County’s special needs black hole could soar to £100m

North Yorkshire Council has revealed it is facing an annual black hole of up to £100m over its spending on special educational needs and disability (SEND) children in as little as four years due to spiralling demand for support services.

While authority bosses say the projected financial pressure was triggered by legislation in 2014, they say a simultaneous increase in complex needs has seen SEND children each cost up to £1.5m a year to support.

In addition, sources say while Covid will have had an impact, it is difficult to pinpoint why North Yorkshire is seeing such an explosion in numbers of SEND children, for which the council already has a £13m annual deficit.

Some point to the Children and Families Act 2014, which allows young people and their families to request local authorities to carry out an assessment and provide support, including allocated funding, for each child or young person who applies.

While declining to go on the record, some politicians at County Hall have suggested the relatively large proportion of middle class parents in the county is partly behind council’s plight, with a common view that getting children statemented brings financial and other benefits.

North Yorkshire is in the bottom quartile of funding per head of population for SEND children nationally, partly because the government funding formula is weighted towards areas of high deprivation. However, some politicians believe areas with more middle class people able to articulate arguments for their children end up with significant SEND demand.

Parents are believed to have had an almost perfect success rate in getting children, some of whom have “mild” or “borderline” issues, classed as having special needs after appealing the council’s decisions.

One source stated: “It is getting to the stage where children with mild difficulties are taking funds away from children who actually need it. It is just unsustainable.”

The financial alert, issued at a full meeting of the authority this week, came days after the authority’s chief finance officer gave evidence to the House of Commons Levelling Up, Housing and Communities select committee the authority was facing “a perfect storm” financially.

Gary Fielding, the authority’s corporate director resources, told the committee even well-run councils were now facing “existential challenges”.

He added the council was looking at using savings of between £30m and £70k generated by merging the county’s eight district, borough and county councils into a unitary authority, “cashing in the dividend that has been delivered by unitarisation” to balance the books.

Mr Fielding said: “There is a whole host of issues, which I would describe as a perfect storm, with SEND, adult social care and children’s placements.

“What we’ve got in part is a disrupted market, a dysfunctional market in most areas, we have supply and demand out of kilter, we’ve got not enough money chasing not enough places, so prices go up.

“We are seeing incredible increases in levels of complexity. There is demand increases, but what I am observing more is the complexity of need that’s presenting, and therefore the cost of that.”

Mr Fielding said while the funding for many SEND services came from a ringfenced Department for Education grant, the increase in demand was draining the council’s general budget, for example with the SEND home to school transport cost soaring from £5m annually to £21m in just five years.

He added the council would be reviewing policy areas as a contingency if the unitarisation savings plan did not work.

The full council meeting had heard residents were questioning when the authority would “reap the benefits of the millions saved by becoming a unitary authority”, a leading argument behind the controversial reorganisation of local government in North Yorkshire.

After outlining “benefits” such as devolution and savings on senior officers’ salaries the authority’s executive member for finance, Councillor Gareth Dadd, said the savings would “help mitigate some of those challenges that we are facing”.

He said: “We are in a far better position, I would contend, than most other local authorities up and down the country.

“We have a plan that’s yet to be fully aired and scrutinised by members and that will become apparent in the budget-setting process. It will be two or three years before we reach the top of that hill and can look down with some ease. We have a plan – it will be extremely difficult.”

After the meeting Coun Dadd added: “The incoming government will either have to take the [SEND] criteria up and give children different guidance or find a load of money. This has the potential to bankrupt prudent, decent local authorities. It is the biggest hurricane we can see on its way.”