Families who launched a landmark legal challenge to the government’s funding of services for children with special educational needs and disabilities (Send) have lost their high court case.

Three families, representing thousands of others across England, brought the action claiming that government budget decisions had left local authorities unable to fulfil their legal obligation to provide education to children with Send.

A two-day hearing in June heard from lawyers representing the families that there was a substantial national shortfall in Send funding for children and young people, the consequences of which could “blight their lives forever”.

Crisis in special educational needs drives parents to court Read more

In a judgment handed down on Monday, however, Mr Justice Lewis ruled there was “no unlawful discrimination” in the way the government made provision for Send funding and dismissed the families’ claim for judicial review.

The legal action was brought by three children, who acted through their mothers: Nico Heugh Simone, 16, from Robertsbridge, East Sussex, nine-year-old Dakota Riddell, of Birmingham, and 14-year-old Benedict McFinnigan, from Scarborough.

Nico’s mother, Lorraine Heugh, said afterwards: “We are understandably disappointed by the ruling. We campaigned for months on this issue and still believe that not only our children, but thousands of other children across the country are being failed by the current system.

“Although the ruling may not have found in our favour we will not stop campaigning for change. We are not asking for preferential treatment, we just want children to have the best education they deserve.”

The case was brought against the former chancellor Philip Hammond and the former education secretary Damian Hinds over what the families claimed was the government’s ongoing failure to allocate sufficient resources to support specialist provision for children with Send.

Lawyers brought the action on four grounds, which were all dismissed in the judgment. They claimed the government was in breach of equality duties under the Equality Act 2010 as well as its duty to promote the wellbeing of children under the Children and Younger Persons Act 2008.

They further claimed the government’s decisions were “irrational” and in breach of the European convention on human rights, because their budget decisions resulted in differential treatment for children with Send.

Jenni Richards QC, for the families, told the hearing in June the former chancellor had acted unlawfully in setting the national budget in October 2018, as had Hinds with additional but “manifestly insufficient” Send funding in December.

She said Department for Education (DfE) statistics showed rising demand for Send funding, which had “not been matched by anything like a commensurate increase in funding”.

Quick guide What is austerity? Show Hide What is austerity? Austerity is how governments across Europe – from the UK to Greece – tried to clear the overdrafts, or deficits, they racked up in the wake of the great financial crisis. How did governments try to achieve this? Their strategy was two-fold. First, cut spending on the public sector, on wages, for instance, or on social security. Second, raise revenue through higher taxes and selling state assets. Greece, for instance, has sold its airports in Corfu and Santorini, among others, to a German company. What was their reasoning? Proponents made a variety of arguments for this strategy. It was said that governments had spent too much money, that everyone needed to tighten their belts. The UK’s then-chancellor, George Osborne, claimed that the public sector was "crowding out" the private sector, taking resources and workers away from businesses. Particularly influential was a paper by two US-based economists, Ken Rogoff and Carmen Reinhart, arguing that once a country’s total public borrowing rose above 90% of its national income, or GDP, growth would slow sharply. Did austerity get unanimous backing? Critics argued that austerity would stop economies recovering from the shock of the banking meltdown and would make teachers and nurses and people with disabilities pay for the excesses of bankers and chief executives. In his book Austerity: The History of a Dangerous Idea, political economist Mark Blyth showed that austerity had been tried before in the 20th century – everywhere from Weimar Germany to 1930s America – and failed, often with politically disastrous consequences.

Government lawyers, opposing the legal action, argued the increase in demand was recognised by ministers who had “made it clear” that high needs would be a priority ahead of the 2019 spending review.

Since the hearing the government has announced an additional £700m over the next year for pupils with the most complex needs as well as a review to examine how the Send system is working. Campaigners say, however, there is still a £1bn shortfall that the government needs to address.

Anne-Marie Irwin, of Irwin Mitchell solicitors, who represented the families, said: “The decision to take this case to the high court was not taken lightly. We believe that it was the first time that the high court has granted permission for a legal challenge against a government budget decision.

“We and the families are disappointed by today’s decision but thank the court for hearing the case. How Send services are funded is still an incredibly important issue, affecting tens of thousands of families, and one that needs addressing.”

Responding to the ruling, Dr Mary Bousted, the joint general secretary of the National Education Union, said: “Today’s verdict is a huge blow to the families and children involved in this case, and allows the government to once again shirk its responsibility for these young people by fobbing them off to severely underfunded local authorities, who do not have the financial capacity to provide the specialist care and provision these families need and deserve.”

A DfE spokesperson said: “No child should be held back from reaching their potential, which is why we recently announced major new high needs funding worth well over £700m in 2020-21 – an increase of more than 11% on the amount available this year, bringing the total spent on supporting those with the most complex needs to over £7bn.

“We have also launched a review of the system to see how it can make further improvements to make sure every child gets the education that is right for them.”