The cost of supporting schoolchildren with special needs such as autism and ADHD risks pushing almost half of all English councils into bankruptcy by 2026, MPs have warned.
The Public Accounts Committee (PAC) said Rachel Reeves was facing a £5bn black hole in the public finances as it warned of a “lost generation” of children being let down by the Government.
Sir Geoffrey Clifton-Brown, chairman of the committee, said the system was “inconsistent, inequitable and not delivering in line with expectations”, as he branded the spiralling costs an “emergency that has been allowed to run and run”.
It comes as Ofsted announced on Tuesday that it would meet parents of children with special education needs (Sen) who are not in school.
The education watchdog said the number of children with special education needs and disabilities (Send) who are not receiving a formal education “has been growing to a concerning extent”.
In its report, the PAC warned that taxpayers faced a multibillion-pound bill to ensure councils are fully funded once emergency provisions expire in March 2026, identifying 66 local authorities that were at risk of breaching a statutory duty to balance the books in two years.
Almost 2m children and young people aged under 25 have Sen, while the number of children who have an education, health and care plan (EHCP) – a legal document that entitles a child or young person to extra help in school – has soared by 140pc since 2015 to more than half a million.
The Chancellor allocated an additional £1bn to support children with Send in the Budget.
However, the PAC signalled that this was far short of the money needed to meet rising demand despite an estimated £10.7bn in dedicated high-needs funding this year.
This money does not include a surge in the cost of school transport provided for children with Sen. The PAC said this had seen a 77pc real terms increase since 2015 to £1.3bn, when reforms were rolled out to give the parents of children with special needs more control over their education.
In a withering assessment, the PAC warned that Whitehall officials did not even understand the drivers behind the increase in Sen spending as it called on the Department for Education to set out an action plan within the next six months.
Previous Telegraph analysis has shown the cost of supporting school children with special needs has jumped by more than two-thirds since lockdown.
One in 100 primary school children is now entitled to formal council support as a result of autism, up from one in 200 before the pandemic.
The PAC warned that parents were becoming increasingly frustrated by an “adversarial” system that is failing parents, councils and taxpayers as it warned that increasing amounts of money were being wasted on tribunals.
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Sir Geoffrey said: “This is an emergency that has been allowed to run and run. Families in need of help have been forced to spend precious energy fighting for the support they are legally entitled to, and local authorities to bear an unsustainable financial burden.
“The immensity of this situation cannot be overstated. As a nation, we are failing countless children. We have been doing so for years.
“At the same time, we are creating an existential financial risk for some local authorities, caused by that same failing system. This report must serve as a line in the sand for the Government. Every day that goes by for families not receiving the right support is another day closer to a lost generation of young people.”
Previous analysis by the County Councils Network (CCN) show that children with autism, social, emotional and mental health needs or speech, language and communication impairments account for 88pc of the total increase in special educational needs spending since 2015.
Roger Gough, children’s social care spokesman for the CCN, said that system was “no longer working for parents, families, councils and schools alike”.
It called for an overhaul of the system within 12 months.
Mr Gough said: “Our research has shown that educational outcomes have not improved despite spend skyrocketing and children’s needs becoming more recognised, so the case for change is unquestionable.
“A key plank of reform should be to incentivise mainstream schools to meet the needs of more Send pupils, which could reduce the reliance on specialist placements, and we back the Public Accounts Committee’s calls for clarity on how inclusive education will be achieved.”