More than 30 local councils in England ended 2024 in a deficit, sparking concerns about widespread financial constraints. The National Audit Office (NAO) has flagged a £4.6 billion special educational needs (SEN) deficit, which is projected to rise to £8 billion by 2026/27, putting two-fifths of local authorities at risk of bankruptcy.
The financial strain is attributed to increasing demand for services, inflationary pressures, and inadequate funding from central government. Councils are struggling to balance their budgets, with some forced to cut essential services or raise council tax. The situation is dire, with the Local Government Association predicting a financial gap of up to £8 billion by 2028-29.
The government’s statutory override, which allowed councils to temporarily exclude SEND-related debts from their accounts, is set to expire in March 2026, exacerbating the crisis. County and unitary councils are particularly vulnerable, with deficits projected to reach £2.7 billion by 2026.
