The proposal in this week's Final Local Government Financial Settlement  covers deficits accrued to the end of the 2025-26 financial year, at an estimated cost of more than £5bn.

Councils will have to submit a ‘local SEND reform plan' to the Department for Education for approval to receive the funds in the autumn.

Local Government minister Alison McGovern said in a statement the deficits had ‘threatened councils' sustainability and diverted funding from essential day-to-day services'.

For deficits that emerge in the next two years, the statement added: ‘We will continue to take an appropriate and proportionate approach, though it will not be unlimited.'

The Government has previously announced it will fund SEND services from 2028–29.

IFS research fellow Luke Sibieta said: ‘By shifting most of the responsibility for covering these historic deficits from local to central government, this will reduce the risks these deficits pose to councils' solvency.  

‘What we don't know is how the Government will address the further challenges to come in the next few years. Without reforms to the system, councils are currently on course to build up another £9bn of SEND related debt over the next two years (2026-27 and 2027-28). The provision of a 90% bailout may now reduce the incentives faced by councils to contain costs, in anticipation that the Government may feel compelled to step in again. The Government also still faces an in-year funding gap of £6bn in 2028-29, when it has committed to taking full responsibility for spending. 

‘In early efforts to reform the system, the councils will be required to submit "local reform plans" in order to access the historic support package. There is a lot of uncertainty about what these plans will mean. The real test will come when the Government publishes its long-awaited white paper and SEND reform plan.'