1 High needs funding reform: Next steps towards a fairer system NATSPEC Annual Residential Conference 2012: Planning for Excellence and Sustainability Ben Bryant Department for Education

2 Introduction  On 26 March, we published School funding reform: Next steps towards a fairer system.  The school funding document set out a range of reforms that will improve current funding arrangements, including those for education provision for pupils and students with high needs aged from birth to 25 in the school, AP and FE sectors.  This set of slides provides additional diagrammatic illustrations of the high needs funding reforms announced in School funding reform: Next steps towards a fairer system.  Full explanation of the high needs funding reforms can be found in Chapter 3 and Annexes 5A-5C of the school funding document. Where possible, cross-references have been provided.

3 The current funding system LA 2 YPLA LA 1 DfE PRU INMSS Special school Special Academy Mainst. school Mainstr. Academy FE collegeISP DSG – paid to LAs Pre-16 funding Post-16 funding – paid to YPLA Post-16 funding Post-16 national funding formula Post-16 high-level additional learner support Post-16 LLDD placement budget SEN Block Grant Academy funding Different types of providers are funded in entirely different ways. This means that local authorities face different levels of additional costs when placing a pupil or student. Post-16 provision is funded differently according to whether a young person remains in a school or enters FE at 16. There are also three different high needs funding systems post-16 (the SEN Block Grant, high- level ALS, and the LLDD placement budget), each with their own rules and regulations. Current arrangements for funding high needs provision in Academies is complex, error-prone and bureaucratic. As the number of Academies grows, these arrangements will become unsustainable. The current process of inter-authority recoupment is bureaucratic and costly. It does not foster dialogue about a pupil’s needs, provision and progress between commissioners and providers. Three different funding systems post-16 PRUs do not have delegated budgets Complex Academy funding arrangements Place-led funding Paid through fees Formula funding Inter-authority recoupment

4 The case for reform Funding arrangements in which all providers are funded on an equivalent basis – education provision for a high needs pupil is funded in a comparable way whatever the form of institution they attend. Remove the awkward divide at 16 according to whether a young person stays in a school or enters FE Create a sustainable long-term basis for funding high needs pupils in Academies and Free Schools Remove potential perverse financial incentives inherent in the current funding system Avoid bureaucratic processes getting in the way of focus on a pupil’s needs and progress High needs education funding pre-16 and post-16 is brought together so as to support the development of an integrated approach to assessment and planning from birth to 25. Funding is genuinely responsive to individual pupils’ and students’ needs – there is greater flexibility with regard to the use of funding, and clear, non-bureaucratic processes that support commissioning focused on the needs of the young person. There is clear and transparent information about available provision so as to improve choice for young people and their families.

5 The High Needs Block EFA Local authority Schools Block Early Years Block High Needs Block Local authorities will continue to receive the Dedicated Schools Grant (DSG). From , this will be split into three notional blocks: the Schools Block, the Early Years Block, and the High Needs Block. The size of each notional Block will be based on previous local authority decisions on spend. This does not represent what we think should be spent by local authorities on the relevant function. The blocks themselves will not be ringfenced, and local authorities will be able to use funding flexibly between the notional Blocks. DSG will be ringfenced. This will ensure that funding provided through DSG is spent on the functions for which it is meant. The notional High Needs Block will cover funding for education provision for high needs pupils and students from birth to 25. This is in line with the proposals set out in the Green Paper on SEN & disability to introduce an integrated approach to assessment and provision across this age range. The High Needs Block will be clearly identified and will be provided so as to enable local authorities to commission provision and use funding to fulfil their statutory responsibilities towards young people with high needs, including those who are subject to a LDA up to the age of 25. The High Needs Block will be constructed using budgeted spend on high needs pupils and students. This will be taken from the Section 251 Budget Statements, and the 2011/12 information on student numbers and spend on high needs students in FECs and ISPs. We will consider whether and how this may need to be updated.

6 Overview: Reform of high needs funding Element 1: Core education funding Element 2: Additional support funding Element 3: Top-up funding Mainstream settings Pre-16 SEN and AP Specialist settingsAll settings Post-16 SEN and LDD “Top-up” funding from the commissioner to meet the needs of each pupil or student placed in the institution Mainstream per-pupil funding (AWPU) Contribution of £6,000 to additional support required by a pupil with high needs, from the notional SEN budget Base funding of £10,000 for SEN and £8,000 for AP placements, which is roughly equivalent to the level up to which a mainstream provider would have contributed to the additional support provision of a high needs pupil. Base funding is provided on the basis of planned places. Mainstream per-student funding (as calculated by the national funding system) Contribution of £6,000 to additional support required by a student with high needs This diagram appeared as Figure 1 (p.43) of School funding reform: Next steps towards a fairer system

7 Post-16 settings (mainstream and specialist) Element 1: Core education funding Element 2: Additional support funding Element 3: Top-up funding “Top-up” funding from the commissioner to meet the needs of each pupil or student placed in the institution Mainstream per- student funding (as calculated by the national funding system) Contribution of £6,000 to additional support required by a student with high needs Post-16 high needs provision will be funded in an equivalent way across all provider types. This budget will be provided by the maintaining local authority (for maintained schools) or the EFA (for all non-maintained settings). All providers will receive an allocation of mainstream per-student funding calculated by the national funding formula – this recognises the different programmes of learning that young people access. All providers will receive an allocation of additional support funding of £6,000 for each high needs student placed with them. The allocation will be calculated using student numbers from the last full academic year. As at present, specialist providers will be able to request that their allocations are reviewed funding if their current number of students is significantly higher than their lagged numbers. As such, the level up to which a post-16 provider would be expected to contribute to provision for a high needs student will vary according to the student’s course. For a pupil on a course costing £5,500 per year, the provider would contribute £11,500 (course cost plus £6,000). For a course costing £4,000, the provider’s contribution would be £10,000. Top-up funding: will be provided direct to the provider from the commissioning local authority; in or close to the real-time movement of the student; and will be based on the assessed needs of the student. We will provide further information about element 1 (the national post-16 funding system) that will enable local authorities to re- model provider budgets in terms of elements 1, 2 and 3 shortly.

8 Funding flow: Placement in a FE college or ISP EFA Commissioning local authority Schools Block Early Years Block High Needs Block ISP Element 1Element 2Element 3 FE colleges and ISPs would receive an allocation of (a) mainstream per-student calculated by the national funding formula and (b) an allocation of additional support funding of £6,000 per high needs student. These allocations would be based on the data from the last full academic year. This funding would be received by providers direct from the EFA. Top-up funding above this level would be provided from the commissioning local authority, using their High Needs Block. Place-led funding Pupil-led funding EFA Commissioning local authority Schools Block Early Years Block High Needs Block FE College Element 1Element 2Element 3

9 Example H: Placement of a student in a mainstream FE college Student H is 17 years old and has high needs. Student H has been assessed as requiring education provision that will cost £18,000. The course that student H wishes to study costs £4,000. The college will be expected to meet the costs of this course from its allocation through the national funding formula. The college receives this from the EFA. The commissioning local authority therefore pays a top-up of £8,000. It funds this from its notional High Needs Block. Top-up funding is paid direct to the provider in or close to the real-time movement of the student. EFA Commissioning local authority Schools Block Early Years Block High Needs Block FE College Element 1Element 2Element 3 The college has also received an allocation of additional support funding from the EFA. This is based on the numbers of high needs students attending the college in the last full academic year. From this allocation, the college is expected to contribute £6,000 towards student H’s educational support costs. The college would therefore be expected to contribute £10,000 towards student’s H provision. This is made up of (i) the cost of student’s H course (£4,000) and (ii) a contribution of £6,000 towards the cost of student H’s additional education support.

10 Example I: Placement of a student in an ISP Student I is 18 years old and has high needs. Student I has been assessed as requiring education provision that will cost £40,000. The course that student I wishes to study costs £7,000. The ISP will be expected to meet the costs of this course from its allocation through the national funding formula. The ISP receives this from the EFA. The commissioning local authority therefore pays a top-up of £27,000. It funds this from its notional High Needs Block. Top-up funding is paid direct to the provider in or close to the real-time movement of the student. EFA Commissioning local authority Schools Block Early Years Block High Needs Block FE College Element 1Element 2Element 3 The ISP has also received an allocation of additional support funding from the EFA. This is based on the numbers of high needs students attending the ISP in the last full academic year. From this allocation, the ISP is expected to contribute £6,000 towards student I’s educational support costs. The ISP would therefore be expected to contribute £13,000 towards student’s H provision. This is made up of (i) the cost of student’s I course (£7,000) and (ii) a contribution of £6,000 towards the cost of student I’s additional education support.

11 Funding for specialist providers: Allocation, review and adjustment Initial allocation – at the introduction of these reforms, we will start from an “as is” position. Post-16, this will be based on the number of high needs students placed by LAs in the last full academic year, and commissioner-provider dialogue. Under the new place-plus approach, specialist providers will receive high needs funding elements 1 and 2. This funding will ensure equivalence provide some stability / predictability of funding. Both the “place” (elements 1&2) and the per-student “plus” (element 3) will be responsive to need, choice and student numbers. As such, there will be a simple process, with clear responsibilities and transparent information, for reviewing and, if necessary, adjusting providers’ allocations of elements 1&2 funding. Evidence-based dialogue will be a key component of the new funding arrangements. Allocation reviewed at least every two years – to ensure elements 1&” funding kept pace with current student numbers and likely future trends. Responsibility – the review and any adjustment would be based on dialogue between the provider and its commissioners. This would be fed back to the EFA. This process would continue at least every two years. Flexibility – there would be flexibility so that reviews could be triggered and carried out more frequently if required. Transparent and accurate information available locally – supporting the development of the local offer. Encourage collaboration – better planning and joint working across sectors and across local areas.

12 To-up funding: setting the top-up and managing the funding flow The new funding arrangements will introduce direct funding relationships between commissioners and providers in relation to the pupils commissioners place. Under these funding arrangements, top-up funding will: be provided on a per-student basis; be based on the student’s assessed needs; and follow the student in and out of a particular setting in or close to their real-time movement. Avoiding unnecessary, bureaucratic burdens We would expect commissioners and providers will want to have (and will be having already) discussions about student’s needs, provision and expected progress. We would envisage there being a simple framework, with clear responsibilities and timescales for making top-up payments. This should not add unnecessary bureaucracy, and may help to avoid delays in receiving funding for students. Work is ongoing with the LGA and colleagues in the sector to determine how this would work in practice. We are clear we must avoid unnecessary burdens being placed on providers. Direct funding relationships: The process Assessment of a student’s needs Consultation with the young person and parents Discussion with the provider – needs, provision, expected progress and outcomes Discussion of funding for the provision the student requires – agree the amount of top-up funding (possibly with reference to a banding framework) Make arrangements for paying the top-up – in or close to real time, possibly on a termly basis

13 Next steps  The publication of Next steps towards a fairer system marked the start of a two- month consultation period. This closes on Monday 21 May. We would welcome your responses to the questions on which we are consulting. ls&consultationId=1817&external=no&menu=1  If you have questions about the reforms, these can be submitted to  A further announcement will be made shortly after the consultation period closes. This will confirm final arrangements for funding from We will make information about the timings for providing local authority and provider initial and final allocations available in due course.  Further information about reform of the national funding system will also be made available shortly.  Detailed work is underway on the implementation of these reforms, both at national and local level.