There are "significant areas of weakness" in Newham's provision for children and young people with special educational needs and disabilities (SEND), inspectors found.
Regulatory bodies Ofsted and the Care Quality Commission carried out a joint inspection last December.
Inspectors found that "there is a great deal of dissatisfaction among parents and carers".
"During the inspection, parents raised concerns about how well the area meets the needs of children and young people with SEND," they said in a report.
"Procedures to involve parents, carers and young people in shaping policy and practice or in designing services are not well developed."
A Newham Council spokesperson admitted services "have not been operating the way they should be".
They added: "The council and partners are doing all they can to rectify this, including seeking additional investment for SEND services and provision.
"The council fully recognises and understands the pain and frustration that our parents feel."
Inspectors found that implementing reforms from the 2014 Children and Families Act has been too slow and have not been "sufficiently" prioritised.
The report said the area's systems do not support information sharing between services "in a timely way" and that waiting times for children and young people to see some therapists "are too long".
Inspectors added that procedures are "weak" for those moving to adult services.
"There are too few opportunities for children and young people with complex needs to prepare for adulthood, for example through work experience or apprenticeships."
Daniel Wood claimed to the Recorder that the council had tried to place his autistic son, seven, into a mainstream school rather than his preferred special school.
He added: "The report makes us so sad that obviously so many families are struggling in the same way.
"The Newham SEND partnership does not put the children first. It should be broken up and rebuilt with transparency and scrutiny."
The council's spokesperson said: "As a local authority it would not be appropriate for us to discuss the individual circumstances of a family and case but we are aware of the concerns raised by the family and we have been actively working with the family to address these issues."
Inspectors did acknowledge there is "drive and enthusiasm" across the borough to tackle weaknesses.
"Area leaders demonstrate a renewed commitment to providing the best for children and young people with SEND.
"Leaders’ self-evaluation is accurate; they know what needs to improve.
"Parents and carers, who have lost faith in the system, are keen to be part of the improvement programme."
There were some strengths found by inspectors, including praise for schools which "identify emerging needs swiftly and put programmes and resources in place to meet the needs of children and young people".
Inspectors also found specialist settings give high-quality provision.
"Leaders in these settings are creative in compensating for the weaknesses identified in the area partnership.
"Parents and carers feel well supported and young people speak positively about what they are doing and achieving."
They also found that most SEND children in the borough "achieve well".
"Outcomes information over time demonstrates that children and young people achieve well in primary schools. They are well prepared for secondary school.
"Outcomes in the early years are strong. Services work together and intervene at an early stage so that no time is wasted in improving children’s outcomes."
Inspectors have sent their findings to the council and NHS North East London Clinical Commissioning Group (CCG) and requested them to provide a written statement of action on how they will address some of the "significant areas of weakness" found.
The council spokesperson said: "During the recent inspection, the service produced a self-evaluation with partners which provided an open and honest appraisal of local area services.
"It outlined our areas of weakness and strength, alongside the improvements we are making to ensure our services deliver the high quality services that our children and families deserve.
"We are absolutely determined to build a truly inclusive borough, where children and young people with special educational needs and disabilities are enabled to thrive in education and in our wider community and supported to develop the skills they need to live a fulfilling adult life.”
Siobhan Harper, director of transition at NHS North East London CCG, said it accepted the report’s findings.
"We recognise there is still significant work to do to support our children, young people and families with special educational needs and disabilities.
“Along with our local partners in health, social care and education, we are committed to addressing the priority areas raised by inspectors and improving the quality and delivery of our SEND provision for young people and their families in Newham.”
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