What does the #SENDReview Green Paper say about funding the future of SEND?

This post includes an explanation of how SEND funding works in the simplest way possible, before looking at funding in Chapter 5 of the Green Paper. If you're an expert in it already, you can skip to the bit about Green Paper.

The current SEND system has a range of nasty problems. Funding lies behind many of them, and getting more from the public purse is a key priority for the Department for Education (DfE)’s SEND & Alternative Provision Green Paper.

So what does the Green Paper actually say about funding? Before we get to that, let’s describe how SEND funding currently works, and what the current funding situation looks like. This is fiendishly complex, so what follows is a simplified version that mostly describes how SEND is funded in schools. We’ll cover alternative provision (AP) funding in a separate AP article to follow.

SEND Funding 101

The main source of school funding is called the Dedicated Schools Grant (DSG). The DSG is split into four separate blocks. There are two blocks that matter most to us:

  • The Schools Block is the biggest of the four blocks, by a long way. It’s delegated down to individual school budgets, including a ‘notional SEND’ budget which is calculated by the LA, but given to schools. 

The Schools Block pays for mainstream school provision: it mostly pays for pupils without SEND, but it also pays for provision for most kids with SEND too. In fact, most pupils with SEND will be supported by this block – but how much of this they get is largely unclear. 

  • If your child is on SEN Support, then usually all of their support will be funded from the Schools Block.
  • If your kid has an EHCP and is in a standard mainstream placement, then a large chunk of their support will be funded out of the Schools Block. And if your child has a place in a mainstream unit or resourced provision, then a smaller chunk of their support gets funded this way.
  • The High Needs Block (HNB) is what you’ll be reading most about in this article. 

How does the High Needs Block work?

The HNB is sometimes called the ‘SEND budget’ but that's not really true, as the Schools Block section above should have made clear. But the HNB is the only one of the four DSG blocks that’s supposed to be spent purely on SEND.

  • The HNB funds all special school placements and ‘top-up’ funding for them: maintained special schools, special academies, and special free schools. Non-maintained and independent special schools are also funded out of the HNB, and it sometimes helps pay for some types of AP too.
  • The HNB also funds plenty of other SEND things.
    • It provides most of the funding to run mainstream SEND units and resourced provision.
    • It provides extra ‘top-up’ funding for pupils with SEND in mainstream schools who have EHCPs, and occasionally for those who don’t.
    • The HNB funds support in the post-16 sector too: specialist colleges, and extra funding for mainstream further education. 
  • Depending on where you live, the HNB also often pays for locally-employed specialist professionals, such as autism outreach services, educational psychologists, and teachers of the deaf.

You can see how different types of provision are normally funded in the infographic at the end of this article, or open it now in a new window here

All clear? Right, this is where the fun begins. What does the current financial situation look like? It’s grisly – particularly for the High Needs Block.

SEND Funding in 2022

Since the 2014 SEND reforms, High Needs Block spending has shot up, p. Because the system is 0-25 years, more young people can get statutory specialist support for longer. Also, some mainstream schools have struggled to meet need with their current resources and/or mindset. Additionally, the number and proportion of pupils in special schools has risen, in both the state and independent sectors. 

LAs can’t control how much High Needs Block funding they get. They don’t have many authorised tools to keep spending down, so they rely heavily on the unauthorised demand suppression tools they’ve been using for decades: labyrinthine bureaucracy, unlawful policies, parent blame, abuse of Tribunal process, and the rest.

But despite this, over the last few years LAs have spent far more DSG funding than they’ve received from government, almost entirely in the High Needs Block. Things we’d all like to see LAs do – less defending the indefensible at Tribunal, fewer well-catered meetings and awaydays, less money on well-paid managers and consultants – these things alone won’t be enough to make the difference. 

Collectively, LAs have now built up hefty DSG deficits. The Department for Education say that this combined DSG deficit was around £1 billion in March 2021, and it’s grown faster since then. Based on the LA financial data I’ve seen; right now, I’d estimate it at around £1.5 billion, with mainstream ‘top up’ funding currently the most common area where LA high needs budgets are overheating. 

Local government says that they weren’t given enough funding to cope with the increased demand brought about both by the 2014 SEND reforms. Central government points to the 40% increase in the High Needs Block given to LAs over the last three years and the lack of positive impact that this has had on value for money and outcomes. Both central and local government point their fingers at parents, and at some types of schools. 

The DfE isn’t happy with this. It wants the DSG deficit repaid, and no more deficits in the future. After being prodded hard by the National Audit Office in 2019, it wants to make SEND spending “financially sustainable” – keeping spending within the financial limits that they and the Treasury have set out.

All of that – finally – brings us to the Green Paper.

coverage and analysis of SEND Review Green Paper

The Green Paper’s Funding Plan

In the SEND & AP Green Paper, the DfE list three main problems that they want to sort out with the current system: 

  • poor outcomes for pupils with SEND and in AP,
  • the difficulties families face navigating the SEND system, and 
  • funding: not whether there’s enough, but the poor value for money that the public gets from the money that’s spent on SEND and AP.

The DfE’s pitch in the Green Paper is that if they can rejig the SEND system to work better – get earlier identification and intervention to work, get a national set of expected standards in place, increase what they call ‘parental confidence’, and get everyone to know what they’re doing and why - then a lot of costs will come down organically. But they also want to tweak the funding system too.

If this pitch works as intended, more pupils will have lower needs than before, fewer pupils will need EHCPs to get their needs met, more pupils’ needs will be met in mainstream rather than (more expensive) specialist settings, parents will be more confident, and there will be fewer battles over who pays for what, when, and how, with better outcomes for kids baked in.

There’ll be several posts from us in the near future that will further analyse this pitch. They’ll help you work out whether it makes sense, and help you think about what changes might be needed if it doesn’t.

Right now though, I’ll concentrate on the specific changes to high-needs SEND funding arrangements that the DfE are proposing as part of this pitch.

Proposed Funding Changes

The first and biggest thing that the DfE plans to do is to introduce a new national banding system for high-needs spending.

Banding is something that we’ve covered previously at SNJ. Almost all LAs have some form of banding system to dole out part of their High Needs Block funding to mainstream schools, and many also use a banding system to provide ‘top-up’ funding to state special schools too. In and of itself, banding is lawful.

This banding is usually loosely linked to types and levels of SEN and disability. In theory, the higher the need, the higher the band, and the higher the value of the top-up funding that flows from the LA. So Band 1 might be worth £2,000, Band 2 might be worth £5,000, Band 3 might be worth £7,500, and so on.

Each LA has basically grown its own banding system, and that means a lot of variety. Near-identical specialist placements, meeting very similar needs in similar ways can end up getting wildly different funding levels, and the difference is mostly down to which local authority the school is in. And at the level of individual kids, the decision-making is as demented as you’ve come to expect.

The DfE thinks that this current way of using banding, with 152 different grow-your-own local funding arrangements, is inconsistent, inefficient, and contributes to the ‘postcode lottery’ problem that bedevils SEND.

So instead, the DfE plans to introduce: 

“a new national framework of banding and price tariffs for high needs funding, matched to levels of need and types of education provision set out in the new national SEND standards”

As part of this, they also plan to introduce a system of tariffs, that will 

“set the rules and prices that commissioners use to pay providers… …tariffs would ensure the right pricing structures are in place, helping to control high costs attributed to expensive provision.”

This new national banding and tariff structure would not just apply to state schools, but also - for the first time - to independent special schools too, presumably including non-maintained special schools (NMSS). 

Independent & non-maintained special school placements are often the most expensive placements that LAs fund, with the greatest variation in cost - usually because these placements meet the needs of pupils with the most complex, unusual and multi-layered types of SEND.

This is a big change. There is only one SEND funding consultation question in the Green Paper, and it’s on banding and tariff systems. 

Question 18 - How can we best develop a national framework for funding bands and tariffs to achieve our objectives and mitigate unintended consequences and risks?

What to consider when answering Question 18

When thinking about how to answer this, here are a few things to think about:

  1. How can the DfE calculate national banding and tariff values accurately and appropriately, to ensure that each local authority and placement has enough funding to ensure that each pupil’s needs are met? At the moment, the plan is to align these values to needs, and to a future set of SEND standards that have yet to be defined. That’s all we know – what should the DfE bear in mind when calculating?
  1. What assurances and transparency should the DfE provide to confirm that national banding and tariff values will be driven by the needs of children and young people, and not just by the funding envelope in which they operate? Many in the SEND system – particularly those at the sharp end – will be suspicious that a national banding and tariff system provides the DfE with an unmatched opportunity to slash costs with minimal visibility and accountability, with children and young people with SEND paying the real price. The DfE can address these concerns, if they want to.
  1. How will national banding and tariffs be calculated and applied in situations where children and young people have multiple types of SEND? Many banding systems in use today – particularly those that suck - map a single type of need to a single funding band. The needs of real children and young people with SEND don’t often work that way. When placements fail, it’s sometimes because secondary needs aren’t met, rather than primary needs. What should the DfE’s plan be here?
  1. What process should the DfE use to revise and update national banding and tariffs over time, as the underlying costs of provision change? A common weakness of current LA systems is that band values don’t often get updated over time, meaning that the real value of funding gets eroded by inflation. This is a standard cost control measure used by LAs – how will the DfE assure people that they won’t do the same? 
  1. How will a national banding and tariff process deal with genuine local differences? England’s 152 LAs differ hugely in size, population, geography, and salaries. An inflexible one-band-to-rule-them-all will buy much more provision in the north east than it will in the south. Provision costs will differ in rural Cumbria and urban London. What’s the best way to the DfE to factor in this variation?
  1. How will a national banding and tariff process work in the independent and non-maintained sector? Whilst nobody should be weeping for the bottom line of profit-making or private equity-funded independent special schools, most schools in this sector aren’t profit making - and they support a very diverse range of education, health and social care needs with bespoke costs that don’t standardise easily. These schools are often the very last resort for highly vulnerable pupils who have nowhere else to go. 
  1. What recourse will families, schools, and local authorities have if the DfE’s new system does not provide the correct level of funding to meet need? This is an accountability question that we touched on in a recent post. In the Green Paper, the DfE has announced that it intends to regulate the system. Here, it’d be regulating itself. Short of judicial review, what recourse should people have if the DfE don’t deliver?
  1. And finally, what information does the DfE need to provide to demonstrate that it has the capacity to implement this type of change effectively? There is currently little evidence to suggest that they do. If it took them 2.5 years to knock out a Green Paper, how confident are you that the DfE can completely redesign the core of a neglected nuclear reactor whilst it’s melting down, without causing mass casualties?
  1. If the DfE gets this right, then a national banding system has potential to increase efficiency without compromising outcomes. But if the DfE botches implementation, then the downside is hugeThe life chances of children and young people with the most serious and complex needs in the SEND system would be compromised even further, and school budgets would be wrecked - with even less accountability for failure than exists today.

What else is there in the Green Paper on funding?

The rest is a mixture of sticks, carrots, and rope-a-dope body swerves.

  • Safety Valves: The Green Paper confirms that the DfE will keep using its financial ‘safety valve’ programme to help local authorities with big DSG deficits manage them better. There are 14 LAs that have signed up to these ‘safety valve’ agreements so far, and more will follow. 
    We’ve written about how these ‘safety valve’ agreements work here. Basically, the DfE provides some extra funding, as long as the LA agrees to take specific measures to improve its long-term financial situation, usually by curbing or manipulating "demand" for SEND provision. In at least some of these deals, that means cuts---big cuts, in some cases.
  • The DfE is also rolling out a separate smaller financial intervention programme for up to 55 LAs, known as the ‘Delivering Better Value’ Programme. As we wrote here, this is likely to be based on a consultant-led initiative that aims to spark earlier intervention – largely again, by curbing and manipulating requirements for specialist provision.

What about more DfE money?

The Green Paper mentions some chunky funding increases that were first announced back in October last year, but are kicking in now:

  • A £7 billion increase in school budgets over the next three years: this covers the whole school sector, with just a fraction going to SEND. A big chunk of this £7 billion will be used to fund the Schools White Paper pledge to increase starting wages to £30,000 for new teachers. Some of it will also be used to cover the costs to schools of this year’s rise in National Insurance contributions. 

A £2.6 billion SEND capital funding investment, also over the next three years, to “deliver new places and improve existing provision for children and young people with SEND or who require alternative provision.” This was first announced late last year, and the first tranche of this capital funding is being allocated soon. If you want to see how previous similar grants have been used, check our article here.

What didn't the Green Paper say about funding?

Lack of High Needs funding increase: While the capital funding should create and improve tens of thousands of places for children and young people with EHCPs, there is a big 'but'. What the Green Paper didn’t explain that from 2023, this won’t be matched by similar increases in the High Needs Block – the funding pot that pays for delivery of provision (see the infographic). It’s worth asking who will actually be staffing these gleaming new buildings if there’s not going to be enough funding to pay their wages.

No mention of the delegated budget: The Green Paper also dodged a funding issue that’s really important for mainstream schools – the threshold at which they should pay for a pupil’s SEND provision out of their own budget, and the threshold at which the LA should cough up high-needs ‘top-up’ funding. 

For eight years now, the DfE’s guidance has suggested that for an individual pupil, this threshold could be up to £6,000 of a mainstream school’s own budget, on top of standard place funding. The £6,000 figure was first dreamed up in 2009. Many mainstream school leaders think it’s not fit for purpose. Inflation means that £6,000 just doesn’t pay for as much support as it used to – if it had kept up with inflation, the £6,000 threshold set in 2014 should be nearer £7,500 now. 

The Green Paper gives this issue a swerve. The DfE have pledged to “consider” – again – whether the £6,000 threshold figure is still fit for purpose. But that’s it.

Nothing on place funding: And the Green Paper is completely silent about the future of another important funding figure – the basic “place funding” of special schools. The current baseline amount - £10,000 per place - was set in 2013. Again, inflation has worked its acidic magic here: £10,000 in 2013 would be worth somewhere north of £12,800 today. Yet there’s no sign that this will change any time soon.

It’s striking in this Green Paper how little scope there is in the consultation to provide input about the two things that really drive the worst problems in the SEND system – accountability and funding. 

If you want to throw in more on funding than the consultation questions allow, then use two catch-all questions at the back:

Question 20 - What will make the biggest difference to successful implementation of these proposals? What do you see as the barriers to and enablers of success?

Question 22 - Is there anything else you would like to say about the proposals in the Green Paper?

But keep it clean!

Check out the infographic

As ever, this is free to share. If you want to use it for anything other than personal use, contact us

see pdf for accessible version
Click to enlarge.

For an accessible PDF version, click here

Also read:

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Matt Keer

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