How Government Money Twisted the Market: The UK’s Special Education Dilemma
When governments inject vast sums of money into a system, they often hope to improve equity and quality. Yet, the UK’s special education framework shows how funding can distort incentives instead of solving underlying problems.
At the heart of the issue lies the Education, Health and Care Plan (EHCP)—a legally binding document guaranteeing special support for children with additional needs. Over the past decade, the number of EHCPs has more than doubled from around 240,000 to over 570,000. The High Needs Block, a section of the local education budget that funds these high-cost cases, now exceeds £10 billion, pushing many councils into deep deficit.
Why the rapid growth? The funding mechanism itself encourages it. Ordinary schools, under financial strain, find it rational to refer students for EHCPs since doing so shifts part of the cost to the central high-needs budget. Parents, seeing the same logic, find it rational to appeal when support is denied—especially since nearly 90% of appeals succeed. The result: a procedural battlefield where money flows into assessments and legal processes rather than classrooms or early intervention.
On the supply side, public special schools are scarce, so councils rely on expensive private placements—many costing £60,000 to £100,000 per student per year. Transport costs inflate further as students are placed across districts, with some requiring one-to-one taxi services costing tens of thousands annually.
Meanwhile, preventive and early support programs have been cut, forcing families to escalate to EHCPs as the only route to get help. Fragmented budgets between education, health, and social care deepen inefficiency. Everyone acts rationally, yet collectively the system becomes irrational: schools pass costs upward, parents lawyer up, suppliers raise prices, and councils delay to stay solvent.
Fixing this requires more than just adding or cutting funds—it demands redesigning incentives so that early support is rewarded, collaboration is cheaper than conflict, and quality—not bureaucracy—drives outcomes.
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