Hampshire County Council’s £354 million deficit for special educational needs and disabilities (SEND) support is set to be largely paid off after confirmation of a multi-billion-pound Government rescue package.

The Government announced it will commit £5 billion to cover 90 per cent of SEND-related deficits built up by all councils in England up to the end of the current financial year.

The move follows warnings from the Local Government Association that eight in 10 councils could effectively face bankruptcy if forced to absorb the mounting shortfalls.

The latest forecast for Southampton City Council’s dedicated schools grant deficit by the end of 2025/26 was £16.54 million, according to a cabinet report published last month.

Hampshire’s deficit is forecast to reach £354 million by March 31, 2026, driven largely by the soaring cost of supporting children and young people with complex needs.

Without Government intervention, the county’s Dedicated Schools Grant (DSG) deficit had been projected to exceed £716 million by the time the current statutory accounting override ends in March 2028.

The temporary override has allowed councils to keep high-needs deficits off their main revenue budgets, avoiding an immediate impact on their overall financial position.

In a statement, Hampshire County Council said it welcomed the announcement but cautioned that the funding is neither automatic nor immediate.

A spokesperson for the county council said: “The Government has pledged to cover 90 per cent of the deficits accrued by local councils, which are almost entirely caused by high-needs SEND costs exceeding available funding.

“But the write-off is not automatic as councils must submit a ‘local SEND reform plan’ for approval by the Department for Education, and the timing of when the cash will be received is not yet clear.”

Even with the write-off, Hampshire would still need to find more than £35 million, the remaining 10 per cent of its forecast deficit, from its own resources.

The council warned that it cannot currently afford to meet that cost when the override ends in April 2028. Reserves are already under severe pressure after years of budget gaps and are expected to be exhausted by 2027/28.

Until the Government funding is paid, the authority says it will continue to carry the financial burden itself, losing an estimated £14 million a year in foregone investment income as it underwrites the deficit from its cash balances.

The SEND funding crisis has intensified in recent years, with rising demand for education, health and care plans and increasing placement costs placing sustained strain on council budgets nationwide.