Dedicated Schools Grant

Rebecca Paul Excerpts

Tuesday 6th May 2025 Westminster Hall

[Rebecca Paul (Reigate) (Con)]

It is a pleasure to serve under your chairmanship, Ms Butler. I draw attention to my entry in the Register of Members’ Financial Interests.

I am pleased to respond to this important and thoughtful debate on behalf of the Opposition. I thank the hon. Member for Tewkesbury (Cameron Thomas) for securing it, and I completely agree with his remarks about the importance of teaching children in the home as well as the school. It is clear from all the contributions we have heard that, across all political divides, we share a desire to see all children, regardless of their location, their background or the complexity of their needs, accessing high-quality education in a setting that supports their potential. That vision depends heavily on fair and sufficient funding for our schools. As we have heard, the dedicated schools grant is at the heart of that.

It would be appropriate, before turning to the concerns raised today, for me to briefly review the last Government’s principal achievements in this space, all of which have a bearing on any debate on the dedicated schools grant. Hon. Members will recall that it was a Conservative Government that took the step of reforming school funding through the introduction of the national funding formula, thereby ending the postcode lottery that, for too long, left similar schools receiving vastly different allocations. The national funding formula delivered greater transparency and a demonstrably fairer methodology, and drew a clearer line between the needs of pupils and the funding schools received. However, as the hon. Member for Tewkesbury set out, there are clearly still some disparities. It is right that we look at those and consider what can be done to address them. I look forward to hearing the Minister’s view on that.

It was also a Conservative Government that increased core schools funding to record levels. Between 2010 and 2023, funding per pupil rose in real terms, with particular investment in the high needs block of the dedicated schools grant. In fact, by the final year of the previous Government, we had delivered a £10 billion increase in overall schools funding compared with 2019-20, including a £4 billion increase to the high needs budget, bringing total high needs funding to £10.5 billion in 2023-24. We backed that up with targeted support for pupils with SEND through capital investment focused on expanding special school places and improving facilities across the country.

It was the Conservative party that took decisive action to address poor-quality provision, cracking down on unregistered settings and increasing the powers of local authorities and Ofsted to take action where provision fell short. Our approach was unambiguously vindicated, as England soared up the Programme for International Student Assessment league tables between 2009 and 2022 in maths, English and science. In that period, England went from 21st to seventh for maths, from 19th to ninth for reading, and from 11th to ninth for science. Moreover, in December 2023, children in England were named best in the west for reading, and in December 2024 they were ranked the best at maths in the western world in the 2023 TIMSS—trends in international mathematics and science study. Regrettably, where England has surged in international education rankings, Labour-led Wales has slumped. While England went from 21st to seventh in maths, Wales went from 29th to 27th. While England went from 19th to ninth for reading, Wales stayed 28th. While England went from 11th to ninth for science, Wales slumped from 21st to 29th.

Ultimately, whether in England or Wales, there will always be more to do, as the hon. Member for Tewkesbury highlighted, but I can say without hesitation that the legacy left by the last Government on school funding and educational outcomes is overwhelmingly positive, based on a relentless focus on sustained investment and principled reform, and a clear commitment to inclusion. It is not just our record; it is the yardstick by which the current Government must be judged.

Our position today is consistent with that record: we support fair funding, we support the principles behind the dedicated schools grant and we believe in the importance of local flexibility and accountability. We support the overarching aims of the SEND and alternative provision improvement plan, and the continuation of investment to support the transition to new national standards, but we also recognise the real pressures that local authorities and schools are facing. While funding has increased, so too has demand, and the current system is struggling to keep up.

The number of pupils with an education, health and care plan has more than doubled in the last decade. Local authorities up and down the country—Conservative, Labour and Liberal Democrat alike—are grappling with high needs deficits, a growing wave of legal challenges and spiralling parental frustration. In my constituency, SEND makes up an ever-growing proportion of casework, and I hear every week from parents struggling to secure the provision that their child so desperately needs. It is little wonder that the Public Accounts Committee recently found that the current system risks creating a “lost generation” of children without intervention from central Government.

The National Audit Office was equally blunt in its 2024 report on SEND provision, which made it clear that, without systemic reform, there will be systemic collapse. The crux of the matter is that, as of January 2024, approximately 1.9 million children and young people in England were identified has having special educational needs, with 1.7 million attending school. Despite the 58% real-terms increase over the last decade in high needs funding, which reached £10.7 billion in 2024-25, the system is not delivering improved outcomes for those children and young people.

The financial strain that is placing local authorities under is deeply alarming. The NAO estimates that, by March 2026, 43% of local authorities will have deficits exceeding or close to their reserves, leading to a cumulative deficit between £4.3 billion and £4.9 billion. The situation is exacerbated by the impending end of accounting arrangements that currently prevent those deficits from impacting local authority reserves. Without a clear plan to manage the deficits, many councils risk issuing section 114 notices, effectively declaring bankruptcy.

Demand for education, health and care plans has surged by 140% since 2015: the number of children with one reached 576,000 in 2024. That increase, coupled with long waiting times—only 50% of EHCPs were issued within the statutory 20-week target in 2023—has eroded confidence among families and children in the system’s ability to meet statutory and quality expectations. Sadly, at the very moment that clarity and support were most needed, the Education Secretary introduced the Children’s Wellbeing and Schools Bill, which would do nothing less than destroy standards in English schools.

No less serious are the broken promises on compensation for national insurance contributions, which have left schools in an impossible funding situation. It is reported that some schools face funding gaps of up to 35% for those additional NIC costs. That shortfall will only exacerbate existing financial pressures, forcing schools to divert funds from essential services, potentially leading to the loss of valued staff, reduced capacity to accommodate pupils with special needs and a generally lower standard of education provision.

In summary, we are at a point where the Government are asking councils to maintain high-quality provision even as they manage large accumulated deficits, some exceeding £100 million, without knowing how or when those will be resolved. Schools have been asked to go further and faster on inclusion without the confidence that adequate support services will be in place to back them up. At the same time, parents are being asked to trust a system that all too often feels both overwhelming and overwhelmed.

I want to put a number of questions to the Minister that reflect the concerns raised by Members, local authorities and professionals across the education sector. First, the Government have confirmed that they will continue funding local authorities through the dedicated schools grant for the foreseeable future, but what is the long-term plan for managing the high needs deficits that many councils have accrued? The safety valve programme and the delivering better value programme provide some support, but they are not available to every authority and they do not provide a long-term solution. Will the Minister confirm whether the dedicated schools grant will remain ringfenced beyond 2025? Will she guarantee that local authorities will not be forced to divert core council budgets to prop up SEND provision at the expense of other vital services?

Secondly, on transparency and accountability, colleagues have spoken of the challenges that their local schools face in not just securing adequate funding but navigating a system that is complex, fragmented and adversarial. Parents are turning to tribunals in record numbers, while local authorities are caught between an ever-growing web of statutory duties and finite budgets with which to deliver them. What steps are the Government taking to reduce the number of SEND tribunals, and what support will be offered to schools to manage rising demand?

Finally, I want to address the issue of place planning and capacity. One of the most frequent complaints we hear from local authorities is about the mismatch between need and availability, particularly in relation to specialist settings. This is not just about funding; it is about the ability to plan, build and adapt provision to changing demographics and trends. Will the Minister set out what work is being done to support local authorities in expanding specialist provision where it is most needed? How will the Department ensure that capital investment keeps pace with rising demand? What role does she see for the dedicated schools grant in ensuring that sufficient places are available for all?

I will end my long list of questions by thanking the hon. Member for Tewkesbury for securing today’s debate. The dedicated schools grant is a critical part of how we deliver education in this country, but if it is to work as intended, particularly in relation to SEND, it must be fair, transparent and sustainable. I look forward to hearing from the Minister how the Government will make it so.