Devon’s growing overspend on supporting children with special needs is “probably the highest” in the country as a percentage of income.

County council leader John Hart (Conservative) made the admission as local authorities await to see if any further help will be provided in chancellor Jeremy Hunt’s budget on Wednesday [15 March].

Councils across the country have been told by the government to put their overspends on supporting children with special educational needs and disabilities (SEND) into separate ring-fenced accounts while it develops a new funding model – an arrangement recently extended to 2026.

Since 2020, Devon’s total running overspend on the service – effectively debt – has risen to around £127 million, a figure projected to increase to £153 million by March 2024.

The total does not include Plymouth and Torbay, which are responsible for their own children’s services.

Negotiations between Devon and the government are ongoing about what will happen to the debt and who will be responsible for paying it off. The amount is now more than the county has in reserves.

“There was a flaw in the system when it first started,” Cllr Hart told the BBC’s Politics South West. “The government almost gave ability for people to get extra help for their children, at the expense of local government not being funded.”

He added: “We’re spending real money, but it doesn’t show on the balance sheet … If I were in real life and I produced a balance sheet at the end of my financial year that had a hole in it that it’s not showing, probably the Inland Revenue would do me for fraud.

“But we have been told, deliberately, to leave this off our balance sheets.

“We don’t have the largest overspend. There are one or two other larger local authorities who’ve got even bigger sums than we have, but as a percentage of our income we are probably the highest.”

Cllr Hart then warned: “We can only carry on for so long without actually needing to find extra money coming in to pay bills.”

The county council is putting an extra 18.4 per cent into children’s services from next month, but it’s still not enough to stop the growing SEND overspend. It projects an extra £26 million will be added to the total during 2023/24.

It continues to await the outcome of a ‘safety valve intervention’ programme with the Department for Education, which could involve money to help plug the financial black hole along with reforms to the system.

Updating colleagues last week, Devon’s cabinet member for children’s services Andrew Leadbetter (Conservative) read out a recent letter from government education minister Claire Coutinho, who said Devon’s safety valve case “remains open”.

Cllr Leadbetter then added: “I am confident we will sort this out.”