President of the Society of County Treasurers, Rob Powell, had warned this week that the move ‘only slightly delays the inevitable for many and worsens current pressures'.
Whitehall expects to have completed its plan to reform special educational needs and disabilities services by the time the override expires.
The announcement of the override extension came as the Government announced an ‘overhaul of the outdated and complex council system' that it said would ‘bring fairer funding, more stability and improve lives of people across the county'.
In a written Parliamentary statement, local government minister Jim McMahon said a failure to update the funding formulae since 2013-14 and the 'subsequent mismatch between funding and need has manifested in unequal outcomes for people and places'.
He added: 'Our up-to-date system will use the best available evidence to take account of the different needs and costs faced by councils in urban and rural areas, and the ability of individual local authorities to raise council tax.'
Under the changes, which will come with a three-year funding settlement, £2bn will be reallocated based on a greater focus on need, with population and deprivation having a bigger impact in determining funding allocations under the updated system.
It comes after ministers were convinced by evidence that they believe showed the impact of deprivation on service demand.
The Institute for Fiscal Studies think-tank has warned funding reforms will mean ‘losers as well as winners', with councils that have most benefited from the system in the last decade expected to be hardest hit.
The Government has proposed a three-year transition to ‘enable local authorities to plan for changes' and plans to keep the funding system up to date going forward in line with every multi-year funding settlement.
No allocations for local authorities will be announced until the provisional local government finance settlement for 2026-27 later this year.
Chair of the Special Interest Group of Municipal Authorities, Sir Stephen Houghton, welcomed the ‘focus on delivering a funding system that supports the most deprived areas'.
Chair of the Education Committee Helen Hayes said: ‘This announcement will bring certainty to local authorities across the country in the short term, for whom SEND has become one of the biggest financial pressures and who will be already planning for the coming financial year.
‘Ministers will know that this is only a temporary fix until the Government brings forward desperately needed, long-term reforms to the SEND system. The Government should not delay a permanent resolution to local authorities' long term SEND deficits beyond 2028 and it must work to devise a solution that helps councils to achieve long term financial sustainability and does not damage their finances further.'
A SEND White Paper is expected later this year.
