body of the 32 London boroughs and The City, warns that grants to councils for supporting children and young people with special educational needs and disabilities (Send) have not kept pace with rising pressures, leading to severe budget deficits.

London Councils forecasts that boroughs’ deficits for Send provision will total £500m by the end of 2026/27 – destabilising town hall budgets and undermining investment in schools’ resources and support for pupils.

Boroughs are lobbying the government for improved funding to address the crisis.

The government has extended its ‘statutory override’ through to March 2026 for councils running deficits on their Send spending. London Councils says that boroughs would seriously struggle to meet these deficits if the statutory override was removed, with up to 16 unable to meet their projected deficit and at risk of issuing a Section 114 notice, which is effective bankruptcy. It has not named these boroughs.

Recent government data shows a 9% increase in London children with education, health and care plans (EHCPs) in just one year, from 85,601 in 2023 to 93,487 in 2024.

Ian Edwards, London Councils’ executive member for children and young people, said: “Boroughs are determined to provide high-quality support for all young Londoners with Send, but we’re extremely concerned by the unsustainable finance pressures we face.

“The sums don’t add up. Government funding has failed to keep pace with rising levels of Send support need in the capital, leading to major deficits.

“The [upcoming government] spending review needs to recognise these pressures and help us restore stability to the system. We are calling for funding that reduces the deficit and reflects London’s fast-growing Send numbers, enabling us to boost inclusion in schools and continue meeting the needs of all children in the capital.”

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