PARLIAMENTARY DEBATE
Education Funding: Distribution - 28 January 2026 (Commons/Commons Chamber)

I am grateful for the opportunity to raise the issue of the distribution of education funding, because it goes to the heart of what kind of education system we want. As Liberal Democrats, we want every child to be provided with the opportunity to succeed and reach their full potential. However, I am sure that the Government and MPs from across the Chamber would agree that the current system is not working as well as it should.

Now is the time to tackle the historical unfair distribution of education funding. Every child should have access to the same resources and opportunities, regardless of where they live or their level of need. That unfairness in funding across local authority areas shapes what local schools can offer and how quickly children receive support, and ultimately affects whether families experience education as a source of opportunity or a source of constant struggle. That is wrong.

The national funding formula and the high needs block of the dedicated schools grant were intended to bring fairness and transparency to school funding, but historical proxy factors remain embedded within them. Those factors lock in funding patterns from decades ago, protecting some areas—regardless of how they have changed—while capping others, even as pupil numbers rise and needs become more complex.

I commend the hon. Lady on securing this debate. She is absolutely right to bring this incredibly important issue to the House. It does not matter where we are in the United Kingdom of Great Britain and Northern Ireland, the problems are the same. Over the past couple of years as an elected representative, I have seen a rise in the number of people with special needs requirements, while schools are deteriorating and need work done. These problems seem to be a burden upon education authorities. Does she agree that now is perhaps the time for the Minister and the Government to review how they allocate their funding? By doing so, it could bring about something positive for all schools.

I agree with the hon. Member. It is exactly why we need this debate at the national level. I recognise the work undertaken by the f40 fairer funding campaign, which has provided comparative historical data for the whole country, exposing the huge variations in funding allocations per pupil by local authority. Nowhere is that unfair disparity more clear than in my constituency. Cambridgeshire remains in the bottom quartile nationally for the dedicated schools grant and for high needs block funding per pupil. We rank 133rd out of 151 local authorities in 2025-26. That ranking has been the same for more than a decade, despite the unprecedented growth in Cambridgeshire. The consequences are stark.

If Cambridgeshire schools were funded to the same level as Lincolnshire—a shire county funded close to the national median—they would receive an additional £23.8 million every single year. That equates to roughly £118,000 a year for a typical primary school—think of that. Equally, if Cambridgeshire were funded to the same level as neighbouring Peterborough, schools would receive around £33 million more annually. That is the scale of the gap we are talking about, and it is impossible to justify. This chronic underfunding interacts directly with the crisis in special educational needs and disabilities provision.

My hon. Friend is raising incredibly important points on the distribution of funding, but does she agree that the distribution of funding during life stage is also important? [Interruption.] According to the Early Intervention Foundation, the NHS is spending £3.7 billion a year on the cost of late intervention. In theory, the Government could spend an extra £3.7 billion on early intervention on SEND at no extra net cost to the Government.

My hon. Friend makes a hugely important point, and we have just heard agreement from across the Chamber about the importance of both the geographic distribution of funding and to which age groups it is distributed.

The underfunding interacts directly with the crisis in special educational needs and disabilities provision. Funding has been historically low in our county, and it cannot meet the rising demand. While there has been a 72% increase in high needs block funding since 2017, the demand for education, health and care plans has risen by 91% in Cambridgeshire over that same period.

I got some data this week that told me that our local authorities are spending £60,000 a child extra on independent special schools versus maintained special schools. In the south-west of England, only one third of children can go to state maintained schools. Does my hon. Friend agree that as schools are having that money taken away from them to support the councils, the problem is just getting worse?

I could not have put it better myself. That issue is symptomatic of and a causal factor in the problems. We are seeing the gap between funding and spend widening year after year. In my area, that is compounded by rapid population growth. Cambridgeshire and Peterborough are forecast to grow by a further nearly 17% between 2023 and 2041. Schools are expanding quickly to meet demand, yet funding lags behind reality. Growth funding is limited and tightly constrained. Section 106 funding supports buildings, not staffing or ongoing SEND provision. While Cambridgeshire growth is seen as the golden goose for the national economy, local families, schools and councils are being penalised for that growth.

As a vice-chair of the f40 group and as an MP in Cornwall, which has the 13th lowest SEND funding, I understand exactly what the hon. Member is talking about. Does she agree, however, that we now have a welcome focus on SEND, that we have increased funding, and that the schools White Paper and the SEND White Paper, which will be published soon, will provide a good opportunity to look closely at the SEND system and perhaps—although it will be very difficult to address those massive discrepancies in one go—start to look at how SEND funding is used across the country?

I have some key questions for the Minister about exactly that point.

A stark reality keeps county councillors and their finance officers awake at night. Cambridgeshire’s overall dedicated schools grant deficit stood at £62.8 million at the end of 2025. Forecasts show that the high needs block deficit will rise to about £94 million by March 2026, and potentially to £200 million by April 2028. The council is now paying about £3 million a year to service the interest on the debt, which places the county in severe financial risk. I raised this question with Minister McGovern when we had a meeting about the local government financial settlement—

Order. We must not refer to right hon. and hon. Members by name. Although the hon. Member for Birkenhead (Alison McGovern) was the Minister in post, we would still not refer to her by name.

Thank you, Madam Deputy Speaker.

Everyone now needs to know what will happen to the debt in 2028 when the Government centralise the funding, as they have announced that they will. If it is not absorbed or absolved by the Government, Cambridgeshire, like many other councils, could be approaching section 114 bankruptcy territory. That is what is keeping its councillors awake at night.

Is the hon. Lady aware of a device called the statutory override which allows local authorities not to declare a deficit in their accounts although they are still incurring a debt? As for schools funding, Gloucestershire is almost at the bottom of the league. This week we received the terrible news that one of our private schools is closing. It has been in existence for 100 years. When it closes at the end of the summer, 170 staff will lose their jobs and 324 pupils will have to find other schools. Undoubtedly, when these private schools close—and we have heard that Exeter Cathedral School will close part of its function at the end of the summer as well—some of the pupils will have to go into the state system, which will put even further pressure on it. The reason cited by the school was the 20% VAT charge, which is having an unfair effect on children in private schools.

I am sorry to hear what has happened with that school, but I think we need to look, in the round, at what is happening to all schools and all school funding. I appreciate the hon. Gentleman’s mention of the statutory override, and I will come to it later in my speech.

I am grateful to the hon. Member for securing this important debate. Sadly, York falls below Cambridgeshire and Gloucestershire in the tables, and ours is the lowest-funded authority under the new fair funding formula, although we have high levels of deprivation. Does the hon. Member agree that when we are looking at school funding—pupils in York are worth as much as those in Camden—we need to look across the piece? York also receives the lowest amount of health funding, and low funding across the board means that our children are getting even less funding.

That goes to the heart of it. All children, no matter where they live, deserve the right to, and the opportunity of, the best education they can have.

Let me return to the issue of the debt, and the deficit that the council is holding as a result of the statutory override. Independent analysis suggests that by 2028, the national dedicated schools grant deficit could lie somewhere between £5.9 billion and £13 billion.

I congratulate my hon. Friend on securing the debate. Torbay unitary authority is the most deprived local authority in the south-west of England, and also the most deprived local authority that has the joy of having a Liberal Democrat Member of Parliament. However, we are also a member of the f40 group. In 2023, we signed up to a safety valve agreement which effectively snatches SEND placements from children in our systems. Does my hon. Friend agree that we need to see the SEND White Paper rolled out there fast? Childhood is a very short period in one’s life, and children do not have the time to wait.

I completely agree.

What does this mean for our schools? It is no surprise that 37 primary schools across Cambridgeshire are operating in deficit. Schools do not have any headroom left; they cannot absorb further pressures without making damaging choices about staffing, class sizes and support. I have heard from the schools in my constituency, including Linton infant school, Linton Heights junior school, Trumpington Meadows primary school, Fulbourn primary school, Comberton primary school and Barrington primary school. They have all told me that they have more children on their SEND register than their funding will cover. They are spending their core budgets on this provision, because they care, and because they know that they have a statutory duty.

Barrington primary school told me that staff are educating children in an area of rapid housing growth. The school is paying up front while waiting months for the funding to catch up. Schools are paying up front for education, health and care plans, and when the funding arrives, it falls well short of the true cost of full-time support. That makes responsible staffing and financial planning almost impossible, and I place on the record my thanks for the amazing work of all staff across all our schools.

As the chair of the children and young people’s committee at Cambridgeshire county council, Councillor Edna Murphy, has said, it is essential that every child has a good education that addresses their needs and supports their wellbeing. Teachers are working hard, and many children have a good experience, but all schools must be able to support children locally. That requires staff and facilities, which only proper funding can provide.

We cannot lose the support of the families and carers at the forefront of this issue. Alicia and Harry Watson are the parents of Penelope and Flora. Penelope is an autistic 10-year-old with pathological demand avoidance traits, severe anxiety, and complex sensory and eating difficulties, and she has been on the waiting list for an EHCP for over two years. Alicia and Harry are facing the horror that many parents in my constituency have had to face. They are navigating adversarial tribunal processes, exhausting all channels and doing the right things. Alicia says:

“Throughout this process, we have felt completely out of sight and out of mind. Passed between services. Told to wait. Told thresholds were not met. Told funding was not available. Told support was being ‘explored’ while months went by and nothing changed”.

Importantly, Alicia has had to give up her NHS career as a care co-ordinator—work that she loved and was proud to do in the public sector. She did not leave by choice; she says:

“I left because my children needed me to step in where the system would not”.

The system is affecting productivity and economic growth. It is emotionally devastating, inefficient and expensive. That would be avoidable if funding were aligned with need earlier.

As the Government look to unveil SEND reforms through the schools White Paper, we urge them to ensure that sufficient extra funding is in place, and to reform the funding formula. I ask the Minister for clarity and certainty. When will the Government publish the overdue schools White Paper? Do they intend to review and rebalance the proportion of funding that is for the high needs block, so that funding is fairer between different areas? How will fast-growing counties—or unitaries, under the local government reorganisation—such as Cambridgeshire be funded proportionately and fairly, so that schools, councils and communities are not penalised for growth?

Finally, when the statutory override ends in 2028, will the Government take over responsibility, or will they leave local authorities facing bankruptcy and carrying historical SEND debt, which is in no one’s interests, and definitely not in the interests of the children and young people whose education we are all striving to improve.

I thank the hon. Member for South Cambridgeshire (Pippa Heylings) for securing this debate on this important matter. I really appreciate her taking the time to meet me and lay out her concerns in person. We had a very constructive conversation. I echo her thanks to all the brilliant teachers and staff who work so hard in her constituency. I also thank my hon. Friend the Member for Truro and Falmouth (Jayne Kirkham), who came to speak to me about similar issues, the work of the f40 group, and the need to support not just schools, but, more widely, the professionals who wrap around schools in communities around the country.

I want to start where the hon. Member for South Cambridgeshire ended, which is with the stories of families. I have travelled around the country speaking to thousands of parents and young people, and sadly, the experience she set out is all too common: parents’ fight for support, the exhaustion of having to navigate different systems, and parents having to give up their jobs to make a full-time job of trying to get support for their children.

On the point about the terrible fight that families face, the Minister will know that I wrote to the Education Committee to pass on the testimony of 653 families from across 114 local authorities about harmful, unethical or unlawful behaviour by local authorities on SEND. These testimonies have 195 references to suicide. One of them said:

“My child now has ptsd, has lost the full use of their arm, is covered in scars from failed suicide attempts”.

The Education Committee wrote to me saying that these testimonies corroborated its findings about the failures in local authority governance. Does the Minister agree that, on SEND, there can be no case for weakening EHCP children’s rights, and that families’ trust in local authority governance has collapsed?

The stories the hon. Member has collected are unimaginably awful, and I commend him for listening to families and engaging with the Education Committee. We are taking its report very seriously; it is one of the documents informing our approach to reform. Conversations with families around the country are informing it, too. We have been clear that we need more support earlier. He talked about the critical nature of early intervention, and families have told us about that. We need greater partnership and earlier support, but families are also very clear that we need a system that protects their legal entitlement to additional support in education. What we have seen, and the stories we have heard today, show the failure to invest in early intervention.

The hon. Member for South Cambridgeshire talked about the urgent need to bring forward the reforms. We said that we were determined to bring them forward in the first part of this year, and we are working very hard on that. However, we want to ensure that the voices of parents, young people and teachers are at the heart of decision making, and we have taken the time to do the further engagement. The proposals that we will take forward are strengthened by that engagement, and by the contribution of families and Members across the House.

However, we have not been waiting to invest and to take action. We have already invested in Best Start in Life hubs, and in leads on special educational needs and disabilities. We have put £740 million into capital for specialist places. We have announced a further £3 billion of capital for this year, and we will set out how that is to be distributed across the country. Just recently, we announced a further £200 million in support for teacher training, and we will make it mandatory for teachers to have continuous professional development on special educational needs and disabilities.

On the point about distributing funding across the country, does the Minister recognise that, under the current high needs block system, a pupil in Westminster receives £2,800, whereas a pupil in Devon receives less than half that amount? When designing the new system, would she ensure that it is less of a postcode lottery, and that rural areas like mine will not be certain to receive less funding?

We had to move quickly to bring extra funding into the system. Hon. Members will know that we have put an extra £1 billion into the high needs block, and we used the funding formula that was available. However, we will review that, to see whether it is in line with our reforms. We want to ensure that people get good-quality, consistent support, wherever they are in the country.

Despite the dire situation that we inherited, the Government have prioritised education spending. We have invested £1.7 billion in additional education funding in 2026-27. That is critical to support schools to give young people a positive mainstream education, but we recognise that we need to continue to work to make sure that we meet the needs of the future. We will be setting out more in the schools White Paper.

The issue of statutory override and the pressure on councils was mentioned. I am very aware of that, as I previously led a council. We need to recognise both the financial pressure on councils and the need for strong accountability for council performance. The size of the deficits that some councils are accruing may not be manageable with local resources alone, and we are going to bring forward arrangements to assist them as part of the broader SEND reforms. The Government will say more about that as part of the upcoming local government finance settlement in early February. The Government have been clear that SEND pressures will be absorbed within the overall Government departmental expenditure limit budget for 2028-29, such that the Government will not expect local authorities to need to fund SEND costs from general funds. We will set that out further in the future. I really appreciate the strength of feeling across the House and the cross-party working from everyone here.

We have already heard this evening about the difficulty of parents getting EHCPs. Even when they have got them—90% of parents who apply do eventually get them, despite the struggle—their provision is not guaranteed. The Government are spending record amounts on SEND, yet we are still not really solving the problems, so there is clearly something wrong with the system. We are eagerly awaiting the White Paper, but can we be assured that the system itself will be thoroughly examined to see how it can be overhauled?

I can absolutely assure the hon. Member that we are doing that work. We need to look at this issue at every level. We heard about the importance of early intervention. It is also critically important that we have strong partnerships across local authorities, schools and health, and that we look at the provision in every school and every community. The teacher training announcement was so important; our expectation is that every teacher in every school should be a teacher of young people with special educational needs and disabilities. We are also looking at the fabric of our buildings, the accountability systems and the support that is put in place.

A few weeks ago, I raised some of these very excessive charges, although I had a bit of pushback from some residents saying, “My child needs this very expensive school.” Can the Minister confirm whether the Government are looking at companies that are coming in and making profit at the expense of our children? We are talking about children who have very complex needs. For 78 children in one local authority in my constituency, the charge is more than £100,000 each. Thirty of those children are from one school alone.

We have put £3 billion into specialist places to ensure that there is high-quality provision across the system. Independent specialist schools play an important part in the system, but excessive profits should not be made from the care of children. We want the money that is going into the system to go into supporting children.

We also want to ensure that every child has the right to an education within their local community. I talk to too many children who have to travel, sometimes for two hours, to get an education. As I travel around the country to look at the system, I see two things. First, the system is absolutely in crisis; there is failure in every single part. I hear that from every single part of the system and we have heard some examples today. Secondly, there are dedicated people who are trying to make it work, including those mentioned by the hon. Member for South Cambridgeshire. There are special educational needs co-ordinators and local partnerships who go the extra mile. There are schools that are thinking deeply about how to provide an inclusive education. That makes a difference; parents who are having a positive experience tell us that they can finally breathe because the support is in place. There are green shoots of that change—such as partnerships between special schools and mainstream schools—which we can build on.

We take this responsibility for generational change very seriously. My commitment is to work in partnership with everyone who cares about this issue. I appreciate the opportunity to continue these conversations and to continue to talk about the work we are doing. When we bring forward the schools White Paper, there will be a full consultation on the work we are setting out, and we have heard this evening, very powerfully, how important that work is. We cannot continue to fail children with special educational needs and disabilities and their families, and we need to give the right resources to the teachers, teaching assistants and health professionals who are trying to support them every day.

Question put and agreed to.