The spending watchdog has defended its “reasonable” decision to forecast the impact of a £6 billion SEND funding shortfall on the schools budget following a backlash from ministers.
The government announced at the budget last week that from 2028, SEND cost pressures will sit on its books, rather than those of councils.
Analysis by the Office for Budgetary Responsibility released alongside the budget said the decision could cost the government £6.3 billion in 2028-29, with “no savings” currently identified to offset it.
But a row emerged over its analysis on the potential impact. The organisation originally reported that funding the £6.3 billion entirely from the schools budget would see mainstream per-pupil funding cut by 1.7 per cent.
It later issued a correction – revising the figure up to 4.9 per cent. However, as the Institute for Fiscal Studies has pointed out, £6.3 billion actually represents around 11 per cent of the proposed mainstream schools budget for 2028-29.
The Department for Education said the OBR’s projections for the schools budget were “fundamentally wrong”, and said its analysis did not “account for the detail” of its planned SEND reforms – which are delayed and due to be announced in January.
The DfE also said funding would not come from the core schools budget and it will be absorbed by the overall government budget.
‘The government has not announced its plan’
At a meeting of the Parliamentary Treasury committee today, Chris Coghlan, Liberal Democrat MP for Dorking and Horley, asked whether OBR officials agreed with the DfE.
Tom Josephs, a member of the OBR committee, said they had to base their forecasts on announced government policy.
“The government has not announced a plan for reforming SEND at the current time. Their intention is to do that I understand in the new year, but there were no details that would’ve allowed us to score anything in this report.
“They did not set out how [the £6 billion] would be funded and that is in a year when there are other significant pressures on the existing spending review envelope, including from inflation, but also other areas of spending pressure.
“And it’s also a year where the government has actually decided to try and reduce overall spending a bit compared to the past.”
Josephs added that the OBR had a legal duty to set out risks to the fiscal forecast.
“The government had not told us in that year how they were going to fund this, where any offsetting savings came from, and therefore in order to illustrate the scale of risk and pressure this created we illustrated the implications for mainstream school spending if – and there is an if there – it was all in the DfE budget.”
He added that the government “just told us it would be absorbed within overall government spending, it didn’t tell us how it would fund it. So what we did was provide an illustration of the risk and pressures.
“We have to illustrate risks so we chose to do it, which I think is reasonable, by illustrating the impact that would have on the schools budget.”
Education secretary Bridget Phillipson told the Commons yesterday that the shortfall was a “matter for the next spending review”, due to be held in 2027.
Government thought deficits would be ‘short-term change hump’
Today in Parliament, Phillipson and DfE permanent secretary Susan Acland-Hood were also questioned about councils’ growing deficits. These are expected to reach £14 billion by 2028, and the government has not said if it will wipe them.
Acland-Hood told MPs that following 2014 reforms to the SEND system, “we started to see local authorities reporting deficits in the mid 2010s and by the end of 2018-19, about half of local authorities had an overspend on their DSG.
But “because the 2014 SEND reforms were still bedding in, and we were still going through a process of change at the time, I think it was felt that this might be a short term change hump, essentially”.
This prompted the introduction of the override and programmes with councils to try to bring deficits down, she said.
But “the short version of what happened is that, although we are really confident, without those programmes, the deficits would have been even worse, they weren’t sufficient to stop the deficits growing.
“And I think it doesn’t look like it was a short term change hump. It looks like it was a more sustained challenge.”
OBR analysis ‘helpful’ says DfE top boss
Acland-Hood added it was “helpful actually that the OBR have recognised this and put it in the conversation.
“Because essentially, there was a piece of the pressure that wasn’t clear and visible, and there was a risk that people were therefore trying to design solutions that didn’t properly account for it.
“And I think although it feels challenging to say, it will go on the government’s balance sheet, what that does is it recognises that it’s a problem that we need to solve together between central and local government. We can’t just keep expecting local government to do this on all on their own.”
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