In a judgment that puts further pressure on LEAs attempting to keep pace with the increase in numbers of pupils with statements, the court ruled that Hillingdon council in outer London had acted unlawfully when it made a Pounds 500,000 cut in its support to secondary schools.

Mr Justice Collins rejected the council’s case that the schools could afford to fund the shortfall because they had had an 8.2 per cent increase in their overall budgets. He ordered Hillingdon to restore Pounds 47,000 to Queensmead - the grant-maintained school that had sought judicial review - and told the council to review the position of other schools for next year. The council estimates it will have to find an extra Pounds 1 million to comply.

The judge suggested Hillingdon take its problems over rate-capping to central Government. “If the Secretary of State (for Education) will stump up, then good luck to you. You will have to cry to Parliamment and not me,” he said.

Unless the judgment is overturned by the Court of Appeal, councils will only be able to reduce spending on children with statements when they have the agreement of schools.

The problem is likely to be at its most acute in areas where there are significant numbers of GM schools. In Hillingdon, the budgets of most of the secondary schools are set by the Funding Agency for Schools through the common funding formula.

In March the council was faced with making cuts of Pounds 1.5m in education in order to achieve an overall saving of at least Pounds 2m. The authority was not able to make changes to the budgets of the GM schools and decided to reduce the amount given to schools to fund statements of special needs.

However, Mr Justice Collins rejected the argument that the cut in money for statemented pupils could be justified by an 8.2 per cent increase in school budgets. That increase had been given, he said, to take account of costs others than those arising from the needs of statemented pupils. He ruled: “In my judgment, the local education authority can only carry out its duty to arrange that the necessary provision is made by providing the required funding, unless it can enter into an agreement with the schools that the school will make the necessary provision ... Since the duty is owed to each individual child, it will normally be necessary and certainly be desirable to discuss with the school how the provision can best be made and funded for each child.”

The council had claimed it had removed an element of double funding for children with statements by subtracting the sum calculated for all pupils based on the age-weighted formula. However, the judge ruled that such an adjustment had left statemented pupils under-funded.

After the case, Hillingdon’s group director of education services, Glenys Andrews, said the council was being put in an impossible position of finding ways to fund an ever-increasing number of children with statements. “In this authority, where schools are funded through the common funding formula, spending on secondaries is ring-fenced and, from next year, spending on primaries will be ring-fenced. The special needs budget is finite and we have only limited opportunity to move money from other parts of the budget.”

A recent London-wide survey conducted for the Association of London Chief Education Officers showed that the boroughs are on average spending 12 per cent of their education budget on special needs, with 9.6 per cent on average on pupils with statements.