Dedicated Schools Grant

Tom Gordon Excerpts

Tuesday 6th May 2025 Westminster Hall

[Sarah Dyke (Glastonbury and Somerton) (LD)]

It is a pleasure to speak in this important debate and to serve with you in the Chair, Ms Butler. I congratulate my hon. Friend the Member for Tewkesbury (Cameron Thomas) on securing the debate and on his powerful speech. I alert Members to my position as one of the vice chairs of the f40 group, which represents 43 local authorities with historically low funding for education and campaigns for fairer funding for schools and SEND provision.

Somerset is one of those 43 councils. Its 2025-26 dedicated schools grant allocation is just £8,500 per student, while some councils get nearly £5,000 more than that per pupil. The launch in 2018 of the national funding formula for mainstream schools introduced a minimum per pupil funding level, which was designed to level up funding. However, that has continued to lock in historical funding elements, preventing some local authority areas from receiving more funding. The Liberal Democrats understand the need for regional variation to ensure that schools can operate successfully, but that should not come at the expense of schools elsewhere, which often struggle to make ends meet.

As other Members have stated, the DSG is made up of four blocks, one of which is the high needs block, which supports SEND provision for children in both mainstream and specialist schools. Somerset’s 2025-2026 allocation of high-needs block funding is £1,250 per student—more than £2,000 less than the highest-funded local authority. It has been stressed many times that the SEND system is broken; the variance and unequal DSG funding is a big reason for that. My inbox, like that of many other Members, is full of correspondence from parents who all desperately want the best education for their children, but are concerned and deeply upset that their children’s needs are not being met by their schools.

[Tom Gordon (Harrogate and Knaresborough) (LD)]

My area of Harrogate and Knaresborough is covered by North Yorkshire council, which is part of f40, which my hon. Friend mentioned. On high-needs funding, we are 146th out of 151. That is causing real challenges in that rural setting, with children sometimes having to travel for hours to get to school. Does my hon. Friend share my concerns about those low levels of funding, which are compounded by the cut to the rural services delivery grant that local authorities receive?

[Sarah Dyke]

I will touch on that. Delivering education in a huge rural county has so many pressures and complexities and my hon. Friend is absolutely right to bring that up.

Let me give a couple of examples of children who are suffering and whose educational needs are not being met in my constituency of Glastonbury and Somerton. One of them is Jensen from Ilchester. He is only seven years old, but has been experiencing severe mental health distress while awaiting a long overdue neurodevelopmental assessment. His mother told me that he has lost all enjoyment in life. He misses his education and his friends, and all the while he is being passed between services. Jensen is not alone in that situation.

Many other children in Glastonbury and Somerton face similar challenges: Charlie from Castle Cary, for example. He has an EHCP, but his school is simply not able to meet his needs. His mother said that he has been left for months without his educational needs, as specified in his EHCP, being met. As a result, his behaviour at school and his mental health are declining. The differential in DSG funding means that children like Jensen, Charlie and many others heartbreakingly cannot get the support that they deserve. Families are being left to suffer alone, fighting a system that is just not working for them.

We know that the system is broken. The Isos report released last year found that all actors within the system are behaving rationally—schools, councils and parents—but the system is just not up to scratch. The funding model needs to be reformed to make it more responsive to changes so that individual schools can receive funding based on need. I urge the Minister to consider reviewing the funding formulas for both schools and high needs.

The Liberal Democrats have a plan to invest in our education sector above the rate of inflation so that we can ensure that all schools have the capacity to operate sustainably. We must also give our local authorities the financial support that they need. The previous Conservative Government left schools to crumble and forced councils to do more with less, impacting our children’s education. The persistent budgetary strain does not allow local authorities to create long-term plans for children with SEND, so we would also set up a dedicated national body for SEND to act as a champion for children with complex needs and ensure that they receive tailored support.

Without major reforms and changes to funding, we will continue to see a landscape with uneven funding where children are badly let down and schools cannot provide the support that is needed. I urge the Minister to take action, invest in education, invest in our children and invest in our future.

--- Later in debate ---

[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.