The Government is failing pupils with special needs despite the current system costing almost £11 billion a year, Parliament's spending watchdog has warned.
In a damning report, the National Audit Office (NAO) said state support for children with special educational needs and disabilities (SEND) "is not achieving value for money and is unsustainable".
There has been no consistent improvement in attainment for children in England with SEND since 2019, with pupils still behind their peers, the watchdog added.
It comes despite Department for Education (DfE) funding for high-need pupils rising to £10.7 billion this year - up 58 per cent in the last decade.
The NAO said the department would face growing pressure to raise funds further as "demand for SEND provision is forecast to continue increasing", but warned that this would quickly spiral out of control.
More than 100 local authorities overspent their high-needs funding budgets this year, with 43 per cent now expecting to rack up deficits exceeding or close to their reserves by March 2026.
The NAO said this would contribute to a black hole in local authorities' funding for schools of up to £4.6 billion by the same period.
The watchdog called on the Government to "think urgently about how its current investment can be better spent", including through greater collaboration with other services such as the NHS.
Bridget Phillipson, the Education Secretary, admitted the special needs system was in turmoil and said root-and-branch reform would "take time".
"The NAO's report exposes a system that has been neglected to the point of crisis, with children and families with SEND quite simply being failed on every measure," she said.
"I am determined to rebuild families' confidence in a system so many rely on - so, there will be no more sticking plaster politics and short-termism when it comes to the life chances of some of our most vulnerable children."
Around 1.7 million children at school are classified as having high needs, which includes any learning difficulty or disability that calls for tailored provision. This amounts to almost 18 per cent of all pupils in England.
The majority of these receive special support in mainstream schools, but pupils with the most acute needs are eligible for Education Health and Care Plans (EHCP).
The certificates entitle them to a wider range of services including a specialist school or private school place in some cases.
The number of pupils with EHCPs has skyrocketed in the past decade, causing additional financial pressure on the state.
Around 576,000 children in England were in receipt of tailored care plans in 2024 - up 140 per cent since 2014.
Most of the increase in EHCPs over the past five years has been related to autistic spectrum disorders, speech, language and communication needs, and social, emotional and mental health needs, the NAO found.
Ms Phillipson hinted she would refocus the special needs system away from tailored support plans and plug extra money into mainstream schools.
"At the moment far too few [children] are being given that chance in a system that is too skewed towards specialist provision and over-reliant on EHCPs - often only to the benefit of families who have the resources to fight for support," she said.
Gareth Davies, the head of the NAO, said the current system "was still not delivering for children and their families".
"The Government has not yet identified a solution to manage local authority deficits arising from SEND costs, which ongoing savings programmes will not address," he said.
Earlier this week, the County Councils Network (CCN) warned nearly three quarters of England's largest councils could declare bankruptcy by 2027 because of SEND service deficits.
The group has called on the Government to outline its overhaul of the system within the next 18 months.
Kate Foale, the SEND spokesman for the CCN, said: "With councils continuing to accrue spiralling deficits and demand reaching record levels each year, reform is urgent."