The ‘black hole’ in Britain no one is talking about

Rachel Reeves has spent the best part of the past month talking ominously of the ‘black hole’ in the nation’s finances. By this dramatic metaphor, she means the extra money the Treasury needs to raise – put at somewhere between £20 billion and £30 billion – if it’s to bridge the gap between projected state expenditure and tax revenues. But if it is the nation’s finances that she is worried about, there is one threat in particular that Reeves – and much of the political and media class in general – has inexplicably ignored. It is the looming bankruptcy of half of England’s local councils.

The figures involved are eyewatering. It is estimated that, thanks to spiralling levels of borrowing, local councils are sitting on a debt pile totalling £122 billion. Little wonder the UK’s Public Accounts Committee declared last year that debt levels had become ‘unsustainable’.

One of the main problems confronting all councils is that, since 2014, they have been required to foot the bill for pupils with special educational needs (SEND) certificates and those in possession of educational, health and care plans (ECHPS). As a consequence of the well-documented explosion in children now categorised as suffering from mental-health conditions and / or physical disabilities, these costs have become unmanageable. According to the latest figures, SEND-related council debts are expected to be £17.8 billion by the end of Labour’s first term in 2029.

This figure should be getting plenty of attention. It is only slightly smaller than the ‘black hole’ that the chancellor has been bleating about ad nauseam in recent weeks. Yet politicians and media alike are turning a blind eye to what is a huge and growing problem.

There are now 1.7million pupils who receive SEND support – or one in five English pupils – while a further 600,000 receive ECHPs, the majority of whom are aged five and six. As a result, at least 15 councils in England have SEND deficits in excess of £100million. At Hampshire County Council, it is a massive £300million.

What’s more, a lot of this outlay is not even going on education, but on transport. Under the ECHP system, councils are required to fund the ferrying of nearly 500,000 pupils to and from school. Kent County Council spent £70million on taxis for pupils alone.

This is the price of over-diagnosing mental-health conditions and of medicalising everyday emotions and feelings. Needless to say, children with serious disabilities and disorders deserve all the support they can get. And it’s true that dyslexia, anxiety and autism can be serious conditions. But too often today, mental-health and neurodevelopmental conditions have become such broad diagnostic categories that they have become nearly meaningless.

Indeed, autism diagnoses in general increased by 787 per cent between 2000 and 2018 – unsurprisingly, 150,000 pupils claim ECHPs because of autism. Seventy-thousand pupils claim them on mental-health grounds. Tellingly, just four per cent of pupils are registered as having a ‘severe disability’.

Westminster has done all it can to ignore this problem. Its most inventive means has been through what is known as a ‘statutory override’, which has allowed councils to exclude SEND-related debts from their balance sheets until 2028. But, at some point, these debts will land with an almighty thud on the chancellor’s desk.

That this crisis of council finances has been ignored at Westminster is hardly a surprise. Few MPs get into politics to talk about local-government debts and deficits.

But there’s another reason for the reticence of parliamentarians, particularly in Labour ranks, to tackle this critical issue. It is that reforming this broken system remains taboo. In July, as soon as education secretary Bridget Phillipson announced her intention to reform the SEND system, a cascade of leaks characterising her as cruel and inhumane appeared in the press. The government abandoned its plans and hasn’t touched the issue since.

It is an indictment of the British media’s obsession with Westminster – and indeed Westminster’s obsession with itself – that this scandal has passed, like a ship in the night, from the news rounds. At some point, however, politicians are going to have to confront local-council debt bombs.

Indeed, it’s worth remembering that in England’s second city, Birmingham City Council, the biggest council in Europe, is stone cold broke. It cannot even afford to collect the rubbish from its streets.

Councils are hardly blameless when it comes to the pitiful state of their finances. Along with universities, they are the last, impregnable strongholds of wokery. Many continue to blow an inordinate amount of money on diversity, equality and inclusion roles. And, notoriously, local government employees love a four-day work week as much as councillors love granting themselves a generous payrise.

But their problems are Westminster’s, too. Rachel Reeves needs to level with the public about the threat debt-laden councils continue to pose to the country. The situation is too serious to be ignored any longer.

Hugo Timms is an editorial assistant at spiked.