OK so then I would say same question.
If for example the decision was made tomorrow to only support the 3% with the highest needs - what happens to the other 14% - remember 14% of ALL school pupils. 1 in 8.
Do they stay in mainstream school but now they are unsupported so they are causing (even more) disruption to the 83% without (diagnosed) SEN?
Do you send them all home? No more school place for you. What do you do then that maybe 5-10% of the nation's parents are suddenly unable to work? That sounds like a disaster.
Do you pile them into a special school? How much does that cost?
I don't think that there is a magic money tree, but these needs exist and they will not vanish into thin air if they are not supported. They will continue to cost money whether you fund it out of a SEN budget or whether it comes from somewhere else. Yes I do think managing this budget somewhere more central might make sense, rather than leaving it up to LAs. But honestly it probably doesn't matter where the decision is being made.
As long as people have this view of children with SEN as hopeless wastes of oxygen, why is anyone bothering to educate them at all, you'll have people who see SEN funding as a waste of money.
And as long as people see SEN funding as a waste of money there will be this circular argument of "Too many people are claiming SEN status, these people didn't exist in my day, they must have coped then they can cope now".
It's like saying "Too expensive to heat the school! In Victorian times they had a single fireplace and crammed 100 pupils into one classroom. They coped then, they can cope now!" We don't expect pupils to do this, because we have moved on. Even though energy prices are incredibly expensive - it's just seen as an essential cost and the heating is kept on.