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.
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.