27.A growing number of local authorities have been spending more than they budgeted on pupils with high needs and the increased spending has added to the financial pressures that local authorities face. In 2017–18, 122 local authorities (81.3%) overspent their high-needs budgets, up from 71 local authorities (47.3%) in 2013–14. The Department noted that the financial situation facing many local authorities was more challenging than at the time the Children and Families Act 2014 came into force, and that the legislation had been debated in advance of the 2015 spending review. It highlighted that the Government’s announcement in August 2019, of £780 million extra funding for children with SEND from 2020/21, was an acknowledgement that there was not enough money in the system.
28.In 2018–19, local authorities estimated that mainstream schools would spend a total of £3.8 billion on covering the first £6,000 of support per pupil with SEND. If schools need to spend more than this £6,000, they may apply to their local authority for top-up funding. The Department introduced the £6,000 threshold in 2013–14, and has not increased it since then.
29.The Department told us that, before it introduced the £6,000 threshold, most local authorities had been funding mainstream schools to cover the extra costs of supporting children with SEND, but the amounts differed significantly. Its aim in introducing the threshold had been to standardise the amount and give schools more predictable support.
30.The Department highlighted that the funding mechanism allowed mainstream schools that were genuinely inclusive to receive additional funding from local authorities. In 2018–19, 85 of 150 local authorities together budgeted £56.8 million for additional support of this kind. The previous Committee heard from the National Network of Parent Carer Forums that schools with a good reputation among parents for supporting pupils with SEND had become ‘SEND magnets’, which had put further pressure on inclusive schools. However, the way schools were funded did not give them an incentive to be inclusive. Sense suggested to the previous Committee that a pupil premium, whereby additional funding followed pupils with SEND and recognised their individual needs, could be used to reward those mainstream schools that were committed to being inclusive.
31.The Department told us that it had put out a call for evidence during 2019 on how effectively the funding system was operating. It had held a number of workshops and meetings and was analysing the feedback to inform the ongoing review of SEND provision. However, the call for evidence had not indicated that there was consensus on whether there was a better system than the one currently in place, which was partly why the Department was not yet in a position to recommend a different system. The Department agreed that the requirement to fund the first £6,000 of additional support costs had deterred some schools from enrolling pupils with SEND. However, it highlighted that, under a previous funding system, schools had been incentivised to identify children as having SEND, even if they did not, in order to secure extra funding, This had resulted in children being treated as different rather than as included.
32.At January 2019, nearly 122,000 children with SEND attended state special schools (9.8% of all pupils with SEND), at an average cost per pupil of £20,500 a year. A further 20,000 children with SEND (1.6%) attended independent special schools, at an average cost per pupil of £50,000 a year. The number of pupils attending independent special schools increased by nearly a quarter between January 2014 and January 2018, partly because state special schools that could otherwise have met those pupils’ needs did not have places available. The Department said that it needed to make sure that, where local authorities were using independent provision, it was because that was the best solution for the child, rather than because there was no alternative. It told us that some local authorities had a historical level of state special school provision that was more generous than others, which was why it was now investing in new state provision.
33.Between 2013–14 and 2017–18, the cost per place in independent special schools rose by 8.4% in real terms, compared with a real-terms decrease of 1.8% in state special schools. The Department expressed concern over the increasing cost, and told us that it was a focus for action. It said that it had been expanding the number of state special school places through the Free Schools Programme. At December 2018, 34 special free schools had opened, with a further 55 in the pipeline. The Department expected that the open schools would provide an extra 2,700 places when they reached full capacity, but that there might be demand for a further 2,500 state-school places for children with complex needs by 2021. The Department said that it had invited 37 applications for more special free schools and that there was clearly more need to be met.
34.The Department said that the increasing demand for places in special schools was a consequence of the intention in the 2014 reforms to make it easier for children to receive specialist support. It also noted that engaging parents in the process had put some in direct contact with independent special schools that could offer support not available in local state special or mainstream schools. The Department accepted that this was a system that had not been designed to maximise value for money, and that it needed to ensure there was a sufficient range of good provision available to keep costs down.
35.In 2017–18, local authorities spent £662 million on transport to take pupils with SEND to and from school, £102 million (18.4%) over budget. Spending on SEND transport increased by £52 million (8.6%) in real terms between 2014–15 and 2017–18, partly because more children were attending special schools which tend to be further from home. The Department confirmed that transport for children attending special schools was a significant financial pressure on local authorities. It expected the extra places created in new special free schools should help reduce these costs.
36.The previous Committee heard from the Special Educational Consortium that mainstream schools could not be expected to respond to the full range of needs for pupils with SEND, because specialist services had diminished. The Consortium wanted to see greater transparency between local authorities and their schools about what support services schools were expected to provide, and for this to be set out in the local offer. A parent carer and Sense both also confirmed that it had become increasingly difficult for mainstream schools to provide specialist support to pupils with SEND, particularly for those with less common needs.
37.The Department told us that it sought to fund additional units in mainstream schools, for example to support children with autism. It had given capital funding to local areas over the past three years and many had used this money to expand provision in mainstream schools to meet the needs of pupils with SEND, with the aim of negating their need to go to special schools.
42 C&AG’s Report, paras 2.10, 2.18
43 Qq 38, 65
44 Q 70
45 C&AG’s Report, paras 11, 2.4, 2.6
46 Q 98
47 Q 102
48 C&AG’s Report, para 2.8
49 (Oral evidence on 30 September 2019) Q 4
50 (Oral evidence on 30 September 2019) Q 11
51 Qq 97–98
52 Qq 30, 97–98
53 C&AG’s Report, paras 2.16–2.17, Figure 3
54 Qq 77–78
55 C&AG’s Report, para 2.17
56 Qq 79, 81
57 C&AG’s Report, para 2.32
58 Q 81
59 Q 79
60 C&AG’s Report, paras 2.19–2.20
61 Qq 76, 90
62 (Oral evidence on 30 September 2019) Q 6
63 (Oral evidence on 30 September 2019) Q 13
64 (Oral evidence on 30 September 2019) Q 8
65 Q 92
Published: 6 May 2020