Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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The Minister for School Standards (Catherine McKinnell)
It is a pleasure to serve under you in the Chair, Ms Butler. I congratulate the hon. Member for Tewkesbury (Cameron Thomas) on securing this debate on the dedicated schools grant, and on the important speech that he gave on such an important subject. Getting this right is a key part of achieving the Labour Government’s aim of breaking down the barriers to opportunity for every child and making sure that the link between background and success is truly broken. That is why we are putting education back at the centre of national life again, and why we have prioritised education funding by increasing the overall core schools budget by £3.2 billion in 2025-26, taking the overall core schools budget to £64.8 billion this year.
Like many Members, I regularly visit schools in my constituency. I know that individual schools face different challenges when it comes to their budgets. The unfunded spending commitments that this Government inherited mean that we have to take tough decisions to restore the public finances, but I am proud that against that backdrop we are putting the money where our mouth is and committing more funding to enable every child to achieve and thrive. The Department for Education will continue to support teachers and school leaders to deliver on that as much as we can. We are ensuring that schools are supported to ensure that they spend their money as efficiently as they can while delivering the best possible life chances to as many children as they can. That means supporting them with best practice for budgeting and financial planning, support and mentoring for school business professionals, and giving hands-on support through school resource management advisers who provide independent and tailored advice to schools on how they can best maximise every pound that they spend. More widely, the national funding formula distributes funding for mainstream schools, as we have discussed already, via the dedicated schools grant. It is based on pupils’ needs and characteristics, so that we can direct the funding to where it is needed.
In 2025-26, £5.1 billion of the school national funding formula has been allocated through deprivation factors, with £8.6 billion allocated for additional needs overall. That is 17.8% of total core funding through the formula, so £1 in every £5 goes on those factors, which helps schools in their vital work to close attainment gaps. I have listened very carefully to the debate, but I must reiterate that the purpose of the national funding formula—I think hon. Members appreciate this—is not to give every pupil the same level of funding per pupil. It is right that pupils who need additional investment attract the additional funding that helps schools respond to and meet their needs. That means that schools in more expensive areas, such as London, attract higher funding per pupil to reflect the higher costs of being at school in London, because of the higher costs that are faced.
However, I recognise that schools have historically struggled with chaos and short-termism in school funding. When we came into government, because of the timing of the general election, in 2025-26 we wanted to give schools certainty about their funding and to minimise disruption for them. Consequently, we prioritised keeping the same funding formula, so that schools had certainty about it, and we also prioritised the speed of allocating that funding over making any changes to the national funding formula that might have been made—but I can confirm that for 2026-27 we are reviewing the national funding formula. I have listened very carefully to what has been said today, because we recognise the importance of establishing a fair funding system that directs funding to where it is most needed.
Richard Foord
After the Government conduct that review of the national funding formula in 2026-27, will the Minister set out what additional funding she expects to have to put into the formula that urban councils such as Westminster might attract to cover their costs?
Catherine McKinnell
I think the hon. Gentleman will appreciate that I cannot get into the detail of a particular local authority area, or indeed a particular aspect of the funding. He will also appreciate that the national funding formula is fairly complex and obviously any changes to it will be very carefully considered, so that we make sure that it is allocated fairly. Nevertheless, I appreciate the issues that various hon. Members have raised today about the different challenges faced by different parts of the country, different demographics and different geographies. Obviously, all those factors will need to be taken into consideration.
Members have also touched on the issue of pay. In its written evidence to the review body, the Department proposed a 2025 pay award for teachers of 2.8%. We were clear that schools will be expected to fund that award from the overall funds they will receive next year, including the additional £2.3 billion provided in the autumn Budget. The schools’ costs technical note, which was published in March, forecast a £400 million headroom in school budgets nationally in this financial year before staff pay awards. As I said at the beginning, I recognise that individual schools will have to balance funding and costs differently, which will matter in how any staff pay award might affect their budget. We will continue to support schools as they navigate these decisions, which are in line with the asks of the rest of the public sector, too.
Tom Gordon
I recently met a number of schools in my constituency; part of the problem that they have in balancing the books is the ongoing lack of reasonable amounts of maintenance funding. Last year I met the Under-Secretary of State for Education, the hon. Member for Portsmouth South (Stephen Morgan), who is the Minister with responsibility for early years, to discuss this issue. Will that funding also be considered when we talk about funding allocation, because in places such as Harrogate, where we have schools that are hundreds of years old, the cost of maintaining those schools far outstrips the cost of maintaining new builds in urban areas?
Catherine McKinnell
I appreciate the challenge that the hon. Gentleman faces. I also appreciate that some of these capital challenges, which are obviously revenue challenges as well for some schools, are a big challenge. We have seen chronic under-investment in our school estate over many years. However, my hon. Friend the Member for Hexham (Joe Morris) and his constituents have sadly experienced that a school built only eight years ago also appears to be crumbling now. We have a significant backlog of repairs and maintenance, and support that has to be given to schools to get them up to a standard whereby they can deliver the education that we know children deserve. Obviously, we will continue to look at these issues as we navigate a difficult financial situation. We are acutely aware of the challenges that many schools face in maintaining their estate.
Fundamentally, each of our decisions is based on the determination to build a firm foundation upon which to rebuild our public services; some of that is about what we deliver and some of it is about the infrastructure. That is because we are determined that all children and young people with special educational needs and disabilities also receive the right support, so that they can succeed in their education and as they move into adult life. High needs funding will increase by £1 billion in 2025-26, which will bring the total to over £12 billion. Of that total, Gloucestershire county council is being allocated over £105 million through the high needs funding block of the dedicated schools grant, calculated using the high needs national funding formula, which is an increase of over £8 million. The high needs allocation is an 8.3% increase per head in the two to 18-year-old population compared with 2024-25. That funding is to support the ongoing costs of special educational needs and disability provision.
To be clear, we do not expect local authorities to use that increase in high needs funding to pay down historical deficits. The structure of the high needs funding formula is largely unchanged. As I said, we need to take time to consider what changes might be necessary in future years to ensure that the system is fair and directs funding to where it is needed, and supports any reforms that we want to bring forward in relation to special educational needs and disabilities.
The Government recognise the strain that the rising cost of special educational needs and disabilities provision is putting on local government, and particularly the impact on councils’ finances. The statutory override is a temporary accounting measure that separates out local authorities’ dedicated schools grant deficits from their wider financial position to help them manage their deficits, and we are working with the sector to find a way forward. We will set out plans for reforming the SEND system in more detail later this year, which will include supporting local authorities to deal with historical and accruing deficits as part of any period of transition from the current SEND system to any new system. That will also inform any decision to remove the statutory override.
Tom Gordon
I thank the Minister for being generous with her time. I want to press her on her point about working with local authorities. Given that some councils now under Reform control seem to be getting their instructions by diktat from their leader, the hon. Member for Clacton (Nigel Farage), is she disappointed, like I am, that no Member of the Reform party is present for this important debate?
Catherine McKinnell
The hon. Gentleman makes his point well.
As a Government, we are determined that local authorities will be able to deliver those high-quality services for children and young people with special educational needs and disabilities, but in a financially sustainable way. Those two elements go hand in hand to create a stronger and more prosperous future for children and families. Many hon. Members have spoken about their constituents’ experiences, and we recognise that too many families and children are not experiencing the quality of SEND services and provision that they should expect, and that the rising cost of SEND provision is putting a significant strain on both local authority and school finances.
Sarah Dyke
The Minister describes the additional funding but, as I have explained, many parents and children are suffering with severe mental health issues; it is heartbreaking to see. The Liberal Democrats want to provide a dedicated mental health professional in every school, so that every child and parent has somebody to turn to when they need it. What steps are the Government putting in place to support parents and children who are facing mental health challenges?
Catherine McKinnell
The hon. Lady identifies an important issue. Yes, we have a big challenge in relation to special educational needs and disabilities, but we also face much wider challenges relating to young people’s mental health right across our school system. The Government are committed to ensuring that we have mental health professionals in every school and community so that children and families can get that support, whether it be within a school setting or outside if that is where they want to access it.
Hon. Members will appreciate that the spending review is ongoing. It is due to conclude in June, but our objective is to ensure that local authorities, schools and colleges can deliver high-quality services for children and young people with SEND. We will set out in more detail how local authorities will deal with their historical deficits as part of that consideration.
I again thank the hon. Member for Tewkesbury for bringing this matter forward, and all those who contributed to what has been a very thoughtful debate. I think there is a large amount of consensus on what we want to achieve for children and young people: getting the best outcomes from our dedicated schools grant. The Government have made clear our commitment to addressing the challenges as part of supporting children and young people to achieve and thrive. I am determined that progress will be made.
I want to give my final word of thanks to all those who work in our school system in the interests of our children and young people, in Gloucestershire and across the country. Indeed, I realise I meant to come back to my hon. Friend the Member for Hexham to particularly commend the staff at Prudhoe community high school, who have been working incredibly hard to minimise the impact on the children and young people who are taking their GCSEs, A-levels, BTECs, T-levels and all the assessments going on this summer. We know that school leaders and teachers are working tirelessly, regardless of any debate we have in this place about school funding or otherwise, to deliver the best outcomes for the children in their area. They should know that they have a Government who are on their side, who will support them to deliver that, despite the very challenging economic circumstances that we have inherited. We need to deliver the very best for all our children and young people. We have pledged to review the funding system to help to support and achieve that.