A two-year survey from the Association of Metropolitan Authorities shows that the increase in the numbers of such children at a time when authorities are cutting support services, such as educational psychologists, has fuelled a rise in exclusions.
Efforts to integrate special needs children date from the 1981 Education Act. The report says integration is breaking down because of cuts in services.
Kath Fry, deputy chair of the association's education committee who led the working party on the report, said: "We are not talking here about children who are being naughty. We are talking about children who are violent, aggressive and out of control."
She cited the case of a six-year-old in Manchester who repeatedly turned over chairs, ran round the class and was out of control both at home and school.
The report says schools are becoming less tolerant of such children, but local authorities say teachers are not to blame for the rise in exclusions.
Graham Lane, the association's chair, said: "Poverty such as we have never seen before in this country is making the job of teachers more difficult."
Twenty-five per cent of primary schools in his borough, Newham in east London, were continually on the move because they were homeless. Several primary schools sent classes out to playtime separately to prevent fighting between children.
The survey also found that increased competition between schools and the publication of league tables meant schools were more likely to exclude pupils.
Last night, members of the association asked Gillian Shephard, Secretary of State for Education, for more resources.
Ms Fry said: "The test of a civilised society is how it treats its weakest members. On that count, Britain today cannot be judged a civilised society because of the very low priority given by government to resourcing provisions for children with special educational needs."
Last September, the Government introduced a new code of practice to ensure children with special needs were assessed more quickly. The association says it is disingenuous of the Government to suggest this does not involve more money. The first stage of assessment is done by classroom teachers.
nMr Lane said the Teachers' Pay Review Body, due to report shortly, should be sacked if, as rumoured, it recommended a rise of 2.9 per cent. The Government is not expected to fund the rise and local authorities have budgeted for an increase of only 1.5 per cent. He said Mrs Shephard should resign unless she was either prepared to block a rise of more than 2 per cent or to secure funding for it.
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