The issues behind the crisis in High Needs funding

1. Demand

The demand for high needs funding is out-stripping the budgets available to local authorities across the country, resulting in serious deficits in the High Needs Blocks in over half of all local authorities.

2. Complexity of Need

The complexity of high needs services demanded by more and more children and their parents is far greater than was the case just a few years ago. As medical assessment and methods of treatment improves and intensifies, the demand for services increases. More children with complex needs are surviving than was the case in the past. The increased demand again creates more need for adult support and greater costs.

3. Supply of Places

The provision of places that can handle increasingly complex cases is dwindling and, where they do exist, the demand-led market place is driving up costs. This is often independent provision, at a distance from the local authority and significantly more – frequently double – local council provision costs.

The independent sector is tending to dictate the costs associated with the supply and holding local authorities to ransom, so consideration needs to be given to setting cost limits. Importantly, parents and SEN professionals see increasing benefits in keeping children locally, with access to family and local community services. Additional support to avoid family breakdown is essential in avoiding high- cost, often residential, placements, which increasingly are not in the child’s best interests.

4. Post-16 Extension to 25

Local authorities are seeing a significant growth in the number of young people they are funding post-16, as a result of recent policy changes. High needs funding was never provided to take account of this number of children and young people and, as such, additional funding needs to be found to meet this new demand.

5. Impact on SEN Transport

There has been a major increase in post-16 to 25 transport costs as a result of policy changes introduced by the government. As the number of children with additional needs increases, so does the cost of transport, which is placing additional demand pressures on local authority budgets already facing significant reductions.

6. Harmonisation of Elements 1, 2 & 3 in Post-16 High Needs Funding with School Funding

Consistency is required between schools and colleges: the funding to meet the high needs threshold of £6,000 is included in the National School Funding Formula, but for colleges the £6,000 high needs threshold, known as Element 2, is funded in Dedicated Schools Grant (DSG) and transferred through individual local authority declaration to the Education and Skills Funding Agency (ESFA). It would be much more efficient and simpler if post-16 Element 2 funding was included in the lagged learner post-16 National Funding Formula i.e. the same as schools. A one-off national transfer from DSG to FE funding would be all that is necessary.

7. Impact on Exclusions

Increasingly exclusions are occurring in primary schools and there is little provision available to meet the needs of these pupils. Evidence from primary headteachers is that behaviour is getting worse at much earlier ages and this may be linked to changes in society, heavily influenced by inappropriate computer games and an inability for pupils to follow instructions and authority in schools. With funding pressures arising from increased costs and demands, schools are finding more and more that their only option is to exclude the pupils.

8. Mental Health and links to Health Service

Admissions to hospital schools/pupil referral units (PRUS) are increasing based on mental health needs and are approved by Child and Adolescent Mental Health Services (CAMHS). Annual increases are in excess of 10% per annum but funding remains static within DSG. New burdens for Tier 4 mental health placements have been transferred from health to education without additional funding. This is contrary to agreed custom and practice with government.

9. Inclusion

As the financial pressures increase on school budgets, the ability and willingness for schools to take on more complex children within a mainstream setting are being challenged, which is resulting in more children being directed towards specialist provision and a greater number of exclusions. If this continues, the full pupil funding in the Schools Block, including the £6,000 threshold cost, which is hidden within the national formula, should follow the pupil to the High Needs Block. It cannot be right that the school’s need for funding in the Schools Block is reduced when the child leaves, but the funding remains with them and does not transfer automatically with the child to the High Needs Block.

There are currently no levers for local authorities to apply to schools that do not act inclusively. Academies can refuse to accept pupils and it takes around a term for the Secretary of State to direct an academy, leaving the local authority to find specialist provision for the pupil, when they should be in a mainstream school.

There was discussion in the White Paper ‘Education Excellence Everywhere’ that schools should remain responsible (both financially and in terms of standards) for that pupil until they are back on roll at a mainstream school, or in specialist provision. This will also be a challenge for the system but must be better for the pupil than the current system, where pupils are effectively moved on as quickly as possible, regardless of whether that is in their best interests.

10. Impact on Special Schools and Pupil Referral Units

Both these categories of schools are funded entirely from the High Needs Block and thus are not in receipt of the additional funding that has been directed to mainstream schools. The High Needs Block is where the funding is most under pressure at present, and so local authorities are forced to squeeze these budgets. Yet, it is at these schools that the most vulnerable pupils are educated and where the greatest difference can be made to young lives for the future. This is where the reduction of future costs of supporting independence in adults or places in the judicial system happens. Investment in these schools is vitally important, but budget reductions (in real terms) are stopping these schools from having the flexibility to work with individuals and make a real long-term difference.

11. Place Funding of £10,000

Place funding provides typically 50% of funding for special schools and needs to be increased regularly to meet inflationary costs in special schools. It is unacceptable to require special schools to absorb increased staffing and premises costs, and to continue to provide the best provision for the most vulnerable pupils in society. Given the pressures on high needs budgets, local authorities are unable to increase top-up funding to compensate. Place funding for special schools is a much more significant contribution to the schools’ budget than the mainstream school lump sum and must be recognised as such.