High needs funding - what does it really mean?

Philippa StobbsAuthor Philippa StobbsDate 01 Feb 2017

Philippa, Assistant Director for Education at CDC, gives her take on the recent high needs funding consultation and unpicks what it really means for children, young people and schools.

A DfE consultation document that came out just before Christmas deserves some attention from all of us: it is the second round of consultation on the high needs funding formula, High needs national funding formula and other reforms: Government response and new proposals for consultation – stage 2. This consultation sits alongside a further round of consultation on a national approach to funding for schools. Whilst there has been a lot of discussion in the news about the impact of changes to school funding, there has been little about the high needs funding; and there is some good news here.

Funding is currently allocated by central government to local authorities in three blocks: schools, high needs and early years. Local authorities agree with their schools forums the local formulae through which the money is then distributed to schools and early years settings. Local authorities are also responsible for distributing the high needs funding to meet the needs of children and young people with additional needs, including special educational needs. In some areas, special educational provision has traditionally been made through higher numbers of pupils in special schools, in others more children have had their needs met in mainstream. With special school places costing more than mainstream places, the allocation of high needs funding has reflected historic patterns of placement rather than levels of need.         

In the first round of consultation on high needs funding, the government indicated its intention to move towards allocating this funding to local authorities in a way that is better linked to levels of need. The overall funding pot was expected to remain the same, so some local authorities were expected to win and some to lose.

During the first round of consultation, many of us made the point that no local authority should lose a penny of high needs funding. This is for at least two important reasons: firstly, local authorities have commitments to many children and young people with SEN that may last some way into the future; secondly, local authorities have taken on new responsibilities for the education of young people up to the age of 25, a responsibility that may not originally have been thought to make a significant difference to expectations of local authorities, but recent case law, in particular the Ryan case, tells us differently.

The first bit of good news, in the second round of consultation, is that there is a rise in the national high needs budget of £90 million this year and further rises up until 2020. The effect of this increase is that no local authority will lose high needs funding as we move to an allocation based more closely on levels of need. This is really welcome.  

At the same time as consulting on proposals on high needs funding, the government is consulting on changes to school funding. The proposal is that, in future, school funding will be determined by a central formula, rather than one agreed with the schools forum locally.

Currently, the allocation of funding to individual schools is determined through a locally agreed funding formula, within a national framework. Local authorities have some flexibility to move funding between the schools block of funding and the high needs block. This allows for high needs funding to be moved into mainstream schools where children with SEN are being taught more inclusively. Equally, where more children are placed in special schools, local authorities have some flexibility to move funding from the schools block into high needs. The benefit of these arrangements is that they give the feel of a single pot of funding to be deployed to meet high needs in the light of placement decisions made locally.

With the introduction of a centrally determined school funding formula, a so-called ‘hard’ formula, the current flexibilities would disappear and funding could not be moved out of the schools block to reflect local patterns such as high levels of special school placements. Recognising the difficulties this might cause, in 2017-18 the schools formula will not be ‘hard’ and local authorities will be able to move funding between the schools and the high needs blocks. However, in 2018-2019, whilst being able to move funding between some parts of the system, local authorities will no longer be able to move funding from the schools block into high needs unless the local schools forum and a majority of local schools agree.        

Different arrangements would apply from 2019-20: the consultation proposes that schools could agree with the local authority to pool some of their funding to create a local budget to meet high needs. The pooled funding, combined with high needs funding from the local authority, could then be deployed to provide support for pupils with high needs in inclusive mainstream schools or in special schools or units, depending on local patterns of provision. The DfE expects the deployment of funding in this way to be made against a local authority strategy for special educational provision.

Local authorities are required, under the Children and Families Act (CFA), to keep special educational provision under review and must involve parents, children and young people in this review. Local partners, including schools, academies, post-16 and early years providers, health and social care agencies must all co-operate with the local authority in meeting these SEN responsibilities. The funding consultation makes it clear that strategic plans should be based on the review of local provision and should show how high needs funding will underpin a pattern of provision to meet local needs.

To support local authority capacity to undertake strategic review and planning, the government has allocated £23 million of additional funding, in 2016-17. All local authorities get some of this funding and where they have already undertaken the review and put in place strategic plans, the funding is intended to support implementation.

The additional funding for high needs and for local authority review and planning will be widely welcomed. The more challenging questions arise in relation to the erosion of local flexibility in the deployment of funding to meet high needs. Given that, overall, it is a combination of schools funding and high needs funding that is used to make special educational provision for children and young people with special educational needs locally, will schools want to pool funding with the local authority? How well will the duty to co-operate stand up to this test? What key factors will enable a local strategy to work?

The high needs funding consultation poses some big questions. We want to encourage everyone to get involved in discussing the proposals and responding the consultation.

The consultation closes on 22 March.