Reeves Urged to Reassure MPs over Public Finances Amid £6bn-a-Year Send Costs

Why It Matters

The unresolved SEND funding gap threatens to shrink the government’s fiscal headroom and could trigger higher borrowing costs, affecting investor confidence and public‑service budgeting.

Key Takeaways

• SEND costs consume £6bn annually, straining fiscal headroom
• OBR warns £18bn backlog by 2028‑29
• Treasury plans 90% debt coverage, decision delayed to 2027
• Options: reform, reallocate school budget, cut mainstream funding, borrow
• Investors monitor potential impact on UK bond yields

Pulse Analysis

The surge in special educational needs and disabilities (SEND) spending has become a fiscal flashpoint in Westminster. Over the past decade, the number of pupils qualifying for additional support has risen sharply, while private providers have increased fees, pushing the annual cost to roughly £6 billion. Local authorities have historically financed these outlays through borrowing, treating them as off‑balance‑sheet liabilities under a statutory override that shields core government spending. This accounting shortcut allowed the Treasury to preserve a sizable budget surplus, but it also concealed a growing debt pile that the Office for Budget Responsibility now flags as a systemic risk.

Chancellor Rachel Reeves now faces intense scrutiny from the Treasury Committee, which demands a transparent roadmap for integrating the £6 billion SEND bill into the public accounts. The OBR estimates an £18 billion historic backlog by 2028‑29, a figure that could erode the £22 billion surplus created in the November budget. Policy options on the table include tightening eligibility criteria, reallocating funds from the broader schools budget, trimming mainstream allocations, or simply expanding borrowing. Each path carries trade‑offs: reforms risk limiting pupil access, while budget reshuffling could spark resistance from education stakeholders ahead of the 2027 spending review.

Financial‑market participants are watching the debate closely, as any decision that chips away from the surplus could tighten UK government bond yields. Analysts at Investec and Capital Economics warn that a sudden shift toward higher borrowing to fund SEND would raise the cost of debt and test investor confidence, especially amid parallel commitments to defence and infrastructure. A measured approach—gradual reforms paired with a clear timetable for departmental budgeting—could preserve market stability while delivering needed support to high‑needs pupils. Ultimately, the government's handling of SEND will serve as a barometer for fiscal discipline in an era of expanding public‑service obligations.

Reeves urged to reassure MPs over public finances amid £6bn-a-year Send costs

Phillip Inman · Fri 13 Feb 2026 02:00 EST (last modified Fri 13 Feb 2026 13:56 EST)

Rachel Reeves is under pressure to reassure MPs over the state of the UK’s public finances, amid concerns that the rising cost of special educational needs and disabilities (SEND) could leave a significant hole in the government’s financial buffer.

Meg Hillier, the chair of the all‑party House of Commons Treasury committee, said the chancellor should make clear her long‑term plans for the £6 bn‑a‑year SEND bill as uncertainty grows over how it will be accounted for at the end of the decade.

Reeves, who is due to appear before the committee next month, said in a letter to MPs that she plans to delay a decision until next year.

City analysts said financial‑market investors would be concerned if some or all of the £6 bn SEND annual cost was deducted from the budget surplus, which the chancellor more than doubled in last November’s budget to £22 bn to cushion the UK against volatile government‑bond markets.

The spat between MPs and the Treasury comes after the Office for Budget Responsibility (OBR) said the £6 bn SEND bill was unaccounted for at the budget and expected increases to the bill over the next decade posed a risk to the public finances.

The government said this week that it would cover up to 90 % of historical debts related to spending by English councils on SEND services.

Ministers said they will clear about £5 bn of the debt up to 31 March this year, although councils must agree to revise how they offer SEND services under plans expected to be outlined in an imminent white paper.

It is unclear how billions of pounds of expected SEND overspends between April 2026 and April 2028 will be handled. Ministers said they would “continue to take an appropriate and proportionate approach, though it will not be unlimited”.

English councils have seen the cost of providing SEND services rise as the number of pupils that qualify for extra help has increased, and the mainly private providers have raised charges.

The excess costs have been rolled over with the Treasury’s blessing as debts at arm’s length, or off‑balance‑sheet, to protect spending on other services. Successive chancellors have delayed allocating the costs since 2014 in a manoeuvre known as a “statutory override”.

In the November budget, Reeves said that from 2028‑29 the cost of SEND services would be taken over by Whitehall, but refused to say which department would account for the spending.

Hillier said:

“It’s extremely important that we can trust that the Treasury is being transparent on its spending plans. As the OBR has identified, this is an obvious risk to the headroom the chancellor created for herself at the budget.

The chancellor will be appearing in front of the committee in March and we will continue to seek answers.”

The OBR estimated that the backlog of historical spending on SEND, mostly paid for from borrowed funds by local authorities, will reach £18 bn by 2028‑29.

The chancellor said in a written response to Hillier:

“From 2028‑29, once the statutory override ends, future funding implications for SEND will be managed within the government’s overall departmental spending limits. Specific department budgets from 2028‑29 onwards will be confirmed at the 2027 spending review.”

The education secretary, Bridget Phillipson, is due to show how the government plans to make SEND services more effective. Critics say she is planning to ration access by pupils, allowing the OBR to revise down its projections at the next budget.

Luke Sibieta, a research fellow at the Institute for Fiscal Studies, said the government might be able to reduce annual spending, but this would probably be at the margins.

He said:

“To fill the £6 bn gap, the government has three main options. First, it could slow the growth in SEND spending through reforms to the system.

Second, it could top up the overall schools budget by finding the money elsewhere in the government’s budget.

Third, it could reduce mainstream school funding to pay for high‑needs funding. To illustrate the impact of these choices, £6 bn is equivalent to about 9 % of the overall schools budget in 2028‑29, or about 11 % of the mainstream schools budget in that year.”

A fourth option would be to increase borrowing, reducing the government’s financial buffer.

Ruth Gregory, the deputy chief UK economist at the consultancy Capital Economics, said the SEND budget posed a “clear risk to the projections for public spending”.

She added that heavy commitments to increase spending across a range of Whitehall departments meant there was a growing risk of the government “eating up its headroom” more broadly, not least from a pledge to increase defence spending.

Philip Shaw, a senior analyst at Investec, said:

“I don’t think the markets would panic if a large proportion of the £6 bn could not be saved and is added to borrowing. But investors would be very concerned.”

The Treasury declined to comment.