If a certain proportion of the children who no longer receive the required specialist services end up in residential care, that will be way more costly to the taxpayer in the long term. It is cheaper to support parents in caring for their kids in a home setting, plus there are fewer social costs associated with that.
In addition, there would likely be significant disruption in classrooms, as teachers struggle to manage with undiagnosed children who are not getting the targeted help they need. This in turn affects the education of children without special education needs as well. For that reason, you would probably have greater trouble recruiting good teachers willing to teach in Reform councils too.