The chancellor has hinted that he will increase spending on public services when he delivers his budget in the autumn.
Philip Hammond today delivered the first of the new-style spring statement to the House of Commons, which did not include major spending announcements.
Ahead of the statement, unions called on Mr Hammond to prioritise funding for children with high needs.
Mr Hammond told MPs: “If, in the autumn, the public finances continue to reflect the improvements [in public finances] that today’s report hints at, then, in accordance with our balanced approach – and using the flexibility provided by the fiscal rules – I would have the capacity to enable further increases in public spending and investment in the years ahead while continuing to drive value for money to ensure that not a single penny of precious taxpayers’ money is wasted.”
In response, shadow chancellor John McDonnell told MPs "we face, in every public service, a crisis on a scale we have never seen before".
He accused Mr Hammond of not listening to teachers, doctors and nurses. He added: "They are telling him they can't wait until the next budget. They are telling him he needs to act now."
Schools at risk
Earlier, the NAHT headteachers' union said its annual survey of school budgets showed that 86 per cent of school leaders believe that the government is underfunding the additional needs of children.
NAHT general secretary Paul Whiteman, said that the "amazing results" of special schools and alternative provision settings were "at risk if we don’t secure more high-needs funding for schools."
He added: “The chancellor has a moral duty to act on high-needs funding.”
The NEU teaching union echoed these calls and demanded an immediate 5 per cent pay rise for teachers.