As The Guardian noted yesterday:
Rachel Reeves is under pressure to reassure MPs over the state of the UK's public finances, amid concerns that the rising cost of special educational needs and disabilities (Send) could leave a significant hole in the government's financial buffer.
Meg Hillier, the chair of the all-party House of Commons Treasury committee, said the chancellor should make clear her long-term plans for the £6bn-a-year Send bill as uncertainty grows over how it will be accounted for at the end of the decade.
Reeves, who is due to appear before the committee next month, said in a letterto MPs that she plans to delay a decision until next year.
Let me offer some advice, as an accountant. It's spending that has to be recorded as such. Anything else is technically wrong, deceitful at best, and playing games by pretending that this very real cost to society does not exist and can, somehow, be accounted for in a way to keep the City happy.
What has the City got to do with this? As the Guardian added:
City analysts said financial market investors would be concerned if some or all of the £6bn Send annual cost was deducted from the budget surplus, which the chancellor more than doubled in last November's budget to £22bn to cushion the UK against volatile government bond markets.
To contextualise this, what are being referred to here are some of the absurd terms that the City, the Treasury and our Chancellor use to constrain government action. They are:
- Balanced budgets
- The household analogy
- Fiscal rules
- Fiscal space or headroom
- Austerity
There are glossary links that explain these (two of them written to support this post).
The point about all of these terms is that they refer to economic mythology.
There is no need for the UK government's budget to balance. In fact, for it to do so is almost invariably economically harmful to the well-being of people in this country. That is because our government is not like a household: it creates the money it uses, unlike households, which are necessarily dependent on the money they can earn.
The government can then use this power for social purposes, and denying this is a form of corruption and a conspiracy against those who are prejudiced as a result.
Fiscal rules are works of fiction designed to constrain government activity to appease neoliberal interests within the financial services sector, and are part of the politics of destruction deliberately engineered to create the economics of failure that we are now witnessing all around us.
Fiscal space, or headroom, to which the particular concern is addressed, is simply a nuance within the concept of balance budgets and fiscal rules, referring to the amount of spare capacity that a Chancellor of the Exchequer supposedly has before they reach the constraint of failing to meet their fiscal rules, when in fact, any fiscal rule can be rewritten at any moment by any Chancelllor if they so wish, as evidence from the last 30 years, which is the only period over which they have been in operation, proves.
Austerity is, of course, the imposition of unnecessary cuts upon an economy to meet a fiscal rule that is disguised as economic necessity but it is in fact nothing more than the deliberate imposition of constraint on an economy to harm the well-being of those who are punished as a result, who are almost invariably the most vulnerable in any society, including that in the UK.
Do people who have special educational needs and disabilities fit into that classification of those who might be amongst the most vulnerable people in the UK? Of course they do.
What we know is that perhaps 15% of the population fits into this category, and that for at least some of those in that group, their condition makes it extremely difficult for them to learn in the conventional way used for the majority of people in our society. That is simply because their brains are wired in different ways than the rest of us, meaning that they require a different form of explanation in the course of their education than most other people. If they do not get that they are effectively excluded from education. In that case, their chances of being able to participate in society throughout their lives are seriously impaired to the point that they become a potential lifetime cost in terms of support. However, this is entirely unnecessary because a great many of them will have enormous potential to offer if only they are supplied with the support that they need to release the potential that they have for the benefit of themselves, their families, and society at large.
This, of course, is the reality of what we're talking about. All of the economic matters being referred to are fiction. The corruption being witnessed is the fiction that is being treated as the priority, when the reality is being treated as something over which there might be discretion.
The reality is that people with so-called special educational needs really do have those needs.
The reality is also that neoliberal education, most particularly of the type promoted by Michael Gove a decade or so ago, which requires rote learning of facts without explanation, and which is associated with the requirement that those facts be regurgitated in exams of structured form, taken within strict time limits, and which provide almost no indication of understanding, but only facts, delivers teaching which makes almost no sense at all to a person with what are described as special educational needs, but which are special only in the sense that they are required by a minority who have exceptional difficulty in structuring their thoughts in this way because, to them, context matters much more than data, and understanding will, in most situations, be the key to unlocking their ability, which facts are ignored within most education these days.
The gameplay between the government, MPs and the city does, therefore, appear to be entirely callous. People of ability who need a type of education that is different from the norm to unlock that ability have been, or are being, denied the chance to participate in our society by systems that demand that we must all be standard in our ability, when of course it is always exceptional ability that drives the necessary processes of change that ultimately matter most to any society if they are to progress. That is literally how perverse this situation is.
And why is this denial happening? It would seem as if it is only to keep the City of London happy. The people in the City, most of whom will be desperately normal in their thinking, their ability, and their comprehension of reality, are seeking to constrain those who are exceptional, who have the potential to deliver so much more than many of those who are willing to comply with the constraints of the City of London will ever be able to comprehend.
And yes, that makes me very angry, and I am entirely unapologetic about that.
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Thank you for this. It is unconscionable that children are denied the education they need and are entitled to due to pressure from the City of London. Those who work there, many of them, have had a privileged education with small class sizes, and extra tutoring if required. Their needs have been attended to. Maybe the establishment doesn’t like any labels apart from ‘gifted’ or ‘exceptional’ but the percentage of people with neurodiversity will be stable through the population. Talk about ‘them’ and ‘us’.
We need people in politics who care about all their constituents and who have the courage to make politics about all people, with clear understanding of the economics that cares for people and builds a sustainable future within real constraints, refusing the imaginary and destructive ones of neoliberalism.
Thanks
I often thought that one thing that humanised David Cameron was his love for his disabled child. There was genuine compassion shown between him and Gordon Brown regarding the losses of their disabled children and Cameron used the same NHS as everyone else and it brought him into contact with normal people.
This is both educational and economic madness. The needs are there for a whole host of reasons. You rightly mention the Gove reforms, which add stress to all not just SEND pupils. Also Covid, family breakdown, the economic need for both parents to work etc. If the needs are not addressed, they don’t go away, they likely become more costly, as children either fall out of education all together, require specialist schooling etc and often develop behavioural and mental health problems. It is the equivalent of ignoring a leaky roof and the dreaded potholes, which only get worse if not fixed when first identified.
A very cheap first step would be to relax the national curriculum and SATS demands, which swallow up so much teacher time and add to stress. Many children are stressed but for SEND children this it reaches levels which stop them being able to engage and feel so overwhelmed they can’t cope with school. It really is time governments listened to parents and teachers not bankers!
Much to agree with
The nexus of City, Treasury and BofE with its self-interested group think has a deeply unhealthy control over UK economic policy.
A wise article with wise comments!
Might it be that the 1988 and 2005 Education Acts were, and are, more concened with compliant passivity than enabling learning adventures for individual students of all styles and contexts?
Might the obsession/enforcement of normative referencing since 1988 be a root cause of too many children and young people not being cared for in their education?
Ipsative and criterion referencing are so very much more effective in assessing the opportunies and needs of the individual student! And kinder!
https://www.google.com/search?q=norm+referencing&oq=norm+referencing&gs_lcrp=EgZjaHJvbWUyCQgAEEUYORiABDIHCAEQABiABDI
https://www.turnitin.com/blog/ipsative-assessments-what-are-they-and-what-are-their-benefits
https://taylorandfrancis.com/knowledge/Medicine_and_healthcare/Psychiatry/Criterion-referenced_tests/
The answer to your third para is, yes.
Ms Meg Hillier MP asks:
How will the GOV pay for SEND?
The way it pays for every item of GOV expenditure. Putting it in a Finance Bill, passing it through Parliament, then ordering the BoE to issue the currency and spend it.
Which bit doesn’t she understand?
Aaah – I see, she has an Oxford PPE degree. ‘Nuff said.
As to how the Chancellor will deal with money-supply and any actual inflation, that’s a separate matter, and doesn’t require us to sacrifice a whole generation of children on a pyre in the City, to placate the angry gods of the bond markets.
Personally, I’m FAR more worried about the destructive recessionary effect of repeated “surplus” budgets than I am about government enabling SEND children to get the best out of their precious years of education.
Much to agree with.
It was interesting to read a Physiatrists report on a SEND Child.
Applications for EHCP’s had been repeatedly refused – too expensive until the LEA caved in at the door of the tribunal.
They referred to the fact that delay had almost certainly made the child’s situation worse and therefore more difficult and expensive to treat – if it was now treatable.
There are undoubtedly a lot of children who will lose out in life as a result of lack of proper provision many of whom COULD have become productive members of society.
Penny wise and pound foolish.
And of course we wonder why the disability benefit bill is going up.
Agreed
Well, this is really bad.
Once again, the situation being portrayed is that the government is in hock to the private sector and that debt is good and virtuous for the control of spending to curb inflation.
Not only should we get out of this fucking doom-loop but I hope that in Cambridge one of the things discussed is how we can put government bondholders (who are never made to buy bonds under duress) in their place and fucking keep them there, nice and quiet and grateful. And I mean grateful.
As you can tell I’ve had about enough of this bullshit.
Me too
The bankers have special educational needs IMHO.
Their report cards might be like:
Maths: D
English: C
Fakeconomics: A
Economics: F
Reality: F
BBC R4 ‘news’ programmes – Today, WATO, PM all solemnly feature politicians and ‘experts’ (often lobbyists in disguise) parroting this economic madness – the orthodoxy – including its latest ‘bond market’ tweak.
There are plenty of economists and political economists who would refute the whole narrative – but they hardly ever appear. This is censorship and propaganda in plain sight.
Agreed
I was shouting at the radio this morning, as two “economists “ argued that the government had to show how they would create growth or face the anger of the bond markets.
So depressing, if you accept this view of the world there is no point in democracy, just leave it to the rich and the markets!
How do we break this stranglehold?
You were right to shout. That argument is one of the most damaging, and also effective myths in modern economics.
It assumes that what are called “the bond markets” are an external authority disciplining governments. But a currency-issuing government is not a household and is not financially dependent on markets in that way. As I have discussed many times on this blog, government bonds are policy tools, a part of interest-rate management and safe-asset provision mechanism, not a leash held by investors.
Markets can create noise. They can speculate. They can try to influence politics. But they cannot make a sovereign government run out of its own currency. The real constraint is inflation and real resources, not bond traders.
So why does the myth persist? Because it serves a purpose. It transfers authority from democratic institutions to financial elites. It allows politicians to say “we’d like to help, but the markets won’t let us.” It is the household analogy in a smarter suit.
Breaking the stranglehold requires three things.
First, honesty about how money and government finance actually work. This is the work I have been trying to do here, elsehwre in things like the Scottish Currency Group debates, and in explaining sectoral balances and capital maintenance.
Second, we need institutional reform: clearer central bank mandates, regulation of speculative finance, and ending the assumption that public policy must please bondholders.
Third, political courage. Democracies only lose power when they surrender it.
The choice is simple. Either we accept market mythology, or we insist that economies exist to serve people and govern accordingly.
Could it be that BBC news editors and producers, and presenters/journalists, have been taken in by the prevailing economic mythological narrative? Perhaps they should be reading this blog. Who are the academics who that have published along the lines of the blogs on this website?
It is not surprising that BBC journalists repeat the myths of orthodox economics. Most of them were taught by economists who were themselves trained within a very narrow tradition. If you are taught that governments must “live within their means”, that markets are efficient, and that bond markets discipline states, you will tend to repeat those ideas without realising they are assumptions, not facts. That is precisely why I keep saying economics is often a CRAp, or a completely rubbish approximation to the truth.
There is, however, a substantial body of academic work that says otherwise. On Modern Monetary Theory alone there are scholars such as Stephanie Kelton, Pavlina Tcherneva, Scott Fullwiler, Fadhel Kaboub and Steven Hail. Dirk Ehnts has developed similar work in Europe.
Beyond MMT there are many others whose work overlaps with the themes on this blog: Steve Keen on financial instability, Thomas Piketty on wealth inequality, Mariana Mazzucato on the entrepreneurial state, Ha-Joon Chang on industrial policy, Kate Raworth on doughnut economics, and friends like Howard Reed on distributional modelling. None of them are fringe voices; they are published, peer-reviewed academics.
The real problem is not a lack of scholarship. It is that media economics has become dependent on City economists, think-tank soundbites, and the household-analogy narrative. Changing that requires exactly what readers here already do: share alternative evidence, cite real research, and keep asking awkward questions. That is how myths eventually lose their grip.
I do think Bankers have Special Educational Needs… although they could learn a lot just by “getting out more”.
🙂
Clive is onto something here.
May be the b(w)anksters misheard ‘get out more’ and think it’s ‘get more out’ of instead?
🙂
‘Austerity is, of course, the imposition of unnecessary count upon an economy’ cuts??
Yes
The financial services elites see themselves at the pinnacle of the neurotypical world.
I hope that Jessie Hewitson, author of ” Autism How to raise a happy autistic child” does not mind me quoting:
In 1998, an autistic woman know as Muskie set up a website for a made up organisation, the Institute for the Study of the Neurologically Typical on which she posted the following satirical definition of “neurotypical syndrome” ( neurotypical means non autistic)
What is NT? Neurotypical syndrome is a neurobiological disorder characterised by preoccupation with social concerns, delusions of superiority and obsession with conformity.
How common is it? Tragically as many as 9,625 cases out of every 10,000 individuals may be neurotypical.
Are there any treatments for it? There is no known cure for neurotypical syndrome.
Very good. I like it.
Having just gone through the diagnostic process and found the long list of so called deficits extremely depressing to read, we need a little humour here. There wasn’t one question about my neurodiverse strengths/gifts. Thankfully my boss appreciates my hyperfocus and off the scale attention to detail. Maybe they should remember many of our key inventors and IT innovators are all autistic?
So much to agree with.
I m glad you have found a niche. We all need to. It took me 20+ years.
I am not a deeply religious person, but I had a religious upbringing. I remember Jesus rebuking his disciples for their treatment of children with the phrase “suffer the little children to come unto me”. In the current economic structure, it’s more the wealthy saying “make the children suffer for coming between profit and me”.
Spot on.
Jesus would be in the city turning over the tables and disconnecting their computers! Jesus also taught good investment and use of resources, which ignoring need in favour of balancing books is not.
People should always come before money as Richard’s politics of care would agree with.
It does
I hope the guardian (of which I am no fan) writer John Harris is reading this thread.
My wife is an LSA and works with SEND children in Leicestershire. She says they are closing centres locally for financial reasons. Clearly, short term thinking and more costly in the long run. Surely the aim of school be to produce children who are (a) socialised and don’t commit crimes and (b) can support themselves as adults financially? Get them all to that point and everything else is a bonus.
Agreed
Agree with all of the above.
I have been focusing on the ‘if we can do it we can afford it’ idea when speaking with friends about this.
However, I’m still trying to figure out the technical answer when people ask me how we will pay for things.
Apologies if I am being simple about this…. and apologies if you have stated this elsewhere Richard.
I have been trying to work out what to say to people about the accounting.
I think I have heard Steve Keen say that a country’s Central Bank could buy the government’s ‘debt’.
Should we change the bond auction rules to allow (or perhaps instruct?) the Bank of England to buy leftover government bonds when private buyers don’t want them at the prices and interest rates we have offered?
Or is there a better mechanism for adding the increased government spending into ‘the accounts’?
I know that the ways and means account runs an overdraft for the government but presumably that is just supposed to be a daily correction and not the permanent mode of money creation?
Or is that just convention?
Could we just increase the overdraft by however many billions a year we like and just keep doing that and maybe annually do a debt ‘forgiveness’ or jubilee to the government?
Or do you have ideas about a completely new Banking Act that will change things more fundamentally?
I’d like to have concrete suggestions to make of how exactly the mechanism will work if/hopefully when we manage refute the household analogy.
I have only read the shorter version of the taxing wealth report…. perhaps you talk about this in the full version? Or in the proposals for Scottish currency and Banking system?
As always, grateful for any answers and in the meantime I will look into those publications.
Does this cover it? https://www.taxresearch.org.uk/Blog/2025/09/03/mmt-and-rules-of-government-borrowing/
Hi Richard,
thanks, my question was more on the technicality…
The government currently pays for things out of the ‘consolidated fund’… the bank of England credits reserves to accounts according to treasury instructions as mandated in the budget.
Let’s say we are taking enough tax to control inflation and that is paid into the consolidated fund and reduces the ‘debit’ amount in the consolidated fund.
Then we also allow savers to deposit money via bonds, perhaps at zero per cent interest if we want or some small amount if interest if we think that would help the economy…. and that reduces the debit amount a bit more.
If there is a deficit we use the Ways and Means account to zero the consolidated fund at the end of each day.
If I have understood correctly… shrinking the money supply or even keeping it stable depresses economic activity, so we can assume that we may always want to have a small deficit.
Where will this go in the ledgers of the accounts?
Do we already have the power to just let the Ways and Means overdraft increase indefinitely to represent the extra liquidity we feel is helpful every month or every year for the economy?
So that the account is kind of a ‘counter’ of how much money we have created rather than an ‘overdraft’?
I think I would be perfectly happy with that.
No overdraft metaphor.
No household metaphor.
We could start explaining to people that the Ways and Means total number is just counting the total money value that has been created by government spending.
In the same way that we get quoted the ‘value of the stock market’ numbers in every news programme…. and those numbers imply that it is allegedly good when the stock market value goes up…. that it should be regarded as just as ‘good’ if the ways and means money creation number goes up?
Government money creation reached so and so many billion today… times are good!
And we already have the accounting technology at the Bank of England to start doing this without changing any rules?
We just need to change the metaphor or language we use to describe the Ways and Means account?
“Where will this go in the ledgers of the accounts?
Do we already have the power to just let the Ways and Means overdraft increase indefinitely to represent the extra liquidity we feel is helpful every month or every year for the economy?”
Yes, in a word.
And it’s happened for hundreds of years.