No, they're right. But I don't think they're saying what you think they're saying.
The LA is not allowed to presume that you want a Special School placement for your child. In fact, they must presume that you want a Mainstream placement.
However, you as the parent can request a special school placement when you are asked to name the school. In that situation, they can amend the proposed statement to reflect the nature of the special school environment (e.g. replace the '25 hours 1:1 at a mainstream school' with statements about the small class size, specialised staff, etc.).
Some LAs do this by sending a 'MS' statement and then changing it once you request SS. Others (mine) do it by writing the statement to imply a SS, then confirming that they had SS in place if you ask. In which case, if you say 'but I want MS' they withdraw it and re-write it for MS.
It's actually very hard to write a statement that will do for both settings, because the needs in one are so different to the needs in another. E.g. my DD's SS is a secure site, so there is less supervision needed at all times, because even if she does bolt, she can't get out. At a MS, she'd need a constant shadow because she could easily escape.