Devon County Council raises tax by 4.99%

There is a "high risk to the ongoing financial stability" of Devon County Council, it has emerged in a report prepared ahead of the council setting its annual budget.

Chief finance officer Angie Sinclair wrote it was "not possible to contain the cost" of special educational needs provision.

The Conservative leader of the council said there was no immediate threat to the council but that local and central government needed to find a solution to funding special needs education and to paying off more than £100m of debt.

The Liberal Democrats said the budget showed the council's finances to be in a "perilous" state ahead of the council voting to increase council tax by 4.99%.

The tax increase was approved with 38 votes in favour, four against and seven abstentions.

This was the last budget to be set before elections for every seat on the council in May.

Caroline Leaver, group leader of the Liberal Democrats at Devon County Council, said: "The financial position of Devon County Council is extremely serious, if not perilous.

"The overspend on special educational needs and disabilities service for young people and children is desperate."

The council's report said there had been a shortage of state-owned facilities for special educational needs leading to an increased reliance on more expensive independent providers.

The Institute for Fiscal Studies said placements in independent special schools cost £61,500 per year on average compared to £23,900 for state-funded schools.

The ever-increasing costs of special educational needs have been in part paid for from the council's reserves which have plummeted from £222m in March 2022 to £125m in March 2024.

That has led to the council now being ranked in last place out of 21 comparable county councils for three key indicators regarding the health of its reserves.

The Conservative leader of the council, James McInnes, said in the medium to long-term the cost of special educational needs was "rising at such a rate that we can't cope with it".

He said: "No council can cope with it. If you look at the amount of debt across the country it goes into the billions and it is all being held in this special little account the government has agreed for us to hold it in."

Since 2020 councils have been able to keep deficits from special educational needs separate from their main accounts.

In Devon County Council's case that has led to an accumulated debt expected to reach £132m by the end of March.

The then-Conservative government introduced a Safety Valve scheme in 2024 to try to deal with the deficit but Devon has continued to overspend.

The number of special educational needs children supported by Devon County Council with an Education Health and Care (EHC) plan has risen from 4,093 in January 2018 to 8,400 in January 2023.

Brahm Norwich, emeritus professor of education at the University of Exeter, said there were two main factors behind the increase.

He said: "One is a very strong performance culture in school where schools are inspected based on their overall attainment levels with expected levels they are supposed to reach.

"The other factor has been a gradual reduction in school budgets and therefore the capacity of ordinary schools to support with teaching assistants and specialist teachers has been diminished."

Luke Sibieta, from the The Institute for Fiscal Studies (IFS), said over the past 10 years there had been "an explosion" in the number of people with "the most severe forms" of special educational needs.

He said the decision to put spending on special educational needs to one side was an "accounting fudge" and a "short-term fix" that was due to come to an end in March 2026.

In his report for the IFS he said "meaningful reform" would be "complex and costly" and was likely to require a "significant expansion" of special educational needs provision in mainstream schools along with "an expansion of state-funded special school places" and "a geographic redistribution of funding".

The Chartered Institute of Public Finance and Accountancy (CIPFA) has also warned the system is "in crisis".

William Burns, CIPFA social care policy advisor, said there was an "urgent need for a system overhaul".

He said if no solution was found to deal with councils' deficits from special educational needs spending it could lead to about half of the councils in the country being left effectively bankrupt.

He said: "This will have a huge impact, not just on Send services but on all services the councils deliver."

The Department for Education said it had inherited a system that "has been failing children with Send and their families for far too long".

A spokesperson said the government recognised the strain on council finances and was "working with the sector on how to improve outcomes for children with Send whilst ensuring the system is financially sustainable".

It said it was investing £1bn into Send and £740m for councils "to create more specialist places in mainstream schools, paving the way for significant, long-term reform".

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