Special Educational Needs and Disabilities Funding

Ed Davey Excerpts

Tuesday 12th February 2019 Westminster Hall

[Sir Vince Cable]

My hon. Friend is right; that is one of many anomalies. Many such issues were not properly accounted for and are not being fully funded. I will come to others in a moment.

The consequence of the growing demand is that many local authorities, which are genuinely trying to do their best in most cases, are accumulating large financial deficits. The Local Government Association, which has done lots of research on it, believes that there will be a gap of about £1.6 billion at the end of the next financial year. That is unaccounted for at present.

Some London authorities—I speak as a London MP, but I know that other parts of the country have similar problems—have a shortfall from the high needs block of about 7%. For about six boroughs in London, it is more than 10%. For my borough, Richmond, it is 20%, and I think three others are in an even worse position, including the borough of my right hon. Friend the Member for Kingston and Surbiton (Sir Edward Davey). For his borough, I think it is 40%.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

My right hon. Friend is right that the situation for Kingston is the worst of any London borough. We are spending more than 40% above our allocation, with a potential knock-on to the budgets of schools across the board, and potentially even the solvency of the local authority. Given how serious that is, does he agree that Ministers need to take action now and that we need to talk to the Department of Health and Social Care? The health service is often not paying for the health part of EHCPs.

[Sir Vince Cable]

My right hon. Friend is absolutely right: those are both key parts of the solution. For example, I have discovered that there are children whose need for wheelchairs—clearly a health requirement—is treated as an educational need. There are many such cases in which the finance sits in silos and is not sensibly dealt with.

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[Sir Edward Davey (Kingston and Surbiton) (LD)]

I will start with my four recommendations to ensure that I get them out in time. This is my first request to the Minister: when the Department looks at the high needs block formula, can it look at the historical element, because there is no justification for the allocations? They have simply come from history. Some of them are clearly unfair and my local authority has certainly been hit. Secondly, can the Minister speak to her education colleagues to ensure that capital funding is provided for a new special school in Kingston when the announcement is made shortly? Thirdly, as I said in my intervention on my right hon. Friend the Member for Twickenham (Sir Vince Cable), can we look at the way the NHS contributes to the cost of EHCPs? I have spoken to many headteachers and Achieving for Children in Kingston and it is clear that the health component is coming out of the education component to deal with things such as physio, testing for diabetes, and members of staff in the classroom dealing with the child’s health needs, not their educational needs. The bills that the NHS is not meeting run into hundreds of millions of pounds across our country.

My fourth recommendation relates to looking at special needs education and health again in a cross-party way. I speak not only from the experience of looking after my constituents and their children, but as the father of a special needs child who has attended two special schools, and who we now educate at home. In my experience of dealing with the schools and with EHCPs and the process, there is a huge amount of waste, which is a scandal when children are not getting the service that they should, such as CAMHS and so on.

I speak as a governor of a local school. I am very impressed by how maintained state schools are properly held to account for their budgets; but some of the voluntary or private schools, which might be very good, are not properly held accountable for the money that they spend. This might be controversial, but in my experience some of them do not provide the quality of care with the money they are given, partly because special needs are extremely difficult to look at. It is much more difficult to get a proper distribution and proper comparisons because special needs are so broad and heterogeneous, and it is difficult to get a proper statistical analysis, unlike with mainstream schools. It is also difficult because Ofsted does not analyse well enough what special needs schools are doing, so I urge the Minister to look at that problem.

In my constituency in the Royal Borough of Kingston we have a crisis in special needs schools. If I could show the Minister the graph of the London boroughs and their overspending on their allocated formulas, she would see that we are a long way to one end—more than 40% above our allocated funding. If we do not bring that overspending under control—it is partly our job to do so, but we need patience and help from the Government—it will call into question the solvency of the council.

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[The Minister for Apprenticeships and Skills (Anne Milton)]

It is a pleasure to serve under your chairmanship, Sir Gary. I congratulate the right hon. Member for Twickenham (Sir Vince Cable) on securing this debate, and I thank him for the constructive tone that he adopted in his opening remarks.

Provision for children with special educational needs and disabilities, and the support available for their parents and families, has been a particular concern for me since I was elected in 2005. Governments of all political persuasions have struggled to get it right.

The right hon. Gentleman spoke about the success of the Children and Families Act 2014, and pointed out some of the issues that have arisen. I was a Minister in the Department of Health when we were doing the early work on it. Much of what was done at the time was the right thing to do, but we must now resolve some of the issues that have arisen from that. Many—but not all—of the issues relate to funding. Many local authorities and schools are having to work very hard to make the best use of the resources available, particularly in supporting those children and their families.

I want to put on the record some of the things that we have done. We have prioritised funding for schools, and increased funding for high needs from £5 billion in 2013 to £6 billion this year—a 20% increase over five years. In December we allocated an additional £250 million funding for high needs, and in the next financial year we will ensure that every local authority will get a share of that additional funding. Across England, funding for high needs will rise to £6.3 billion in 2019-20. We have also announced an additional £100 million of capital funding to create new places and improve facilities for children and young people. That will take our total investment between 2018 and 2021 to £360 million.

We will invest in more of the new special schools that are needed locally. Sixty-five local authorities have applied for funding to build special and alternative provision free schools. We are currently looking carefully at those requests and will go ahead with all bids that meet the criteria and are of good quality, so that local authorities have the specialist provision they need. We are hoping to notify local authorities before Easter. I recognise that although that additional support is welcome, it will not provide a complete answer to the funding pressures that local authorities are reporting to us. We are preparing for the spending review with that in mind.

We have reformed the funding system and have introduced a new formula allocation to make the funding for those with high needs fairer. We introduced the national funding formula after extensive consultation. It marks an historic change to the way that we distribute education funding—one that previous Governments have long avoided. The formula that we use to allocate high needs funding uses a range of factors, including low attainment, deprivation and health factors, to direct funding to where it is most needed.

The formula ensures that the funding changes from year to year and takes account of changes in the overall population of young people and children, which the system it replaced did not. The formula also includes a substantial element of funding based on local authorities’ past spending, to reflect the fact that there are factors driving costs that depend on local circumstances and cannot be linked directly to the population and other characteristics represented in the formula. The formula also includes a funding floor to guarantee an underlying increase in high needs funding from this year to next year, subject to population and pupil or student number changes. Although the national funding formula is a significant improvement in the way that we distribute high needs funding to local authorities, we will keep it under review.

[Sir Edward Davey]

Is the Minister able to tell me, either today or in writing, how the historical spend factor in the formula was set? I understand what history is, but it needs a justification.

[Anne Milton]

I will make sure that the right hon. Gentleman gets a letter on that point.

We want to ensure that the design of the funding system works in mainstream provision. The hon. Member for Westmorland and Lonsdale (Tim Farron) raised the issue of perverse incentives, as did my hon. Friends the Members for Bexhill and Battle (Huw Merriman) and for Cheltenham (Alex Chalk), who has raised this issue with the Secretary of State. There is an expectation that mainstream schools pay for the cost of SEND support—up to £6,000 from their core budget—before accessing additional top-up funding from the local authority. We are very aware that that arrangement is deterring schools from meeting the needs of pupils with special needs.

A number of issues were raised in this debate. My hon. Friend the Member for St Ives (Derek Thomas) talked about the life chances of those young people and referred to proposed changes in Ofsted inspections, which are very important. I am the Minister with responsibility for post-16 further education, and I know what a brilliant job further education colleges do. As the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) said, getting education right early in a child’s life saves money and, in some instances, much heartache further down the line.

I point out to the shadow Minister that discretionary bursaries are available for transport, although I know that that is an issue for some local authorities. I do not recognise all that the shadow Minister said, which is disappointing, bearing in mind the consensual tone of the debate. I think that we all share and acknowledge the problems that families and their children face. There is no one system that works for every child. I remember that when I was elected in 2005, the whole issue of inclusion was much debated. Inclusion is positive, but it is not always the right answer for children or their families.

Home schooling is without doubt the option that some parents choose if their child’s needs are not being met. The hon. Member for Sheffield, Heeley (Louise Haigh) mentioned increase in demand for EHCPs and the issue of transport costs, while the right hon. Member for Kingston and Surbiton (Sir Edward Davey) raised the issue of the NHS not paying for the health part of the EHCP. When I was a junior Minister, bringing health and care together was at the heart of discussions. My right hon. Friend the Member for Witham (Priti Patel) talked about wraparound provision, which is exactly what the changes to the 2014 Act were meant to ensure.

The hon. Member for High Peak (Ruth George) talked about the fight that parents face—as if they do not already have enough to manage. The hon. Member for Sheffield, Heeley talked about navigation of the complex system. It is a complete nightmare for parents who, as I said, already have a lot on their plate. There are right hon. and hon. Members present who are members of the Government—my right hon. Friend the Member for Portsmouth North (Penny Mordaunt) is one—and who have an interest in this subject. If House convention had allowed it, they would have raised particular points, because this issue is shared by many.

My right hon. Friend the Secretary of State for Education—