Has Bridget Phillipson’s schools budget been trashed to pay for special needs?

One bomb in the Budget minefield that took a while to explode was Rachel Reeves’s creative accounting on schools spending. The Office for Budget Responsibility (OBR) said that there is no provision for special educational needs and disabilities (SEND) from 2028 onwards in the government’s plans.

It estimates this at £6bn a year, and says that if the sum comes out of the department’s budget, “this would imply a 4.9 per cent real fall in mainstream school spending per pupil rather than the 0.5 per cent real increase planned by government”.

Bridget Phillipson, the education secretary, has sent a message to worried Labour MPs to say that these figures are “misleading” and to accuse the Conservatives, who had seized on the OBR statement, of “scaremongering”.

The Budget document said that “the government would not expect local authorities to need to fund future special educational needs costs” from 2028, and that the costs would be “managed” within “overall” government spending. It says that Phillipson will set out plans “early in the new year” to reform SEND provision.

But the OBR says that this doesn’t say who will be picking up the rapidly rising bill, and so it has to assume that it will come out of Phillipson’s own departmental budget.

Phillipson insisted in interviews on Friday morning that the whole amount would not be coming out of her budget. “What I can be absolutely crystal clear about is that the illustrations in the OBR document about what that theoretically could mean for school budgets is not government policy.”

Asked how much of the money would come out of the core schools budget, she said: “This will be something we’ll have to consider in the next spending review.”

The next spending review is not due until 2027, so until then the OBR has no choice but to assume that the money will come from her department.

The share of children receiving SEND assistance has almost doubled in the past decade, according to the Institute for Fiscal Studies (IFS). This increase has come mostly from the rise in numbers receiving diagnoses of autism and attention deficit hyperactivity disorder (ADHD).

Because local councils in England are required by law to provide SEND support to any young person up to the age of 25 with an education, health and care plan, the cost of such provision has increased and is predicted to go on increasing.

Hence the reform plan, which has already run into opposition, because parents and SEND advocates assume, reasonably enough, that it is all about cutting cost. Labour MPs are sensitive to any suggestion of cuts, and I can confirm, having listened to or read all the maiden speeches of new MPs of all parties, that the difficulties of obtaining SEND support was the single issue that came up most often.

The one thing that Phillipson cannot allow is for core funding per pupil to fall in real terms. The Labour Party knows how important this is because cuts to school funding was a big issue in the 2017 election, when the party under Jeremy Corbyn exceeded expectations by depriving Theresa May of her majority in the Commons.

Hence Phillipson’s refusal to accept the OBR estimate that per-pupil funding will fall by nearly 5 per cent, after adjusting for the effects of inflation.

But so far, she has been left fighting with one arm tied behind her back by Reeves, who has simply left some of her homework unfinished.

In the end, a compromise is likely to be thrashed out, which will involve some savings from “reform”, and some additional funding allocated to the education department – just enough to keep the year-on-year changes in real per-pupil funding above zero.

But until then, this is a rare example of an actual hole in the public finances: there is £6bn a year missing from 2028 onwards and the OBR has done the only thing it could, which is to assume that Phillipson’s department will be paying it.