Guidance

High needs funding: 2023 to 2024 operational guide

Updated 22 July 2024

This guidance was withdrawn on 4 September 2024

Find the latest guidance in our high needs funding collection.

Applies to England

1. Summary

This guide describes how the 2023 to 2024 financial and academic year high needs funding system will work for all types of education provision. Unless the context relates specifically to the national funding formula (NFF) allocations and operational processes relating to 2023 to 2024, most of this guidance applies to the current financial year and should therefore be implemented immediately.

The guide is primarily for local authorities, schools and colleges, although some sections of the guide may not apply to all organisations. It may also be useful to anyone with an interest in special educational needs and disabilities (SEND), alternative provision (AP) and high needs funding.

The guide explains how the high needs funding system operates for local authorities and different school and college types across England. It can be used to inform local budget planning and consultations over the autumn term and beyond, particularly in agreeing how high needs provision should be supported, commissioned and funded.

The definitions of terms used throughout this guide are detailed below:

Table 1: definitions of terms

Term used	Definition of term
Provider local authority	This is usually the local authority where a school or college is located. The provider local authority funds the high needs places at a school or college from its dedicated schools grant (DSG). For centrally funded schools and colleges, that is, non-maintained special schools (NMSS), special post-16 institutions (SPIs) and a small number of other further education (FE), Education and Skills Funding Agency (ESFA) is considered the provider local authority
Resident local authority	This is the local authority where a child or young person lives (wholly or their main residence), as identified in the school census or individualised learner record (ILR) using their postcode. The local authority where a child or young person lives will be responsible for securing any special educational provision or for making AP, funded from their high needs budget
Commissioning local authority or commissioning school	This is the local authority or school placing a child or young person at a school or college. For those with education, health and care plans (EHC plans) this will be the local authority where they live (the resident local authority). In the case of AP, schools may also be commissioners for children placed in AP settings
Schools and colleges	The term ‘schools and colleges’ is used to refer to all education provider types, including: all mainstream schools (pre and post-16, maintained and academies, which should normally be taken to include free schools unless these are referred to separately, but excluding mainstream independent schools), maintained and NMSS, special free schools, special academies, independent special schools, pupil referral units (PRUs) and AP academies, hospital schools, general FE colleges, sixth form colleges, independent learning providers (ILPs) and SPIs – unless specific references or funding processes are relevant to particular types of school or college

1.1 Next planned publication date

This 2023 to 2024 operational guide will be updated in summer 2023, following publication of the 2024 to 2025 NFF funding allocations.

1.2 Who is this publication for?

This guidance is for:

• local authorities

• all distinct types of schools and colleges, including:
  • early years providers, including maintained nursery schools
  • mainstream schools
  • special schools and academies
  • NMSS
  • independent special schools
  • PRUs
  • other AP
  • 16 to 19 maintained schools and academies
  • FE colleges
  • SPIs
  • ILPs
• those with an interest in how high needs funding operates across England

1.3 What is high needs funding?

High needs funding supports provision for pupils and students with SEND who require additional resources to participate in education and learning, from their early years to age 25 in schools and colleges (excluding students aged 19 to 25 who do not have an EHC plan or students who are over the age of 25) and pre-16 pupils in AP who, because of exclusion, illness, or other reasons, cannot receive their education in mainstream schools.

High needs funding is provided to local authorities through the high needs block of the DSG, enabling them to meet their statutory duties under the Children and Families Act 2014.

The financial allocations from the high needs funding block provide local authorities with resources for place funding and top-up funding for schools and colleges, funding for high needs services delivered directly by the local authority, or under a separate funding agreement with a school or college (including funding devolved to schools and colleges), as permitted by regulations. Local authorities must spend that funding in line with the associated DSG: conditions of grant and School and Early Years Finance (England) Regulations.

High needs funding is also provided directly to some schools and colleges by ESFA, and the respective conditions of grant and funding agreements apply.

1.4 Local SEND responsibilities and accountability

Local authorities must ensure that children and young people and their parents/carers are involved in discussions and decisions about their individual support and local provision, in line with their statutory duties and the SEND Code of Practice. Similarly, local authorities must ensure any changes to SEND provision and high needs funding arrangements are made in close consultation and co-production with the schools and colleges which will be affected. The local authority’s schools forum is one way through, which partnership working across the education sector can be strengthened to ensure their spending decisions are most effective. However, to fulfil local authorities’ statutory duties to keep the services and provision for children and young people with SEND under review, as required by the Children and Families Act 2014, local engagement should take place with all of those providing education to ensure good quality provision can be planned, developed and sustained in line with available resources. This includes early years settings and colleges, as well as parents of children and young people with SEND, and young people themselves.

It is important to note that financial accountability will vary according to school or college type, for example, the governing body for a maintained school and the trust for an academy. Each of these operates with different levels of delegation according to their governance arrangements. In some cases, the relevant legislation, for example, the Children and Families Act 2014, refers to the proprietor (the trust in the case of an academy) as the person responsible, and specifies the headteacher or principal, as the person performing a particular role. In other cases, there are references only to the governing body/proprietor. Consequently, references to schools and colleges should be interpreted as applying to the headteacher, principal, governing body, trust or other proprietor according to the context.

This guidance does not cover funding arrangements for students with SEND who are aged 19 to 25 who do not have an EHC plan or students who are over the age of 25. Links to the funding arrangements for these students are in annex 5: other information.

2. Changes to the high needs funding operational guide for 2023 to 2024

This section sets out the main changes to the 2023 to 2024 high needs funding system, although the NFF and underpinning operational processes and principles remain largely unchanged from 2022 to 2023. We have clarified certain aspects of this guidance, particularly relating to the sections below, which includes an update since the August 2022 publication and renumbering some of the existing annexes:

2.1 March 2023 updates:

• update on the Special Educational Needs and Disabilities (SEND) and Alternative Provision (AP) Improvement Plan

• link to the School and Early Years Finance (England) Regulations 2023

• 16 to 19 national funding rate

• 2022 to 2023 (academic year) in-year growth criteria (element 1 and element 2) for post-16 education

• additional information and guidance references about high needs place and DSG deductions for new special and AP free schools

2.2 January 2023 updates:

• the calculation of additional funding following the Autumn Statement 2022:

• clarifying information about the calculations to be used for allocating the additional funding for maintained and academy hospital schools

• link to the published data for PRUs and AP academies that should be used for the calculation

2.3 December 2022 changes:

• additional funding for 2023 to 2024 – how an additional £400 million, made available following the Autumn Statement 2022, is being allocated to local authorities and schools, and guidance on the additional condition of grant attached to that funding, including supporting information in annex 2.

2.4 August 2022 changes:

• new contextual information about:

  • local SEND responsibilities and accountability

  • annual 2023 to 2024 funding overview

  • the SEND and alternative provision green paper

• special schools: minimum funding guarantee (MFG) – for 2023 to 2024 this will be 3% over 2 years, based on a like-for-like comparison with a special school’s overall budget in 2021 to 2022. This takes into account the additional high needs funding that local authorities are receiving in 2022 to 2023 and 2023 to 2024, some of which is intended to help with the additional costs that schools are facing. Updated guidance and supporting information on the change and process for a local authority’s disapplication request can be found in annex 1: special schools minimum funding guarantee

• notional SEN budget guidance, published separately and referenced in the mainstream schools, academies and free schools section

• annex 3: responsibility for children and young people who move between local authorities - further clarification with reference to belonging regulations

3. Annual 2023 to 2024 funding overview

3.1 High needs funding allocations to local authorities for 2023 to 2024

High needs funding is increasing by a further £970 million, or 10.6%, in 2023 to 2024, following the £1 billion increase in 2022 to 2023 and £1.56 billion increase over the previous 2 years. The total high needs budget of £9.7 billion announced in July 2022 has been increased by £400 million, to £10.1 billion, as a result of additional schools funding included in HM Treasury’s 2022 Autumn Statement. The vast majority of this total high needs funding of £10.1 billion is allocated through the high needs NFF and included in local authorities’ DSG allocations.

3.2 National funding formula for 2023 to 2024

The main changes to the 2023 to 2024 NFF are set out below: more details can be found in the NFF policy document, calculation tables and technical note.

The funding floor factor in the high needs NFF for 2023 to 2024 is 5% per head of 2 to 18 population, which means that every local authority will receive through the NFF at least 5% per head more than they received in 2022 to 2023. This, together with the additional funding referred to in additional funding for 2023 to 2024, guarantees an increase of at least 9.8% per head for all authorities.

This increase is not calculated on elements of the formula that are subject to later updates and is in proportion to estimated population changes (so a projected decrease in population will result in a lower overall cash percentage increase).

The limit on gains in the NFF is set at 7%, calculated based on per head of population and using the 2022 to 2023 funding baseline. That funding baseline includes the extra supplementary funding allocations announced in December 2021. Full details of the NFF for 2023 to 2024 can be found in the schools operational guide: 2023 to 2024 and provisional allocations to local authorities were published in July 2022.

The basic structure of the high needs NFF for 2023 to 2024 has not changed from the 2022 to 2023 NFF. However, due to the coronavirus (COVID-19) pandemic there is no appropriate 2020 or 2021 attainment data to use for the 2 low attainment factors; therefore, 2019 data has been used in place of 2020 and 2021 data for the 2023 to 2024 high needs allocations. This aligns with the approach taken in the schools NFF.

The high needs funding allocated to local authorities for 2023 to 2024 takes into account that colleges offering extra hours of study to students with high needs may require additional funding. You can read further guidance on the additional hours requirement, which takes effect from academic year 2022 to 2023.

We expect local authorities and colleges to work together in deciding what constitutes as an equivalent of additional time for a student with high needs, and/or with an EHC plan, and – as explained in the top-up funding section of this guide – to discuss the level of top-up funding to ensure that it is sufficient.

3.3 Additional funding for 2023 to 2024

The additional £400 million allocated following the 2022 Autumn Statement is intended to reflect likely cost increases local authorities and schools will face in the provision for children and young people with high needs. The distribution methodology used in allocating additional high needs funding to local authorities in 2022 to 2023 is again being used for the allocations of this 2023 to 2024 additional funding, i.e. a percentage increase (4.6% in 2023 to 2024) to the funding floor and proxy factors in the formula which, in 2023 to 2024, guarantees an increase of at least 9.8% for all authorities. You can find further information about each local authority’s additional allocation in the pupil referral unit (PRU) and alternative provision (AP) academy additional funding allocations for 2023 to 2024 document.

Part of the additional funding allocated to the department following the 2022 Autumn Statement is being distributed in 2023 to 2024 as a mainstream schools additional grant, separate from the DSG. The average increase that schools will receive through this grant is 3.4% of their NFF allocation. This is an additional grant because it was not possible for the department to include this money in the DSG or for local authorities to include it within their local funding formulae in time.

In the financial year 2023 to 2024 maintained special schools and pupil referral units, special and alternative provision (AP) academies (including free schools), and maintained and academy hospital schools, will also receive a separate allocation amounting to 3.4% of their total place and top-up funding income, similar to the mainstream schools additional grant. This will be paid directly by the local authority which maintains the school or (in the case of academies) previously maintained the school, or (in the case of special and AP free schools) in whose area the school is located. Local authorities are required, by further conditions of grant attached to their additional high needs funding, to pass on to these schools the allocations of additional funding using a proportion of their additional high needs funding. Guidance on implementing this condition of grant is set out in annex 2.

The remainder of local authorities’ allocations of additional high needs funding can be used for other purposes, such as top-up funding for mainstream schools (including those with special units or resourced provision) as well as funding for non-maintained and independent special school placements and SEND services.

3.4 Funding increases for schools and colleges

Other than the requirement for local authorities to pass on additional funding to certain schools as described in 3.3 above, it is the top-up funding rather than the place funding that is intended to reflect the cost increases that schools and colleges are facing. Schools and colleges should therefore discuss with their local authority any further shortfall in funding that they believe is necessary to make the provision that has been commissioned. Special schools’ minimum funding guarantee (MFG) for 2023 to 2024 has been set at 3% compared to 2021 to 2022 funding levels. This is to reflect that a proportion of the increased funding received by local authorities over the 2 years, (2022 to 2023 and 2023 to 2024) must be passed on to schools in 2023 to 2024, if it has not already been passed on in 2022 to 2023. The additional funding allocations referred to above must be excluded from the MFG calculations, so that schools receive both the 3% MFG increase over 2 years and the additional 3.4% in 2023 to 2024. Further details can be found in annex 1.

4. Improving special educational needs and disabilities (SEND) and alternative provision (AP)

On 2 March 2023, we published the Special Educational Needs and Disabilities (SEND) and Alternative Provision (AP) Improvement Plan in response to the green paper published in March 2022.

Local authorities should do what they can to use resources effectively for children and young people with SEND and those in AP. You can find further information on research examining practice in local authorities which appeared to manage high needs budgets effectively, which may offer helpful examples to show how local authorities can improve and manage their high needs systems and associated spending in a sustainable way.

5. Important dates

The timeline below shows the implementation of the 2023 to 2024 high needs funding arrangements, including actions for local authorities and schools and colleges.

Schools and colleges must ensure the school census or individualised learning record (ILR) guidance is followed on all items that are, or will be, used for funding purposes, including elements of the NFF. It is critical that all schools and colleges check the latest guidance to make sure that they understand what is required, including identifying those pupils or students for whom they receive high needs top-up funding.

5.1 October 2022

Department for Education:

• 2023 to 2024 guidance on the place change notification process published and local authorities workbook issued

• January 2022 school census data for special academies and free schools published

• 2021 to 2022 and 2022 to 2023 high needs place numbers updated (as of 1 October 2022)

Local authorities:

• continue discussions with all types of schools and colleges and other local authorities to ensure positive strategic demand and supply planning to enable agreement to be reached on 2023 to 2024 high needs place numbers, in preparation for completion of the data return to ESFA

Schools and colleges:

• continue discussions with local authorities and reach agreement on 2023 to 2024 high needs place numbers, in preparation for the local authority data return to ESFA

• all maintained schools, academies, NMSS and PRUs, to complete the autumn school census

• FE colleges, sixth form colleges, ILPs, 16 to 19 academies and SPIs are to submit 2022 to 2023 ILR R14

5.2 November 2022

Department for Education:

• the AP free schools 2023 to 2024 place process launched

Local authorities:

• deadline for local authority submission of 2023 to 2024 high needs place number changes and requests for local authority hospital education funding changes to ESFA

• deadline for requests to disapply conditions of grant relating to movement of funding from the schools block of the DSG

Schools and colleges:

• complete discussions with local authorities and reach agreement on 2023 to 2024 high needs place numbers, in preparation for the local authority return to ESFA

• AP free schools: discuss commissioning arrangements with local authorities and schools for the 2023 to 2024 academic year

5.3 December 2022

Department for Education:

• 2023 to 2024 DSG schools, central school services and high needs block allocations published

• initial 2023 to 2024 DSG early years block allocations published

FE providers:

• FE colleges, sixth form colleges, ILPs, 16 to 19 maintained schools and academies, and SPIs submit 2022 to 2023 ILR R04

5.4 January 2023:

Department for Education:

• 2023 to 2024 high needs place change notification outcomes published on GOV.UK

• 2021 to 2022 R14 ILR data returned by colleges published

• 2-week enquiry window for local authorities and relevant schools and colleges to raise place change related issues

Local authorities:

• calculate additional funding allocations for special and AP maintained schools and academies and consult schools on the data and calculations used

• check published outcomes and ensure queries are discussed with relevant schools and colleges and, if necessary, those raised during the 2-week enquiry window

• this should include checking the outcomes for schools and colleges located in other local authorities, where a local authority places large numbers of students

• deadline for submitting the final 2023 to 2024 authority proforma tool (APT) to ESFA. This covers all mainstream maintained schools and academies: including pupil numbers on the October 2022 census in resourced provision (RP) and special educational needs (SEN) units to support the calculation of funding for occupied and unoccupied places

Schools and colleges

• schools and colleges to check 2023 to 2024 funded place numbers are correctly reflected in the published outcomes, ensure any queries are discussed with the relevant local authority and, if necessary, those raised with ESFA during the 2-week enquiry window

• deadline for AP free schools 2023 to 2024 place number returns

• all maintained schools, academies, NMSS and PRUs to complete spring 2023 school census

5.5 February 2023

Local authorities:

• 2-week enquiry window closes for raising queries with ESFA regarding 2023 to 2024 funded place numbers

• review of, and amendments to EHC plans must be completed by 15 February for pupils moving into, or between, schools in that calendar year

• 2023 to 2024 budgets issued to maintained mainstream schools, special schools and PRUs

Schools and colleges

• 2-week enquiry window closes for raising queries with ESFA regarding 2023 to 2024 funded place numbers

• FE colleges, sixth form colleges, ILPs, 16 to 19 maintained schools and academies and SPIs to submit 2022 to 2023 ILR R06

5.6 March 2023

Department for Education:

• publication of the 2023 to 2024 high needs place numbers for schools and colleges

• 2023 to 2024 academic year allocations to be issued to FE colleges, sixth form colleges, free schools, academies, NMSS, SPIs, ILPs and 16 to 19 academies

• local authorities’ DSG updated

Local authorities:

• additional high needs funding allocations to special and AP maintained schools and academies to be confirmed following consultation

• review of, and amendments to EHC plans, including specifying the post-16 provision and naming the school or college, must be completed by 31 March for students moving from a secondary or special school to a college or apprenticeship in that calendar year

• complete EHC plan review process by 31 March for students moving between post-16 colleges, where a young person is expected to transfer to a new post-16 college in the new academic year

Schools and colleges:

• check high needs allocation is received and correct

5.7 June 2023

Department for Education:

• issue to local authorities the NFF import/export adjustments data at school and college level and the special free school adjustments

Local authorities:

• review NFF import/export adjustment data

FE providers:

• FE colleges, sixth form colleges, ILPs, 16 to 19 academies and SPIs to submit 2022 to 2023 ILR R10

5.8 July 2023

Department for Education:

• 2023 to 2024 high needs place numbers updated and published (as of 1 July 2023)

• 2023 to 2024 DSG update to reflect final school and college level allocation decisions, NFF import/export adjustments and special free school adjustments

6. High needs funding and the dedicated schools grant (DSG)

The DSG is the main source of government funding for the provision of education by local authorities and schools in England. Its use is governed by the DSG: conditions of grant one of which requires the grant to be spent in accordance with the School and Early Years Finance (England) Regulations.

The DSG is intended to meet the educational costs of pupils in primary and secondary education, as well as the educational costs of special educational provision for children and young people with SEN in post-16 provision, including those aged over 19 and up to 25 who have an EHC plan. The DSG cannot be used for purposes other than those specified in the conditions of grant and regulations.

The DSG is divided into 4 notional blocks:

• the schools block (for mainstream schools and academies)

• the high needs block

• the central school services block

• the early years block

Each of the 4 blocks of the DSG is determined by a separate NFF.

6.1 Transfers between blocks of the DSG

Transfers between blocks can be made from the high needs and the central school services blocks. Movement from the early years block can be made in compliance with the early years pass through rate conditions, details of which can be found in the early years entitlements: local authority funding of providers operational guide. The schools forum must be consulted on all transfers between blocks. The schools block is ringfenced which means that this block must be spent for the purposes specified in the conditions of grant. Local authorities retain the ability to transfer up to 0.5% of funding out of the schools block, with the agreement of the schools forum.

Formal permission from the Secretary of State (a disapplication of the DSG conditions of grant) will be required for transfers out of the schools block above 0.5%, or any amount without schools forum approval; this applies to any transfers even if approval has been given in previous years. Local authorities should consult with local maintained schools and academies; the schools forum should take these views into account before making their decision.

The deadline for local authorities to submit a block movement disapplication request is 18 November 2022.

Further details, including the disapplication proforma and supporting documentation can be found in the movements between blocks section of the schools operational guide: 2023 to 2024.

Most proposals by local authorities to move funding from their schools block arise because of pressures on their high needs budgets. In view of the increases in high needs funding local authorities are continuing to receive, we expect them to carefully consider the impact of these increases when making decisions on block movements.

6.2 DSG management plans

A significant number of local authorities have been incurring a deficit on their overall DSG account, largely because of overspends within their high needs block. The DSG: conditions of grant set out that any local authority with an overall deficit on its DSG account at the end of the financial year, or whose DSG surplus has substantially reduced during the year, must be able to present a plan to the department and cooperate in handling that situation by:

• providing information, as and when requested by the department about its plans for managing its DSG account in the 2023 to 2024 financial year and subsequently

• providing information, as and when requested by the department about pressures and potential savings on its high needs budget

• meeting with department officials, as and when they request to discuss the local authority’s plans and financial situation

• keeping the schools forum updated regularly about the local authority’s DSG account and plans for handling it, including high needs pressures and potential savings

We have developed a DSG deficit management plan template and accompanying guidance for local authorities to use to develop evidence-based and strategic plans covering the provision available for children and young people with SEND. In all cases, we expect local authorities’ management plans to focus on how they will bring in-year spending in line with in-year resources.

The high needs benchmarking tool helps to facilitate a better understanding of how a local authority’s high needs expenditure and use of provision compares with that of other authorities and to prompt local discussion of how current spending patterns might need to change. In addition, we have published research and guidance on managing special educational needs provision and the high needs budget effectively.

Further details on this process can be found within the DSG management plans section of the schools operational guide: 2023 to 2024.

7. How local authority high needs allocations are calculated

ESFA makes an allocation to local authorities for high needs as part of the DSG. High needs block allocations are calculated through the high needs NFF.

Local authorities decide how much to set aside in their high needs budget for place and top-up funding given to schools and colleges, and for central high needs services (some of which may be devolved to schools or colleges and funded through a service level agreement). This should take account of the overall amount required to meet the continuing needs of children and young people with SEND, and those who need AP. Local authorities should account for aspects of provision related to SEND and AP, as permitted by the School and Early Years Finance (England) Regulations. Schedule 2 to the regulations sets out the categories of central expenditure that local authorities are permitted to incur.

7.1 High needs NFF factors explained

There are 12 elements to the high needs NFF. These form the basis for local authority high needs block allocations. The following diagram shows the funding factors in the high needs NFF. See the high needs national funding formula: technical note for more information.

Figure 1: the structure of the high needs national funding formula

Further adjustments outside the normal formula distribution and allocation arrangements may be made to reflect other changes - in particular, for those local authorities with a special free school in their area or pupils resident in their area attending a special free school in another local authority.

Information on how adjustments for special free schools have been calculated is available in the special free schools adjustments: a guide for local authorities.

Adjustments may also be made because of local changes, for example, if an NMSS becomes a special academy, or an FE college merges with another college in a different local authority area, depending on the timing of the changes.

Basic entitlement factor

The basic entitlement factor allocates funding using data on the pupil and student numbers at special schools in the local authority and performs the same role as its counterpart within the mainstream schools NFF and 16 to 19 NFF. The basic entitlement funding rate is £4,660 per pupil or student for 2023 to 2024 and is subject to an area cost adjustment.

Historic spend factor

The historic spend factor value remains at the same cash level as in the 2022 to 2023 NFF: it is 50% of each local authority’s actual 2017 to 2018 spending on high needs.

Proxy factors

The remaining high needs funding, after deductions for the basic entitlement, hospital education and historic spend factors, is then available for the proxy factors listed below:

• population factor

• free school meals (FSM) factor

• income deprivation affecting children index (IDACI) factor

• bad health factor

• disability factor

• key stage 2 low attainment factor

• key stage 4 low attainment factor

Due to the COVID-19 pandemic, there is no appropriate 2020 or 2021 attainment data to use for the 2 low attainment factors. Following consultation, 2019 data has been used as a proxy for both the 2020 and 2021 data in the 2023 to 2024 high needs NFF.

Weightings are assigned to determine the amount allocated through each of the proxy factors. The weightings are applied separately for SEND (90% of funding) and AP (10% of funding), before being combined. The weightings remain the same in the 2023 to 2024 formula, as in previous years.

Funding floor factor

This ensures local authorities do not fall below a minimum level of funding. The factor is applied to the funding calculated through historic spend factor and proxy factors. The per head floor ensures relevant elements of the funding increase on a per head basis from the 2022 to 2023 funding baseline by at least 5% in 2023 to 2024, based on the Office for National Statistics (ONS) estimated population of 2 to 18-year-olds. The 2022 to 2023 funding baseline includes the supplementary high needs funding allocations that were announced in December 2021, in addition to the 2022 to 2023 NFF allocations.

Hospital education and historic teachers’ pay and pensions funding factor

Local authorities pay for places in their maintained hospital schools and the equivalent academies, and for other hospital education placements and services.

The local authority hospital education allocations for 2023 to 2024 are calculated as the 2022 to 2023 hospital education funding, plus the full year equivalent of any adjustments made during 2022 to 2023, plus a 5% uplift.

This factor also includes funding for AP and other historic teachers’ pay and pensions costs that prior to April 2021 were paid as separate grants. The AP (including hospital education) teachers’ pay and pension funding, together with the pensions supplementary grant funding, is the same as for the final 2021 to 2022 allocations. These amounts are for historic costs and, therefore, have been held at the same level as in the 2021 to 2022 formula. The basic entitlement factor includes an uplift to reflect the remaining funding for historic teachers’ pay and pensions costs incorporated into the NFF from April 2021.

The factor funding is calculated as a sum of the hospital education funding, AP teachers’ pay and pensions, and pensions supplementary grant funding. Further information is available in historic teachers’ pay and pensions funding.

7.2 Import/export adjustment

This is a net adjustment to local authorities’ DSG, implemented through the July DSG update, reflecting the difference between high needs pupils and students living in one local authority and attending a school or college in another. The timelines for making these adjustments are included in the important dates section.

How the import/export adjustment works

The high needs NFF is designed to allocate funding to local authorities for the needs of the children and young people who live in the local authority’s area, regardless of where they are educated. Local authorities can face higher costs because they are expected to pay from their DSG for the costs of high needs places in schools and colleges in their area even if those places are occupied by pupils and students with high needs who live outside the local authority area. Conversely, local authorities that place pupils and students with high needs in other local authority schools and colleges face lower costs. We therefore make an annual adjustment in the funding formula to reflect where pupils or students live in one local authority and attend a school or college in another.

The import/export adjustment calculation uses school census and ILR data and compares the number of high needs pupils and students. It is calculated as a net figure based on:

• the number of high needs pupils and students educated at a school or college in the local authority area minus

• the number of high needs pupils and students living in their area and

• the net number of pupils and students, either positive or negative, is then multiplied by £6,000

If the net import/export adjustment is positive, the local authority is considered a net importer. This is because the local authority provides education to more pupils or students than live in their area and so faces higher costs (for example, because they pay for more high needs places at a school or college in their area).

If the net import/export adjustment is negative, the local authority is considered a net exporter. This is because the local authority has more pupils or students living in their area attending schools or colleges in other areas and so faces lower costs (for example, because they do not pay for their high needs places at schools or colleges outside their area).

Where the number is zero, and imports and exports balance, the cost to the local authority is zero and no adjustment is made.

Import/export data

The 2023 to 2024 import/export data is made available to local authorities at school and college level in June 2023 and the total net adjustment reflected in the July 2023 DSG update. In the meantime, the 2022 to 2023 import/export data is used provisionally in the NFF and DSG allocations.

The pupils and students counted in the calculation of the adjustment are shown below.

From the January school census (aged 4 to 18) for pupils and students:

• with top-up funding in mainstream schools and academies

• in special schools and academies (including special free schools)

• in NMSS

From ILR R06 for students aged 14 to 18 and those aged 19 to 24 with EHC plans who receive top-up funding in:

• FE colleges

• sixth form colleges

• ILPs

• 16 to 19 academies

• SPIs

For all special schools and colleges, the data used for the import/export adjustments should be broadly consistent with the numbers of places funded in that academic year. It should be noted that places for post-16 students with high needs may be funded through a local arrangement with the provider local authority, not necessarily as places in the school’s or college’s allocation.

Schools and colleges must ensure that only those pupils and students with high needs are included on the relevant school census and ILR. Pupils and students with high needs are those who have additional support assessed by the local authority as costing more than £6,000 per annum and for whom the local authority is paying top-up funding to the school or college. In their discussions with schools and colleges, it is also important that local authorities are aware of the number of pupils and students with high needs that are included on the school census and ILR and understand the impact on their budgets.

The import/export adjustment does not use any data relating to pupils in AP. This is because the school census data we would use for such an adjustment is not accurate enough. The pattern of admissions and placements in AP can vary significantly at different times and a school census snapshot does not necessarily capture pupil movement in the same way as for special schools.

The import/export data is based on where the child or young person lives and receives their education. Further information about the responsibility for pupils and students who move between local authorities is detailed in annex 3: responsibility for children and young people who move between local authorities.

7.3 High needs place deductions

For the following schools and colleges, place funding is included in local authorities’ initial DSG allocations and then deducted from the provider local authority’s DSG by ESFA to pay the funding direct:

• mainstream academies and free schools

• special academies and free schools

• AP academies

• 16 to 19 academies and free schools

• general FE colleges, sixth form colleges and ILPs

The number of high needs places deducted is based on the annual place change notification process. ESFA do not deduct for places at centrally funded NMSS, SPIs, and some FE colleges; these deductions are effectively made through the NFF import/export adjustment.

Deductions are made for some places at AP free schools based on census data. For the 2023 to 2024 academic year, deductions will be made for places at AP free schools that opened during or before the 2021 to 2022 academic year. The deduction is from the local authority where a pupil lives, based on the number of pupils aged 5 to 15 years, main or sole registered at that AP free school at the time of the October 2022 census.

The academic year place funding rates are shown in the school funding table, with further information in the section on type of school. The 2022 to 2023 and 2023 to 2024 academic year place amounts are prorated as follows, to calculate DSG deductions for the 2023 to 2024 financial year, by place and type of school or college:

Table 2: pre-16 DSG deductions by type of school

Type of school	AP: 2022 to 2023 A/Y (*5/12)	AP: 2023 to 2024 A/Y (*7/12)	SEN unit/resourced provision: 2022 to 2023 A/Y (*5/12)	SEN unit/resourced provision: 2023 to 2024 A/Y (*7/12)	Special schools: 2022 to 2023 A/Y (*5/12)	Special schools: 2023 to 2024 A/Y (*7/12)
Mainstream academies and free schools	N/A	N/A	£2,500 or £4,167	£3,500 or £5,833	N/A	N/A
Special academies and free schools	£4,167	£5,833	N/A	N/A	£4,167	£5,833
AP academies and AP free schools	£4,167	£5,833	£4,167	£5,833	N/A	N/A

Table 3: post-16 (SEN places) DSG deductions by school or college type

Type of school or college	Schools: 2022 to 2023 A/Y (*4/12)	Schools: 2023 to 2024 A/Y (*8/12)	Post-16 schools (16 to 18): 2022 to 2023 A/Y (*4/12)	Post-16 schools (16 to 18): 2023 to 2024 A/Y (*8/12)	Post-16 schools (19 to 24 with EHC plan): 2022 to 2023 A/Y (*4/12)	Post-16 schools (19 to 24 with EHC plan): 2023 to 2024 A/Y (*8/12)
Mainstream academies and free schools	£2,000	£4,000	N/A	N/A	N/A	N/A
Special academies and free schools	£3,333	£6,667	N/A	N/A	N/A	N/A
AP academies	£2,000	£4,000	N/A	N/A	N/A	N/A
16 to 19 academies/FE/ILPs	N/A	N/A	£2,000	£4,000	£2,000	£4,000

The above rates are multiplied by the number of places to calculate the total deduction amount.

8. How funding is allocated to schools and colleges

Schools and colleges receive high needs funding in different ways.

8.1 Core funding

The annual allocation a school or college receives through the respective funding formula or as high needs place funding, either directly from the provider local authority (for maintained schools and PRUs, based on the financial year); or from ESFA (for academies, NMSS, FE colleges and SPIs, based on the academic year).

8.2 Top-up

The funding required over and above the core funding, allocated by local authorities to schools and colleges from their high needs budget, to enable a pupil or student with high needs (especially when an EHC plan is in place) to participate in education and training.

8.3 Funding under a service level agreement

Where a service relating to SEND or AP has been commissioned by a local authority and is delivered by a school or college, the local authority can fund that service from its high needs budget, where permitted by the funding regulations. Local authorities also allocate high needs funding to independent schools to meet the cost of the placements they commission, rather than as place and top-up funding.

The section funding by type of education provider provides further information on how high needs provision is funded in different types of school or college for both pre- and post-16 pupils and students.

9. High needs place funding

Place funding is allocated to:

• all types of special schools, apart from independent special schools

• all types of mainstream school with an SEN unit or RP, and/or a sixth form that has pupils with high needs

• all types of college that educate students who have high needs

Place funding is allocated as an annual amount of core high needs funding. Once place funding is allocated, it is not associated with or reserved for a specific local authority or individual pupil or student. It is for the school or college to decide how best to apportion their total allocated place funding across the actual number of places commissioned by local authorities, considering the provision and support that may be specified in the individual pupils’ or students’ EHC plan.

Place funding is not withdrawn if an individual does not occupy a funded place. It provides all eligible schools and colleges with a guaranteed budget for the year and gives them a degree of financial stability. A local authority may not seek to recover funding for places which it perceives as being unused from the previous or current academic year. Similarly, local authorities should not automatically be charged an extra £6,000 or £10,000 per head top-up funding for a pupil or student with high needs if a school or college has filled all funded places (irrespective of which local authority has filled them). Further guidance can be found in example: where pupil or student numbers exceed allocated places in a school or college.

Local authorities may, with the agreement of the relevant members of the schools forum, retain part of the place funding of maintained special schools and PRUs to fund specified central services relating to maintained schools only. Further information about place funding for AP, PRUs, AP academies and AP free schools can be found in alternative provision, including information on the different funding arrangements for pre-and post-16 pupils.

9.1 How to determine funded place numbers

In most cases, determining place funding is the responsibility of the local authority in whose area a school or college is located. The exceptions to this are special post 16 institutions, AP free schools, NMSS and a small number of centrally funded FE colleges and ILPs.

Place funding should reflect both local authorities’ recent commissioning activity and their future forecasts (for example, as set out through strategic plans to secure suitable SEND provision and AP in line with their statutory responsibilities). In determining the number of funded places for individual schools and colleges, local authorities should consider:

• the number of placements made in recent years not only by the provider local authority, but by any other local authorities

• the number of children and young people currently placed at the school or college who might be expected to continue their placement

• in the case of AP, local schools’ commissioning activity and plans should also be considered

Dialogue between local authorities and all schools and colleges that offer high needs provision is essential when preparing for the allocations of high needs place funding for the following academic year. Local authorities should consult with schools and colleges in their area and discuss both the current numbers of places being taken up, which will be included on the school census and ILR returns, and the number of places required in future.

Where a school or college believes it is not being funded for the correct number of places, it should raise this with the provider local authority. These discussions must consider the total number of places required to meet the needs of all local authorities, not just those of the local authority in which the school or college is located. This is particularly important for colleges and special schools, as the import/export adjustment should ensure that funding in the local authority’s DSG reflects those pupils and students with high needs resident in one local authority area who attend a school or college in other areas.

Where a school or college is admitting pupils or students with high needs from multiple different local authorities, the provider local authority should first seek information from the school or college on the number of places currently being commissioned from each local authority and how those numbers are expected to change in the following academic year. Significant changes may be confirmed with the commissioning local authorities concerned, and they should also proactively contact the relevant provider local authority in such circumstances. When doing so, commissioning local authorities should provide clear and accurate information to the provider local authority in good time, to enable collation of this information in advance of the place change notification process deadline. We are aware of issues that may arise when FE colleges in different areas merge into a single college and we expect that the approach described is adopted in these circumstances.

9.2 Changes to place numbers

Guidance on the place change notification process, which will be published in October 2022, explains the process for notifying ESFA of changes to 2023 to 2024 high needs place numbers at: academies, free schools (excluding AP free schools), FE colleges, sixth form colleges, ILPs and SPIs not previously funded by ESFA.

The outcomes from the high needs place change process for academic year 2023 to 2024 which will be published in January 2023, is followed by a 2-week enquiry window follows, where local authorities and schools and colleges raise significant issues.

AP free schools will receive guidance on notifying ESFA of their proposed high needs place numbers for 2023 to 2024 which will be published in November 2022.

2023 to 2024 place funding allocations for NMSS are based on the October school census and existing SPIs allocations are based on ILR R06 data.

Local authorities have local flexibility to change funded place numbers at maintained schools and PRUs, and these numbers should be included on each local authority’s section 251 (s251) budget return for 2023 to 2024.

If a local authority maintained school or PRU converts to an academy, place numbers must be agreed between the local authority and school. To ensure that the school is funded on the correct basis, the local authority should notify the department’s project lead of the agreed place number. This is recognised by completion of the department’s notification of changes to funded high needs places form. This is supplied by the department’s project lead and must be returned before the school converts. If no notification is received, place numbers recorded in the 2022 to 2023 s251 (September to March) will be rolled forward.

A notification of changes to funded high needs places form must be completed for all schools where post-16 places are required. This is because post-16 place data is not set out within the s251 and may even be included within the recorded pre-16 place numbers. In these cases, completion of the form will ensure clarity of the split between pre- and post-16 requirements.

9.3 Where pupil and student numbers differ from allocated places

We recognise that there will frequently be a difference between the number of funded high needs places and the actual number of pupils or students in attendance. However, as explained in the high needs place funding section, place funding is not reserved for individuals, it’s for schools and colleges to apportion the total allocated place funding across the actual number of pupils and students with high needs. In most cases, the variance between place numbers and pupils or students is small, or only has a marginal impact on cost. ESFA is unlikely to revise annual allocations to schools and colleges where the number of commissioned places changes after the annual processes.

Place funding should not be withdrawn if an individual does not occupy a funded place and a local authority may not seek to recover funding for places it considers unused in the previous or current academic year.

If the number of pupils or students agreed as having high needs by the resident local authority exceeds the number of funded places, the school or college should approach the provider local authority. In practice, that could result in the school or college incurring additional costs in making special provision not met through the top-up funding amount normally paid. We expect the provider local authority to engage with the school or college to agree how the costs of the additional special provision required are to be met, and these conversations should take place as early as possible. Centrally funded NMSS, SPIs and a small number of ILPs and FE colleges should approach ESFA. The provider local authority should not automatically be charged an additional £6,000 or £10,000 per pupil or student. The amount should reflect the actual costs of making additional special provision available, which may only be marginal. Importantly, the provider local authority and the school or college should seek to agree how those costs are to be met.

Local authorities need to be mindful that the import/export adjustment should compensate the provider local authority for actual pupils or students living in other local authority areas who attend the school or college, albeit in the subsequent financial year. This will avoid the position where the commissioning local authority effectively funds twice – both through increased top-up funding direct to the school or college and through the £6,000 import/export adjustment in the NFF. These arrangements apply to colleges and special schools that are experiencing year-on-year growth in the number of pupils and students with high needs that they admit.

Example: where pupil or student numbers exceed allocated places in a school or college

The following is an example of how the high needs funding arrangements should operate when a school or college has more pupils or students with high needs than the number of places for which it has been funded. Although it is illustrated using a college located in a local authority area (the provider local authority) with several other local authorities also commissioning places, similar arrangements may also apply to other schools and colleges, including special academies.

The example demonstrates how the place funding for schools and colleges, and consequent deductions from local authorities’ high needs allocations work together with the import/export adjustment. This shows the flow of high needs funding between local authorities, schools and colleges when a school or college has to make additional special provision for a number of pupils or students that exceeds the funded place number, including where inter-authority collaboration is required:

1) Following data sharing and discussion with a college and where there is a change from the previous academic year, the provider local authority submits the total high needs place numbers to ESFA in November, through the place change notification process, in advance of the start of the academic year.

2) In this example, the local authority and college have agreed on 100 places for the 2023 to 2024 academic year, which comprises the total number of places to be filled by high needs students from all local authorities.

3) The number of college places to be funded is published by ESFA in January 2023 and, during the subsequent enquiry window, the college and local authorities check the number, ensuring they are content that it reflects local discussions.

4) ESFA issues an allocation to the college in March 2023, in advance of the academic year. This reflects the 100 places, providing £600,000 of high needs funding, (100 places × £6,000 place funding).

5) The provider local authority’s DSG will also be updated in March 2023 and 100 places deducted from their high needs allocation at £6,000 per place, prorated for the academic year, based on the 8 months from August to March (100 places × £4,000).

6) The resident local authority (the local authority in which the student is ordinarily resident, and which commissions the place) needs to have notified the college directly that the student has high needs and have agreed top-up funding. The provider local authority (if not commissioning the place) and ESFA do not need to be involved in these conversations. However, we would encourage neighbouring local authorities to collaborate on the special provision required for their students. This includes cooperation on associated commissioning arrangements and top-up funding levels.

7) In the lead up to the academic year, several local authorities have commissioned further high needs places in excess of the 100 places that the college has received place funding. Therefore, the college has 120 high needs students at the start of the academic year 2023 to 2024.

8) This has resulted in additional costs for the special provision required by these extra 20 students that the college cannot meet through its existing funding streams. This includes the £6,000 high needs place funding in their allocation and standard top-up funding rates in respect of the 120 high needs students. The college should not seek to recover these costs through the top-up funding sought from the resident authorities commissioning places for the extra 20 students. This is because places funded at £6,000 per place are not reserved for individual pupils or specific local authorities and funding changes may arise from the local authority net import/export DSG adjustment.

9) Therefore, the college discusses with the provider local authority, if possible before the start of the academic year, the scale of the additional special provision that it is being expected to make available and the costs involved. It is agreed that the provider local authority will allocate a further £50,000 of high needs funding to contribute to the additional costs incurred by the college. This is to help meet the additional costs of making the provision required by the additional students, on top of the normal funding streams.

10) It is important to note that within our lagged funding system, we would normally expect the costs of in-year growth to be met by the college. At the same time, local authorities will have received an increase in high needs funding to recognise population and other factors that have contributed generally to the costs of growth. Where that growth is significant in a college, it is reasonable for the provider local authority to consider what extra funding might be needed by the college to maintain the required level of provision, on an exceptional basis. The college should not expect the provider local authority to pay an extra £6,000 for every extra student placed over and above the college’s 100 places. The provider local authority should be compensated for the costs of the high needs’ places filled by students resident in other local authorities, including 5 of the additional 20 students via the import/export adjustment in the 2024 to 2025 financial year. This includes the final term of the 2023 to 2024 academic year.

11) In this example, 50 students live in other local authorities. This is recorded on the college’s ILR in February 2024 and + £300,000 (50 × £6,000) will subsequently contribute to the provider local authority’s net import/export DSG adjustment for 2024 to 2025.

It is important to note that this example is provided for a college and some details may vary depending on the school or college or place type.

Where ESFA acts as the provider local authority (for NMSS, SPIs and a small number of centrally funded FE colleges), funding is also provided on a lagged basis. This means that the number of pupils or students who attend one of these schools or colleges in any given year is used to calculate their respective place funding allocation for the following year. The funding allocation will subsequently be deducted from the relevant commissioning local authorities through the NFF import/export adjustment.

Given these arrangements in place, centrally funded schools and colleges should not seek to secure any additional place funding from any local authority, to avoid a situation where a local authority effectively funds a place twice. If an NMSS, SPI or centrally funded college has significant numbers of pupils or students over and above their allocated place numbers, which raises funding concerns because of the lagged approach, they should contact ESFA.

10. Historic teachers’ pay and pensions funding

From the 2021 to 2022 financial year the majority of the historic teachers’ pay grant (TPG), teachers’ pensions employer contribution grant (TPECG) and pensions supplementary fund money has been incorporated into the high needs NFF allocations to local authorities, as follows:

• the basic entitlement factor value in the NFF was increased by £660 to reflect the TPG/TPECG previously paid to local authorities for their maintained special schools, special academies, and independent special schools, and

• funding equivalent to the amounts previously paid to PRUs, AP academies and hospital schools was added into the hospital education factor

• this factor now covers hospital education, the historic teachers’ pay/pensions funding for AP and supplementary pensions funding

To calculate the values for the teachers’ pay/pensions element, we multiplied the number of places by the September to April TPG rate plus the corresponding TPECG rate and then multiplied by 12/7 to get an annualised amount.

These rates and places numbers were taken from the high needs providers tabs of the TPG allocations 2020 to 2021 and TPECG 2020 to 2021 allocations documents.

The pupil numbers on which the NFF basic entitlement factor is based, the fact that the NFF includes an area cost adjustment to those numbers, and the cash value of the teachers’ pay and pensions element of the AP factor, all mean that these elements of the NFF are unlikely to generate exactly the sum that local authorities are required to pass on, which is based on place numbers, including the 40-place minimum. This may mean that local authorities have to subsidise this element of funding from the more general increases in high needs funding that they are receiving, or indeed may receive more funding through the NFF than they need to pass on. The following provides further detail on how local authorities should pass this funding on to schools under the requirements outlined in the DSG: conditions of grant, including the arrangements for non-maintained and independent special schools and the arrangements for new and growing schools in receipt of high needs funding.

10.1 Established special, AP and hospital maintained schools and academies

Local authorities must allocate this historic teachers’ pay and pensions employer contribution grant funding to maintained special schools, PRUs, special and AP academies and maintained and academy hospital schools, on a per place basis according to the agreed number of funded places in the financial year 2023 to 2024. The condition of grant requires that this additional high needs funding must not result in a reduction to the number of places, for which £10,000 per place is allocated to a school or hospital, or to the top-up funding in respect of individual pupils and must be disregarded in applying the protection for special schools set out in annex 1: special schools minimum funding guarantee. This is a separate high needs funding stream (that is, neither place funding nor top-up funding), as follows:

• minimum of 40 places per school must be funded

• no recoupment for academies, so local authorities must fund academies directly

• this funding must be excluded from any special schools MFG calculation

As for 2021 to 2022 and 2022 to 2023, the amounts of funding per place should be equivalent to the amounts of TPG, TPECG and pensions supplementary fund paid in the 2020 to 2021 academic year, prorated for the full year. The TPG and TPECG rates would have been decided locally, in accordance with the conditions of grant that applied to those grants, although local authorities may have used the same rates as used in calculating the grant allocations to them. The rate and place numbers for the TPG allocations 2020 to 2021 and TPECG 2020 to 2021 allocations are listed in the respective grant allocations documents, available on the high needs providers data tabs (provided above). Local authorities should, therefore, use the same per place annual amount used in 2021 to 2022 and 2022 to 2023 and apply that to any changes in place numbers after April 2023. High needs funding to replace the pensions supplementary fund should be paid as a full year equivalent of the same amount the school received before.

Local authorities will be expected to pay the equivalent of the TPG and TPECG per place, based on the agreed number of funded places in the next academic year, even if there are increases or reductions in the number of places. As noted above, this may mean that local authorities have to subsidise this element of funding from the more general increases in high needs funding that they are receiving or may receive more funding through the NFF than they need to pass on. No adjustments in funding should be made for actual over or under occupancy.

10.2 Growing schools (special, AP and hospital maintained schools and academies

Funding through the NFF is based on lagged data, so no additions to the 2023 to 2024 high needs NFF will be made in respect of growing schools beyond those made in December 2022 (that is, the adjustment using the latest special school census data, plus any adjustment for new AP free schools not previously included in the relevant factor amounts). Local authorities will be required to use their high needs funding allocations to pay growing schools, the equivalent of the TPG and TPECG per place based on the number of funded places in the next academic year. This is irrespective of any increases or reductions in the number of places. No adjustments in funding should be made for actual over or under occupancy.

10.3 New special and AP free schools

For new special and AP free schools, opened after September 2022, whose place numbers and pupil numbers were not available in time for the DSG high needs block update in December 2022, local authorities will receive separate funding outside their high needs NFF allocation. The basis of these payments to local authorities will be the previous rates of TPG and TPECG allocations and will be issued to local authorities in April 2023 based on place numbers known as of 1 March 2023.

Local authorities will continue to have the flexibility to disburse this funding in recognition of the specific costs of the free schools’ teaching workforce, following consultation. It should be understood that this funding continues to recognise legacy costs and is not being increased to reflect later pay or pensions increases. The minimum 40 place funding per school will apply to new schools. No adjustments in funding provided to the local authority or to schools should be made for actual over or under occupancy.

10.4 Non-maintained special schools

Non-maintained special schools (NMSS) will continue to receive funding directly from ESFA at a level equivalent to their previous TPG, TPECG and pensions supplementary fund payments, without any recoupment or deductions from local authorities’ high needs NFF allocations. These payments will be distinct from any payments of place funding, which will remain at £10,000 per place.

10.5 Independent special schools

The high needs NFF also includes additional TPG and TPECG funding, on the basis of data returned in the AP census on the number of children placed in independent special schools. While it is not an explicit condition of grant for local authorities to pass this funding on to the schools, the additional NFF funding enables local authorities to take account of any school’s legacy pension cost increase that may be included in the school’s request for funding for a pupil placement.

10.6 FE colleges and SPIs

FE colleges and some SPIs that contribute to the pension scheme receive the teachers’ pension scheme employer contribution grant, which is based on their audited contributions into the pension scheme.

These arrangements have been confirmed until the end of the 2023 to 2024 academic year.

11. Top-up funding

Top-up funding (sometimes referred to as element 3) is the funding required over and above the core funding (sometimes referred to as elements 1 and 2) a school or college receives to enable a pupil or student with high needs to participate in education and learning. This is paid by the commissioning local authority (or sometimes schools in the case of AP) and should reflect the costs of additional support to meet the individual pupil or student’s needs.

Top-up funding can also reflect costs that relate to the facilities required to support a pupil or student’s education and training needs (either for individuals or on offer to all) and can take into account expected place occupancy levels and other factors.

Most of this section covers how top-up funding works for children and young people with SEND. Further information about how top-up funding works for PRUs, AP academies and AP free schools is set out in alternative provision.

Although many of the pupils and students receiving high needs funding will have an associated EHC plan, local authorities have the flexibility to provide high needs funding outside the statutory assessment process for all children and young people with high needs up to the age of 19.

11.1 Organising top-up funding at local authority level

Local authorities play an essential statutory and strategic role in planning education services and places, and in supporting local schools and colleges, within a robust financial framework. They should work closely with schools and colleges that have pupils or students with high needs. In doing so, they should ensure there are clear processes for identifying, determining, and allocating appropriate levels of top-up funding.

One of a local authority’s statutory responsibilities is to keep the special educational provision in their area under review, working with parents, young people, schools and colleges, as set out in chapter 4 of the SEND Code of Practice. A wide range of educational providers are required to co-operate with local authorities in such reviews, including: maintained schools, academies, FE and sixth form colleges, independent and NMSS, SPIs and other providers of special educational provision, including relevant early education providers. Local authorities must engage with all of those providing education for children and young people from their area, including providers which may not be located in the area itself, such as specialist provision and FE colleges. The local offer must include information about the arrangements the local authority has for funding children and young people with SEND, including any agreements about how providers will use any funding that has been allocated to them.

We expect commissioning local authorities to work constructively with schools and colleges, with the aim of reaching agreement on the overall levels of top-up funding required. This should include agreeing what additional needs mainstream schools and colleges should meet from other elements of their funding (taking account of any additional support or funding provided centrally) and where top-up funding will be provided. This information should be published as part of the local offer of SEND services and provision.

Children and young people with high needs often access provision outside the local authority area in which they are resident. An authority’s local offer should reflect all the SEND provision which is available to support children and young people resident in its area, regardless of where it is located. Therefore, we encourage neighbouring local authorities to collaborate when reviewing their local offer of provision and considering arrangements for top-up funding.

Many local authorities have systems which indicate the range of top-up funding that might be provided for children and young people with a particular complexity of need (sometimes referred to as banded funding systems). These can be helpful in providing clear and transparent funding arrangements for many types of need that may be met in a range of different schools and colleges. Where a local authority makes a large number of placements at a school or college or at a range of schools and colleges locally, a system of this kind (where the local authority, schools and colleges agree levels of top-up funding in advance) can be a very efficient way of allocating this funding. However, the local authority must be satisfied that the final allocation of funding (both the top-up funding and other elements of funding) is sufficient overall to secure the agreed provision (for example, that specified in an EHC plan), and should keep top-up funding levels under review at regular intervals.

A local authority’s banded top-up funding system generally helps to deliver fair and transparent funding in relation to placements in schools and colleges within that local authority. There can be issues, however, when a child or young person is placed in a school or college located in another local authority area since the latter’s top-up funding arrangements are likely to be based on different levels of normally available provision and costs. We therefore encourage neighbouring local authorities to collaborate when reviewing and developing their top-up funding systems, and in making individual top-up funding decisions for children and young people placed in schools and colleges in other local authority areas. In all cases, where a local authority makes a placement in a school or college which would not be covered by an existing agreed framework (for example, where a different provider local authority has agreed a separate cost or banded funding framework), the commissioning local authority should consider which funding arrangements are appropriate for the provision being commissioned.

11.2 Conditions of DSG relevant to top-up funding

When developing area-wide approaches to using high needs funding, it’s important to remember that local authorities’ expenditure from the DSG is subject to conditions of grant set by the department, which govern the way high needs funding is used, including the way top-up funding is organised. In particular:

• local authorities must treat those placed in maintained provision, academies and free schools, the FE sector, and non-maintained and independent provision on a fair and equivalent basis when making arrangements for funding young people with high needs

• local authorities must make payments of top-up funding to schools/colleges in a timely fashion and on a basis agreed with the respective school and college (for example, monthly payments in arrears) and

• payments must be monthly unless otherwise agreed (such as termly in advance)

ESFA will examine cases and consider remedial action where there is clear evidence from a school or college that a local authority is not meeting the relevant conditions of grant.

11.3 Determining top-up funding for individuals

As described above, we expect commissioning local authorities and all types of schools/colleges to work together so that agreement can be reached on the level of top-up funding required to enable suitable provision to be made for individual pupils and students. It is always better if principles are agreed in advance. This gives greater clarity about the different types of provision which are to be provided, the needs of the children and young people who are likely to require them and the associated level of funding (for example, if funding bands are used). As noted above, these arrangements should be developed collaboratively, and clearly communicated so that parents, as well as staff in schools, colleges and the local authority, have a shared understanding.

Local authorities allocate top-up funding for the high needs placements they have commissioned, that is, for children and young people who require additional support or a specialist placement because they have complex SEND or require AP. When making such placements, the local authority will be acting under the relevant statutory framework (the Children and Families Act 2014 for EHC plans or the Education Act 1996 for AP). As the statutory responsible body, the local authority is responsible for the final decision about the level of funding required to secure the necessary provision.

In determining the funding level, the local authority should have consulted with the school or college and should ensure their decision is evidence-based and reasonable. However, even where provision is specified in an EHC plan there is no statutory requirement that a local authority must pay top-up funding at a particular rate requested by a school or college. That is one reason why a clearly understood and consistently applied local framework is particularly important, as a means of avoiding extensive negotiations on funding after individual placements have been commissioned. In addition, the establishment of a local dispute resolution protocol can help to resolve disputes on funding in a timely manner.

Many local authorities use multi-agency panels to provide advice on decisions relating to EHC plans placements and high needs funding (for example, when deciding whether to assess, to make an EHC plan as well as advice in relation to placements, provision and resources). This can be an important way to ensure area-wide approaches (such as funding bands) are applied consistently and fairly in individual cases. Such bodies can only be advisory and decisions on these matters must remain with an officer of the local authority.

Disagreements about funding levels and commissioning arrangements for individual children and young people can arise and schools, colleges and local authorities need to work together to resolve these. In the case of children and young people with EHC plans, the statutory annual review process can be a particularly useful point for reviewing funding arrangements in the light of evidence about an individual’s needs, their progress, and any changes to the provision they require.

The local schools forum can be helpful in setting the wider context. As noted above, local dispute resolution processes might need to be developed and agreed to help those involved work through the issues, and to avoid recourse to legal action. Ultimately local authorities bear the responsibility for decisions on top-up funding, as they are accountable for spending from the high needs block allocation they receive from the department. That responsibility should, however, be discharged fairly, reasonably and after proper consultation, recognising that at every level, different types of school and college are also accountable for their spending.

11.4 Confirming top-up funding

All high needs placements for children and young people with an EHC plan must be formally commissioned by a local authority. The local authority should, therefore, confirm in writing the amount of top-up funding to be paid as soon as the placement is agreed. Where a local authority makes a number of placements, a single schedule of placements and payments may be sufficient. The details of payment arrangements should be agreed as soon as possible, bearing in mind the condition of the DSG that local authorities must make payments of top-up funding in a timely fashion and on a basis agreed with the school/college, and that payments must be monthly unless otherwise agreed.

It is important that the local authority makes an assessment at the earliest opportunity, ideally before the pupil or student has been admitted to the school or college, so that a pupil or student’s placement is not disrupted. Where a pupil or student with an EHC plan is due to move between educational settings or phases, the local authority must review, amend, and issue a revised EHC plan in the spring of the preceding academic year and by 31 March, as set out in the important dates section. In no circumstances should an admission to, or the continuation of, a placement at a school or college be conditional on, and/or delayed by, receipt or agreement of top-up funding for the pupil or student.

Pupils and students should only be counted as having high needs for funding purposes (and be recorded on the school census or ILR as a pupil or student with high needs) if the local authority has agreed that top-up funding is payable for that pupil or student. This applies even where a school or college has assessed a pupil or student as requiring additional support, or where a pupil or student has been offered a place by that school or college. In such circumstances, the school or college should use its best endeavours to make the special provision for the pupil or student, seeking advice from the local authority, if necessary, as to what additional support the pupil’s EHC needs, or other assessment may have indicated was appropriate.

If a pupil or student’s placement is interrupted temporarily for public health reasons, for example, because a school/college has had to partially close, the school or college should contact the commissioning local authority to discuss alternative arrangements for their continuing access to education and support, and for the continuation of top-up funding for the provision being made. If an absence is expected to be long-term, because a public or personal health issue affects the young person’s attendance and ability to engage in their education, the local authority should review the EHC plan and amend it if necessary, commissioning different provision as required, for example, an alternative suitable placement.

11.5 How top-up funding should be calculated

Top-up funding rates for individual placements should consider both the costs to the school/college of offering overall provision for the pupils and students with high needs and the contribution made from other elements of funding. These include mainstream schools’ notional SEN budget (for the costs of additional support up to £6,000 per annum) and the overall high needs place funding of £6,000 or £10,000 per place in special schools and FE. This is particularly important for specialist providers (such as special schools, SPIs and AP), whose primary purpose is to offer high needs provision. We would encourage approaches to the calculation of top-up funding that both:

• create certainty for schools/colleges on the level of funding they can expect to receive for the provision

• are sufficiently responsive to changes in the number and needs of the pupils and students being placed in the provision, and the unavoidable costs of making that provision

When agreeing rates of top-up funding, a local authority and a school or college may wish to reflect economies and diseconomies of scale based on occupancy of places. For example, a special school may have 100 high needs places for which it receives a total budget of £1,000,000 (100 × £10,000). If the school fills 95 places, it may agree with the provider local authority to charge a lower rate of top-up funding. This would reflect the surplus funding arising from its 5 unfilled places already funded by the provider local authority.

However, the nature of pre-16 AP and SEND provision in some schools and colleges results in empty places arising at some points in the year, such as where diagnosis after the beginning of the academic year leads to later identification and placement.

In all cases place funding should not be withdrawn if it is perceived as unused or the £6,000 or £10,000 place funding amount deducted from the normal level of top-up funding. Similarly, an additional £6,000, or £10,000 per head should not automatically be charged to a local authority if a school or college has filled all funded places.

Other factors that could impact on the way local authorities calculate the top-up funding for individual pupils and students include:

• the extent to which standardised rates, local banding arrangements and streamlined administration have been established to reduce the need for detailed costs and negotiation of different top-up funding amounts for each pupil or student

• the way schools and colleges set their budgets and break down their costs and overheads

• the number of pupils in a special school who are eligible for free school meals

• overheads affecting certain types of independent school and college which are otherwise funded for maintained schools and academies, such as VAT costs in NMSS and colleges, and the costs of buildings for those schools and colleges not able to access capital funding

We do not expect top-up funding to contribute to or subsidise:

• overheads attributable to other budgets within the school or college, or that relate to costs that would have had to have been met even if it had no pupils or students with high needs, for example, the salary of the special educational needs coordinator (SENCO) required by all mainstream schools

• the costs of legal action against local authority decisions on assessment, provision, and top-up funding, including support for parents seeking SEN Tribunal judgments on such local authority decisions

• the cost of educational and other assessments, for example, by educational psychologists

Schools and colleges should be transparent with commissioning local authorities about their cost and willing to explain how the overall school or college finances are working to ensure their continuing financial viability and their ability to sustain appropriate levels of support for children and young people with SEND. When determining top-up funding, local authorities should take account of the overall budget required for the provision to remain financially viable.

Schools and colleges may need to adapt their approach to making special provision, focusing on the needs of the child or young person. For example, a school or college should not assume that an EHC needs assessment and plan will result in the provision of a full-time teaching assistant – this level of help is often not needed by the child or young person and can, at times, be counterproductive to their development. Colleges may need to reorganise their study programmes for young people with SEND and find different ways of supporting them over the week.

11.6 Impact of the Public Contracts Regulations

The department’s position is that the commissioning by local authorities of SEN and AP placements, funded from the high needs block of the DSG, is not regarded as a public service contract for the purposes of the Public Contracts Regulations 2015.

The Public Contracts Regulations (and related Concession Contracts Regulations 2016) are not intended to cover all expenditure of public funding, as made clear by EU law on which they were once based, and which our courts must still take into account. The Public Contracts Regulations apply only to contracts for the acquisition, or acquisition of the benefit, of public works, services or goods made for consideration between an economic operator and a contracting authority (whether at departmental, arm’s length body (ALB) or local level, such as a local authority, school or college), where such services are deemed to constitute an economic activity or purpose.

Other forms of public funding, such as funding for services provided through grants or other public subsidies or preferences, to specific enterprises engaged in economic activities, usually fall out of scope of procurement law, but are potentially in scope of subsidy. EU law has established a general principle (which will likely still be recognised by our courts) that publicly funded and supervised education organised within a national education system does not constitute economic activity, even in cases where tuition fees may be required to support placements, so long as the majority of funding is public. Anyone relying on this guidance should, however, seek their own legal advice in each individual case.

When a local authority fulfils its statutory duties to make provision specified in an EHC plan or to put in place AP for children of compulsory school age, funded from their high needs budget, it is likely to be delivering public education organised within a national education system. Any disbursement of high needs funding between the local authority and a school/college in fulfilment of such duties will, therefore, not constitute economic activity, and any agreement between local authority and a school or college will not be regarded as a public service contract for the purposes of the Public Contracts Regulations.

We recognise that the wide range of different placement processes and documentation employed by local authorities, some intended to comply with the Public Contracts Regulations, is not always helpful to schools/colleges that attract placements from a number of local authorities. We will consider how best to engage with local authorities, schools/colleges, and their representative organisations to encourage shared arrangements for commissioning and quality management of their local schools/colleges, which operate on a regional or national basis and to share existing good practice.

12. Local authority high needs services and support

While the majority of a local authority’s high needs budget is spent on place and top-up funding for schools and colleges, local authorities can also use high needs funding to provide additional or targeted support for children and young people with SEND, as permitted under schedule 2 of the School and Early Years Finance (England) Regulations. This can take the form of additional funding to schools and colleges, which may be paid on the basis of a service level agreement, or access to specialist services or expertise commissioned by the local authority.

Such support can play an important role in enabling mainstream schools and colleges to meet a wider range of special educational needs and supports the presumption in law that all children and young people should be educated in mainstream provision, unless their SEN requires more specialist provision, as determined through the statutory EHC assessment process.

As in previous years, the amount that the local authority plans to spend on such services should be included on the local authority’s s251 budget statement. The actual expenditure should be reported on the same basis in the authority’s s251 outturn statement. The schools forum is expected to discuss the details, including funding and effectiveness of these services.

12.1 Additional funding for mainstream schools

One of the categories of high needs spending referred to above is targeted funding to mainstream schools. Local authorities can provide additional funding outside the main funding formula for mainstream schools and academies on a consistent and fair basis, especially where the number of their pupils with SEND and/or high needs cannot be reflected adequately in the funding they receive through the local funding formula. They should define the circumstances in which additional funding will be provided from their high needs budget. The criteria and budget should also be included in the APT with the additional factors/commentary section, as well as line 1.2.4 additional high needs targeted funding for mainstream schools and academies in the s251 returns.

Additional funding may be provided where there is a disproportionate number of pupils with a particular type of SEND. For example, a primary school may have developed a reputation for meeting the needs of high achieving pupils with autism, or pupils with physical disabilities, and it is not possible to target additional funding to the school through factors in the school funding formula.

Local authorities should have a formula or other method, based on their experience of distributing additional funding to their maintained schools and academies. This should be agreed with schools and described on the APT. In all cases, the distribution methodology should be simple and transparent, and devised so that additional funds are targeted only to a minority of schools which have particular challenges because of their disproportionate number of pupils with SEND or high needs, or their characteristics. Budget and expenditure should be included within the relevant s251 statements.

Local authorities can also provide additional funding to mainstream colleges for supporting a disproportionate number of students with lower level SEND, where their annual costs of additional support are less than £6,000 per student.

12.2 Specialist support services

If mainstream provision is to meet a wide range of additional needs, it is important that the provision enables access to high-quality specialist support, for example, to help children and young people with autism, speech and language needs, social, emotional and mental health needs, sensory impairment, or challenging behaviour. This typically involves specialist teachers with expertise in supporting pupils with complex needs who are available to advise, train and support other teachers and SEN co-ordinators in mainstream schools and colleges. For example, support could be provided through networking and targeted training or commissioned from a specialist provider.

It is important that such support is available to mainstream schools (maintained schools as well as academies and free schools), FE colleges, sixth form colleges and 16 to 19 academies. They are all statutorily required to identify the SEND of their children and young people and to use their best endeavours to make sure that a child or young person who has SEND gets the support they need.

Local authorities and mainstream schools and colleges should discuss how such specialist support should be delivered when considering how to spend the high needs funding available to them. Many local authorities employ specialist teachers, funded directly from their high needs budget. Others give special schools additional funding to provide specialist support to other schools and colleges. Such arrangements are frequently accompanied by a service level agreement confirming what will be delivered in return for the additional funding.

Specialist support for pupils at risk of suspension or permanent exclusion may be commissioned by the local authority or by schools (using funding devolved by the local authority). Further information on centrally commissioned AP services can be found in the alternative provision section below.

High needs funding cannot be used for local authorities’ costs in relation to SEND administration, assessment, co-ordination and monitoring, as per schedule 1 of the School and Early Years Finance (England) Regulations. For example, educational psychologists costs for: the identification of children and young people with SEND; the assessment of EHC needs; and the preparation and review of EHC plans cannot be charged directly to the DSG. Annex 5: health and social care costs provides further guidance on the funding of health and social care costs.

13. Alternative provision

Alternative provision (AP) provides targeted and specialist intervention and support to children at challenging moments in their lives and each placement or provision has the potential to transform a child’s life chances.

When children of compulsory school age are not receiving suitable education, the local authority has a duty, under section 19 of the Education Act 1996, to arrange it.

When arranging AP, the commissioner should clearly define the nature of the intervention, its objectives, and the timeline to achieve these, accounting for any statutory SEND responsibilities, especially when an EHC plan is in place.

Occasions where a child may be placed in an alternative setting for a period of time could be because of a suspension or permanent exclusion or where a child has health-related needs, which mean they are unable to attend a mainstream school full-time. Many schools make use of AP services, before the need for suspension or permanent exclusion arises. In most cases the intention is for these children to return to their mainstream school and the length of the placement should be determined by the needs of the pupil.

When local authorities make arrangements for AP (including hospital education), this is normally funded from their high needs budget. There is flexibility for local authorities to devolve some decision-making and funding for AP to schools, and there is evidence to show that this can be effective in promoting inclusion and accountability. Where a pupil remains on-roll of a mainstream school, the school is effectively acting as a commissioner of AP and retains accountability for the child’s education. For example, where a pupil is suspended from a mainstream school for longer than 5 school days, the school is responsible for commissioning and funding AP from the sixth school day of the suspension.

13.1 Organising and funding AP

We acknowledge there are different ways local authorities, schools and academies are discharging their statutory responsibilities and making use of AP. When reviewing and determining commissioning and funding of AP, local authorities should take account of the needs of local schools in determining the demand for AP and how it is delivered and encourage schools to think collectively about their use of AP, and how the full cost of provision is to be met. Many local areas have developed strong partnership arrangements which seek to share responsibilities across schools for AP commissioning, funding, and accountability. Such arrangements can include the local authority devolving some decision-making and funding to groups of schools.

Funding devolved to schools, including AP schools, or partnerships of schools remains as a central budget under the local authority’s central control, and the terms of its use should be covered by a service level agreement or memorandum of understanding with the maintained schools and academies involved. As with other elements of high needs funding held centrally, under the conditions of grant associated with the DSG, the local authority must treat maintained schools and academies on an equivalent basis and make sure that any distribution of such funds is fair and reasonable.

The local authority should make sure that there is consultation with the schools forum on the way AP funding is used and distributed. The schools forum regulations are intended to ensure that the arrangements for AP funding are properly discussed at local level – with engagement not only from the local authority, but also from the mainstream maintained schools and academies, PRUs and AP academies and free schools. This is explained in the schools forums operational and good practice guide.

The regulations and schemes for financing schools do not permit local authorities to make a differential charge on maintained schools’ and academies’ budget shares according to their use or intended use of AP. It is possible, however, to use funds relating to pupils leaving the school roll, which have been deducted from schools’ budget shares under regulation 27 of the School and Early Years Finance (England) Regulations, or under the similar arrangements with academies to offset some of the cost of places. This is explained further in the section on funding adjustments for permanent exclusions.

13.2 How high needs funding is allocated to AP

Alternative provision can receive high needs funding in different ways through:

• core funding: the annual allocation of funding based on an amount per place (place funding), which a school receives either directly from the provider local authority (for PRUs, based on the financial year), or from ESFA (for AP academies and AP free schools, based on the academic year)

• top-up funding: the funding required over and above the core or place funding, to enable a pupil to participate in education (especially when an EHC plan is in place) is paid by the local authority or school that commissions each place

• locally negotiated funding for AP services, such as outreach, which are outside the place funding and top-up funding model, usually based on a service level agreement

• funding for independent AP is also locally negotiated between commissioner and provider as it is outside the place funding and top-up funding system

It should be noted that post-16 students in PRUs, AP academies and AP free schools are not funded in the same way as pre-16 students. Alternative provision is, by definition, set up to educate children of compulsory school age (up to age 16). A school will therefore not receive AP place funding for post-16 students because this type of provision is out of scope. If an AP school has post-16 high needs students with SEND, usually with an EHC plan, these places can be funded on the same basis as post-16 students with high needs in mainstream schools (using a combination of funding through the post-16 funding formula, £6,000 per place and top-up funding).

Where the local authority commissions a place at a PRU, AP academy or AP free school, the top-up funding is allocated from the local authority’s high needs budget.

Where a school commissions a place at a PRU, AP academy or AP free school, the top-up funding may come from centrally held high needs funding that has been devolved to that school or a local partnership of schools (for example, via a service level agreement), or from the school’s delegated budget share or (if an academy) general annual grant.

It is in the interests of the local authority and its schools offering AP to agree the referral process and process for resolving concerns about admissions. If the local authority is unable to place a particular pupil because they are not suited to the type of provision offered by a PRU, AP academy or AP free school, they would need to make other arrangements.

13.3 How to determine place numbers at AP

Each PRU, AP academy or AP free school usually has a number of places to offer pupils excluded by schools or who cannot get a school place for other reasons. In this case the commissioner would normally be the local authority. Many AP schools will also have places for pupils who are on part-time or shorter-term placements. In many cases local schools would be the commissioner for these places.

Although we have not defined a place in the regulations, we expect that a place will generally be available for occupation by a full-time equivalent (FTE) pupil. We recognise that in AP, places may not be filled by the same individual throughout the year, or in some cases, across the week. Identification of AP places is not determined by pupils’ registration status. Where pupils are dual registered with a mainstream school, the time they spend attending a PRU, AP academy or AP free school should be accounted for in the number of places identified.

It is important that AP schools are not overfunded where places are not required, but there will be occasions when places remain unoccupied, for example, to accommodate unpredictable fluctuations in demand. There will also be places that are occupied by more than one individual attending on a part-time basis. For example, a place may be filled by a child who attends for 2 days a week from one school, and another child who attends for 2 days from another school, with no child present for one day a week. AP schools should consider if it is possible to direct any unused resources into outreach work in mainstream schools.

It may not be appropriate to provide place funding for some AP services where children are receiving their education offsite, such as a home tuition service or an outreach service provided by teachers whose base is the PRU or AP academy/free school. These services should be funded through a service level agreement with the commissioning local authority or school.

As in previous years, pre-16 AP places will be funded at £10,000 per place in 2023 to 2024, regardless of whether the place will be commissioned directly by a school or by a local authority. As with special academies, 2023 to 2024 places funded at AP academies are deducted from the DSG of the local authority in whose area the academy is located.

The local authority is responsible for agreeing and submitting the number of AP places to be funded in PRUs and AP academies, in consultation with those schools in the area which may need to commission places. This may require consultation with other local authorities and their schools if they are likely to commission places in the PRU or AP academy. As explained previously, post-16 students in AP settings are not funded in the same way as pre-16 students, but on the same basis as post-16 students in mainstream schools.

Local authorities have flexibility to change the number of places they fund in 2023 to 2024 at PRUs; and should only notify ESFA of changes to the place numbers in AP academies, using the 2023 to 2024 place change notification process. ESFA will contact AP free schools directly in November 2022 detailing how their 2023 to 2024 high needs place numbers will be determined. Evidence to support changes in place numbers may be required, and we recommend that PRUs, AP academies and AP free schools engage early with local authorities and schools commissioning places. AP academies and AP free schools should receive notification of their 2023 to 2024 allocations of place funding from ESFA by the end of March 2023 and PRUs from their local authority by end of February 2023.

As with special academies, 2023 to 2024 places funded at AP academies are deducted from the DSG of the local authority in whose area the academy is located to enable ESFA to fund the places directly.

For AP free schools, deductions for the 2023 to 2024 academic year are made from the DSG of the local authority where the pupil lives, based on October 2022 school census data. These deductions will be notified to local authorities in April 2023. No deduction is made for places in AP free schools opening during the 2022 to 2023 or 2023 to 2024 academic years. However, a deduction is made from the DSG for places in AP free schools open before or during the 2021 to 2022 academic year.

AP academies and AP free schools should receive notification of their 2023 to 2024 allocations of place funding from ESFA by the end of March 2023 and PRUs from their local authority by end of February 2023.

Place funding provides some certainty for schools, but a stable income and financial viability will continue to depend on:

• developing strong relationships with local authorities and schools that commission places

• working out with commissioners, top-up funding rates that reflect the costs, including (for example) the costs of under-occupancy when places are not filled. See section on agreeing top-up funding for alternative provision below

• where appropriate, developing commissioned services that can provide an income from local authorities and schools on a longer-term basis (for example, through a 2 or 3 year contract)

13.4 Agreeing top-up funding for alternative provision

Top-up funding for AP is not usually related to an assessment of SEN. A standard top-up funding rate is often set for each PRU, AP academy or AP free school, which reflects the overall budget needed to deliver the provision for pupils and students attending. The principles of local authorities working constructively with schools and AP providers to co-produce transparent local arrangements for the provision offered and the expected cost rates (as set out in organising top-up funding at local authority level) are as important for AP as for any other form of high needs provision.

Cost transparency is an important feature of the high needs funding arrangements. Local authorities and schools should be aware of the full cost of AP in different schools, and placement decisions should be made based on the cost and quality of what is on offer. The local authority should publish clear information about how AP is funded, including top-up funding rates for PRUs and AP academies, and clarity about which organisation is responsible for providing the top-up funding and place funding for AP. When determining top-up funding, local authorities should take account of the overall budget required for the AP to remain financially viable.

There is often a very fluid movement of pupils and students in and out of AP during a year. The extent of this movement can create uncertainty and volatility in an AP school’s budget planning. Local authorities should recognise such fluctuations and trends to inform a more transparent and simplistic mechanism for administering the distribution of top-up funding.

One such example is where, at the beginning of the year, the AP school and its main commissioning local authorities and schools agree an estimate of the places they expect to be used. Top-up funding could then be paid on account every month throughout the year; and a termly or year-end reconciliation could take place to reflect an actual take-up of places by individual pupils during the period (the difference between estimated and actual uptake). This would give the AP school more certainty over its in-year cash flow, enabling it to employ the staff needed to make the required provision available (recognising that an increase or decrease in pupils may not necessarily directly equate to shifting staff: pupil ratios). This will ensure a high-quality service throughout the year. The amount and nature of provision can be changed over time to meet local authorities’ and schools’ evolving demand.

It is important that top-up funding relates to pupils actually occupying places. The aim of the system of place funding and top-up funding is to give a proper balance between sustainable income for the AP school, and flexibility to commission AP that meets the needs of individual pupils. Funding based solely on places, which may or may not be occupied, risks spending scarce resources on places that are needed neither by local authorities nor by schools and academies. It also ties up funding that would otherwise allow decisions to be taken about the most appropriate AP for an individual pupil.

We are not prescriptive about how the calculation of top-up funding reflects the period that a child or young person occupies a place. Some AP schools operate based on a daily rate but, in many cases, it would be more beneficial to calculate the top-up funding using longer periods, for example, weekly, monthly, or even termly rates.

It would also be possible to develop a top-up funding system that more closely reflects the achievement of desired outcomes, as a way of encouraging high quality AP. For example, the AP school could receive an enhanced rate of top-up funding after the end of the placement if the intended outcome for the pupil or student had been achieved. In this example, a mainstream school could be seeking a particular intervention for a year 11 student, which would enable him or her to successfully complete their GCSE exams; it could agree a short-term placement for the student at a local PRU and an additional amount of top-up funding that would be paid after the student’s exam results are known, and if the expected grades had been achieved. Similarly, a local authority may wish to agree that an additional amount of top-up funding is payable if a year 11 pupil is in education, training, or employment in the year after leaving AP. Such arrangements are not mandatory, but could be used to secure better outcomes and improve the quality of AP.

13.5 Commissioned AP services

In many cases the services offered by a PRU, or AP academy or free school will not fit neatly into the combination of place and top-up funding intended for full-time educational placements. Teachers at the AP setting may be involved in outreach work with local maintained schools and academies or may be employed by them on a consultancy basis, to advise on behaviour management. The local authority may use a PRU’s staff to provide home tuition to children with medical needs or to provide a service to pregnant teenagers or young mothers who cannot easily attend school. These are examples of services that would normally be funded by the commissioning local authority or school, or group of schools, under a service level agreement that specifies what is required and the funding to be paid.

Where the local authority commissions the service, the funding would come from its high needs budget.

Where a school or group of schools commissions the service, the funding would come either from those schools’ delegated budget share, or from centrally held high needs funding that has been devolved to schools. Any distribution of devolved AP funding should be fair and treat both maintained schools and academies in the same way.

As with other centrally held AP budgets, the local authority should make sure that there is consultation with the schools forum on the amount retained and how it is used and distributed. For certain centrally held budgets, including for services relating to the education of children with behavioural difficulties; and other activities for the purpose of avoiding the permanent exclusion of pupils from schools, the regulations require schools forum agreement to the amount retained.

13.6 Permanent exclusions: funding adjustments

The previous AP sections highlight the importance of ensuring schools and local authorities explore the most effective arrangements for AP commissioning and funding in their area, including for children who have been permanently excluded. Where pupils are excluded, under the School and Early Years Finance (England) Regulations, funding should flow in-year from the school that has permanently excluded the pupil to the provision that takes responsibility for the pupil. If a school subsequently admits a pupil who has been permanently excluded during that financial year, it should then receive additional funding.

The provisions also apply to pupils who leave a mainstream school for reasons other than permanent exclusions and are receiving education funded by the local authority, other than at a school. The provisions also act independently of whether a particular pupil has been on the school census in the first place, and whether the school has, therefore, received funding for them.

Local authorities are responsible for adjusting the budget shares of mainstream maintained schools if a pupil is permanently excluded, so that funding follows the pupil. Further information on this, including calculating the amount to be deducted from the excluding school’s budget and admitting school’s budget (if appropriate), is available in the redetermination of budgets where pupils have been excluded section of the schools operational guide: 2023 to 2024.

Different funding arrangements apply in relation to pupils permanently excluded from PRUs, AP academies, maintained special schools, special academies and children in designated special units or resourced places at mainstream schools. These schools receive base funding for each place, which is not linked to individual pupils and so is not withdrawn following a permanent exclusion. Similarly, the calculation for an admitting school would not be used for a PRU, AP academy or AP free school. They also receive top-up funding that is linked to individual pupils. When commissioning places at one of these types of school, local authorities and schools should formally agree with the providing school what proportion of this top-up funding will be returned if a pupil leaves the school (for any reason). See paragraphs above for further information on the approach to top-up funding for PRUs, AP academies and AP free schools.

The only exception to this is where pupil premium is payable in respect of a pupil attending a PRU or special school maintained by the local authority. In this situation, local authorities must adjust the school’s budget in accordance with the same formula that applies to mainstream schools. In the case of AP and special academies, local authorities should claim from the academy an amount equivalent to the pupil premium (as calculated according to the formula in the regulations) or pay the academy the relevant amount when a previously permanently excluded pupil joins the academy.

Information about regulations covering the movement of funds in relation to permanently excluded pupils who are placed in provision in other local authorities can be found under the section inter-authority funding transfers in the schools operational guide: 2023 to 2024. The regulations relate to situations where a pupil is permanently excluded from a maintained school in one local authority, and is either:

• subsequently provided with education in the same financial year at a maintained school, or otherwise than at school in a second local authority

• subsequently provided with education in the same financial year at a PRU, or otherwise than at school in a second local authority, and then at a maintained school or otherwise than at school in a third local authority

14. Funding by type of education provider

14.1 Early years providers

Children aged 0 to 5 with more complex needs and those with an EHC plan are eligible to receive funding via the high needs block of the DSG.

Local authorities can meet the costs of under 5s with high needs in different ways from their high needs budget. These may include SEND support provided directly as a central service for young children with high needs and early years providers. Place funding may also be used for early years provision, for example, at special schools, supplemented by top-up funding for individual children.

Additionally, local authorities are required to pass funding on to all early years providers delivering the free entitlements for eligible children aged between 2 and 4 through the early years block of the DSG. The early years entitlements: local authority funding of providers operational guide includes more information on how early years block funding is allocated and should be passed on to providers.

As set out in the early years operational guidance, there are additional early years funding streams to support children aged 3 and 4 with SEND to access their free entitlements.

The settings of 3 and 4-year-olds eligible for the disability access fund (DAF) (those in receipt of child disability living allowance and receiving free early education) will be entitled to receive a one-off payment of £828 per year.

All local authorities are required to establish an inclusion fund in their local funding systems for 3 and 4-year-olds with SEN taking up the free entitlement, regardless of the number of hours taken. This fund supports local authorities to work with providers to address the needs of individual children with low level or emerging SEND. The structure also supports local authorities to undertake their responsibilities to strategically commission SEN services as required under the Children and Families Act 2014. Local authorities can establish their SEN inclusion funds using funding from either one or both of their early years block and high needs block of the DSG.

14.2 Mainstream schools, academies and free schools

Mainstream schools without SEN units or RP are funded for pre-16 pupils with SEND as follows:

• core funding: included within the local schools funding formula

• top-up funding: agreed and paid on a per pupil basis by commissioning local authority

High needs place funding is only available in pre-16 provision to mainstream schools with SEN units or resource provision. It is available for mainstream schools with sixth forms in the same way as other post-16 provision.

Maintained mainstream schools will receive notification of their core funding allocations of pre-16 funding for the new financial year beginning in April, by the end of the prior February. Mainstream academies and free schools will receive notification by the end of March, before the subsequent academic funding year starting in September.

The core funding for mainstream schools includes funding for pupils with SEND, whose additional support costs are lower than £6,000. Maintained schools and academies should have sufficient funding in their delegated budget to enable them to support pupils with SEND as required, up to the mandatory cost threshold of £6,000 per pupil per annum.

For pupils aged 5 to 15 years in mainstream schools, a notional SEN budget is identified, and the amount will be shown in the school’s budget; this is an indicative amount that schools may use as a guide for how much they might need to spend on supporting their pupils with SEND. Published guidance for local authorities explains how their schools’ notional SEN budget can be calculated using local funding formula factors, with the aim of achieving greater consistency in that calculation. Local authorities should review their schools’ SEN budget calculation for 2023 to 2024 in line with that guidance. Where there is a disproportionate number of pupils with SEND, additional funding may be provided outside the main funding formula, as explained in additional funding for mainstream schools.

Where individual pupils require additional support costing more than £6,000, the excess should be met by top-up funding associated with the individual pupil. Top-up funding rates are for local authorities to determine, in consultation with schools. Further information is provided in top-up funding .

14.3 Sixth forms

Mainstream school sixth forms are funded for their core funding per student based on the post-16 NFF (sometimes referred to as element 1), and £6,000 per high needs place (element 2). Funding for pupils whose additional support costs are lower than £6,000 is provided within the disadvantage funding element of the post-16 NFF. Local authorities should assume a national average amount of £5,600 for element 1 for the 2023 to 2024 academic year. These amounts comprise of the national funding rate which is increasing from £4,542 to £4,642 and additional funding allocated through the 16 to 19 funding formula.

High needs place funding (element 2) is available to schools for students with SEND requiring additional costs exceeding £6,000. Mainstream schools with sixth forms should have engaged with their local authority to agree place numbers. Local authorities have flexibility to agree alternative ways of calculating this element of high needs funding with maintained schools, academies, and free schools. Further information can be found within high needs place funding: local flexibility to allocate differently.

ESFA does not require information on changes to places funded in maintained schools, as local authorities fund these directly and have local flexibility to change the number of places, as well as the method of calculating the allocation. Local authorities should, however, notify ESFA of changes to place numbers for academies and free schools, to ensure that they are funded on the correct basis, as agreed with their schools.

As explained for pre-16 pupils, where individual pupils require additional support that costs more than £6,000, the excess should be met by top-up funding associated with the individual pupil.

14.4 Special units and resourced provision

Special, or SEN, units are special provision within a mainstream school where the children are taught mainly within separate classes. Resourced provision (RP) is where places are reserved at a mainstream school for pupils with a specific type of SEN, taught mainly within mainstream classes, but requiring a base and some specialist facilities around the school.

Mainstream schools are funded for SEN units and RP through:

• pre-16 core funding: a combination of per-pupil funding through the local schools funding formula, plus £6,000 per place for those occupied by pupils on roll; and £10,000 per place for the remainder of places to be funded

• post-16 core funding: element 1 (based on the 16 to 19 national formula) plus element 2 (£6,000 per place) based on the number of places to be funded

• top-up funding for pupils with high needs, additional support costs of more than £6,000, paid on a per pupil basis by the resident (commissioning) local authority

Depending on the range and type of services on offer, it is also possible for such provision to be a centrally funded service commissioned by the local authority, normally under a service level agreement with the school or academy. If such an agreement is with an academy, this would be a local arrangement with the special unit or RP funded directly by the local authority rather than via ESFA. More information will be included in the 2023 to 2024 place change technical note.

Where there are changes to specialist provision at academies and free schools, such as new special unit or RP, this must first be approved through the significant change process. A signed deed of variation must be received from the trust so place funding can be reflected in the 2023 to 2024 academic year allocation from ESFA.

Pre-16 places at a special unit and RP that are occupied by pupils recorded on the school census, as sole or dual (main) at a special unit or RP are funded at £6,000 per place. Pupils in these places will also attract funding through the mainstream school formula.

Other places are funded at £10,000. This may apply where:

• the place is or will be occupied by a pupil registered on the roll of another school

• a place is not occupied at the time of the school census count, but is likely to be filled, and requires funding

• spare capacity is required for another reason

ESFA confirms the number of funded high needs places in mainstream academies and free schools following the annual place change notification process. In the case of maintained schools, the provider local authority that maintains the school determines the total number of places to be funded, taking full account of places that may be commissioned by other local authorities.

For mainstream academies and free schools, ESFA determines the place funding amount rate based on occupancy data provided in the APT, with the number of places confirmed as part of the place change notification process.

The total number of places funded is based on the outcomes from the place change notification process. The number of places funded at £6,000 per place is calculated based on the number of places occupied by pupils on-roll of the school or academy, as recorded in the APT, but would not exceed the total number of places to be funded.

For example, if funding for 10 places was agreed through the place change process, and 12 places were recorded as occupied in the APT, a total of 10 places would be funded at £6,000 per place. This is because we use the place change process to determine the place numbers, not the APT.

The number of unoccupied places, funded at £10,000 per place, is calculated as the total number of places to be funded (via the place change), minus the number of occupied places recorded in the APT; this funding will not be below zero. In the example above, there are no unoccupied places, given the total occupied places is the same as the number notified as part of the place change process.

14.5 Maintained special schools, special academies and special free schools

Pre-16 and post-16 high needs places at maintained special schools, special academies and special free schools are funded at £10,000 per place. In addition, they receive per pupil top-up funding paid by the commissioning (resident) local authority.

Following publication of the place change notification outcomes there is a 2-week enquiry window for local authorities and schools to raise significant issues regarding the number of places to be funded. Schools receive allocations of place funding from ESFA by the end of March, in advance of the academic year, maintained special schools are notified of their place funding allocations (that is, their budget shares) by their local authority, by the end of February 2023.

ESFA provides additional place funding for new and growing special free schools in their period of growth to ensure there is not an additional cost for local authorities. For special free schools that have reached the end of their period of growth, additional funding has been included in local authorities’ baselines, informed by data from the previous academic year.

Further information about overall funding for new and growing special free schools can be found in special free schools adjustments: a guide for local authorities.

A special school protection, otherwise known as the minimum funding guarantee or MFG will continue to apply to maintained special schools and special academies (including special free schools) in 2023 to 2024. The level of that protection will be 3% per pupil in 2023 to 2024: rather than using a 2022 to 2023 baseline, this is the level of increase that local authorities must pass on to their schools within the 2-year period, using 2021 to 2022 funding levels as the baseline, unless a disapplication request has been approved.

This means that no special school will receive from their provider local authority an increase less than 3% per pupil in 2023 to 2024 on a like-for-like comparison with their pupil cohort in 2021 to 2022, unless a disapplication request has been approved. The calculation should assume that the number and type of places remains the same between 2021 to 2022 and 2023 to 2024. It should also assume that all pupils in the school are placed by the provider local authority (usually, where the school is located) and that all top-up funding rates received by the school are those set by that local authority.

See annex 1: special schools minimum funding guarantee for further information on the MFG protection, including worked examples.

14.6 Non-maintained special schools

Non-maintained special schools (NMSS) receive place funding directly from ESFA and are subject to an ESFA funding agreement. All places in NMSS (pre and post-16) are funded at £10,000 per year. In addition, they receive per pupil top-up funding paid by the commissioning local authority.

ESFA bases NMSS place funding allocations on the pupil number data from the latest October school census, uplifted by the difference between the previous year’s October and January census pupil number data. If there is a reduction in the number of pupils between the October and January census, ESFA will not reduce funding, to ensure that no school is funded on numbers less than those recorded in their latest October census. If a school has significantly more pupils than their allocated place numbers, and they have concerns about how that will be funded through the lagged funding approach, they should contact ESFA.

14.7 Independent schools

Independent schools, including independent special schools and independent AP, sit outside the high needs place funding system. Where a local authority has commissioned a place in an independent school, the local authority is responsible for all the funding for that child or young person with SEND and the local authority must provide the equivalent of both place and top-up funding from their high needs budget. The total expenditure on these placements should be included in the relevant high needs top-up funding line of each local authority’s s251 returns.

Only educational costs (including deemed educational costs) should be funded by the DSG. In some cases, the integrated package of support will be costed and charged through a single fee and in such cases, the local authority should charge non-educational costs to the responsible partners. In these cases we encourage providers to be clear about which elements of provision (and therefore cost) can be attributed to education, health and social care. Further information can be found in annex 4: health and social care costs.

More information about how local authorities should discharge their responsibilities for children and young people with SEND in independent schools is set out in the SEND Code of Practice, in particular paragraphs 9.131 to 9.136.

Where a local authority is considering placing a child or young person with an EHC plan on a full-time basis in independent provision, they should ensure the setting is properly registered with the Department for Education before any placement is made. Any provision that provides full-time education for 5 or more pupils of compulsory school age, or for one or more pupils of compulsory school age who have an EHC plan or are looked after by a local authority, and which is not a maintained school, or a non-maintained special school will be considered an independent school. All independent schools must be registered with the Secretary of State. Further information on the process can be found at independent school registration.

It is an offence to conduct an unregistered independent school, and anyone who does so is liable on summary conviction to a fine and/or imprisonment. Local authorities making use of unregistered provision for the purpose of providing full-time education to children with EHC plans may prejudice future prosecutions of unlawfully operating settings.

14.8 Pupil referral units, AP academies and AP free schools

Pupil referral units (PRUs), AP academies and AP free schools are normally funded as follows:

• pre-16 core funding: £10,000 per place based on the number of places to be funded

• post-16 core funding: element 1 (based on 16 to 19 national formula) plus element 2 (£6,000 per SEND place)

• top-up funding: per pupil top-up funding paid by the commissioning local authority or (in the case of pre-16 pupils) school

We encourage schools and local authorities to explore the most effective arrangements for AP commissioning and funding in their area. For instance, there is flexibility for local authorities to devolve some decision-making and funding for AP to schools: there is evidence to show that this can be effective in supporting mainstream schools’ work with their most challenging pupils. Local authorities should provide information locally and consult with the schools forum about such arrangements. Local authorities should also consult with the schools forum on providing PRUs, AP academies and AP free schools with increases in top-up funding rates comparable to those that are being considered for maintained special schools and special academies.

Funding levels for new AP free schools are determined by ESFA from the third academic year after opening. Place funding numbers for the first 2 years are based on evidence provided in pre-opening, as an estimated number of FTE places required for the number of pupils attending the free school. ESFA reviews actual pupil numbers against planned places (occupancy) and under-occupancy in year 1, which may have an inpact on the place numbers funded for year 2.

Beyond year 2, the number of places to be funded are determined annually using evidence of occupancy (pupil numbers) and commissioning of places by local authorities and schools. ESFA write to all AP free schools in the autumn term to begin the place process for the following academic year.

PRUs, AP academies and AP free schools will not receive AP place funding for post-16 students because these providers are, by definition, schools set up to educate children of compulsory school age. If an AP provider does have post-16 high needs students with SEND, usually with an EHC plan, these places are funded on the same basis as post-16 students in mainstream schools.

Further information about overall funding for AP schools can be found in alternative provision and a guide to new alternative provision free school revenue funding

14.9 General further education colleges, sixth form colleges, independent learning providers and 16 to 19 academies

General further education (FE) colleges, sixth form colleges, independent learning providers (ILPs) and 16 to 19 maintained schools and academies receive core funding based on an amount per student calculated using the post-16 NFF (element 1) and, for their students with high needs, £6,000 per high needs place (element 2). Top-up funding for students with high needs (element 3) is paid directly by the local authority commissioning the place.

Element 1 funding, based on student numbers, is allocated directly by ESFA to colleges (or via the provider local authority for 16 to 19 maintained schools) for students aged 16 to 19 and those aged 19 to 25 with EHC plans. The number of students and amount of funding paid has no impact on local authorities’ high needs budgets. Funding is provided through the disadvantage factors of the mainstream 16 to 19 funding allocation for students with SEND, but whose additional support costs are lower than £6,000 and who therefore do not count as students with high needs.

For the 2023 to 2024 academic year, local authorities should assume for element 1, a national average amount of £5,600. These amounts comprise the national funding rate, which is increasing from £4,542 to £4,642 and additional funding allocated through the 16 to 19 funding formula.

The number of high needs places (element 2) funded at £6,000 per place for the 2023 to 2024 academic year is determined through the place change process. As indicated above, it is essential that FE colleges discuss with their provider local authority (that is, the one in which the main college or provider headquarters is located) how many places should be funded, as set out in the high needs place funding section above. Further information about how place funding works, including where students exceed place numbers, can be found in high needs place funding. Further information on high needs top-up funding (element 3) is set out in top-up funding.

FE colleges may also agree an alternative method of calculating this element of funding with their provider local authority (that is, a calculation that is not necessarily a number of high needs places multiplied by £6,000), subject to the requirements outlined in the high needs place funding: local flexibility to allocate differently.

There are a number of situations where a 14 to 16-year-old may be studying in a college, these could be:

• students who achieved a level 2 qualification early and are choosing to enrol on a full level 3 course, and home-educated students are counted as 16 to 19-year-olds; such students are funded alongside 16 to 19-year-olds via the 16 to 19 funding formula for element 1 and £6,000 per place for element 2

• students enrolled in a maintained school or academy but studying part-time in college are not funded as 16 to 19-year-olds, as the maintained school or academy will receive funding in respect of these students via the pre-16 process applicable to that school

• some colleges are eligible to be directly funded by ESFA for 14 to 16-year-olds

These students should be recorded in the ILR accordingly and will be funded for element 1 via the 16 to 19 formula using a separate process. For element 2 these students are counted as 16 to 19-year-olds and funded at £6,000 per place using the same process as for 16 to 19-year-olds. Further details for FE colleges on funding for directly recruited 14 to 16-year-olds in colleges can be found in the enrolment of 14 to 16 year olds in FE guidance.

14.10 Special post-16 institutions

To be eligible to receive high needs place funding from ESFA for the first time, SPIs must successfully complete the high needs funding: due diligence process for special post-16 providers. To receive ESFA place funding, such SPIs must have been proposed to ESFA by a local authority through the annual place change notification process. Their allocations are determined by the numbers returned by the local authority in which they are located, through the place change notification.

All SPIs in their second year onwards of direct ESFA funding are allocated funding (element 1 and element 2) based on their latest R06 ILR return. In addition, they receive top-up funding paid by the resident (commissioning) local authority. Further information can be found in the high needs place funding and top-up funding sections.

ESFA publish the criteria for calculating elements 1 and 2 of the in-year growth for SPIs and the centrally funded colleges once decisions have been made for the academic year in question - this will normally be during that academic year, not before. The 2022 to 2023 academic year in-year growth criteria has been published.

14.11 Hospital education

Hospital education is defined as education provided at a community special school or foundation special school established in a hospital, or under any arrangements made by the local authority under section 19 of the Education Act 1996 (exceptional provision of education) where the child is being provided with such education by reason of a decision made by a medical practitioner.

Although we allocate funding to local authorities for hospital education without reference to the age of the young people receiving the education, local authorities’ duties differ for young people aged 16 and over. This may affect their decisions on funding education for young people in this age group, such as those in independent hospital schools.

Our long-term intention is to introduce a formulaic hospital education factor in the high needs NFF that considers both local authorities’ spending data and NHS data, thereby better responding to the number of patients needing education. Our work to progress this has been delayed because of the impact of the COVID-19 pandemic on the NHS, hospitals and hospital schools.

In the meantime, as in previous years, hospital education should continue to be funded by local authorities based on either an amount per place, or as a centrally funded local authority service. An example of the latter is where the local authority employs teachers directly to work in a hospital or offer home tuition to pupils who are confined to their home, because a medical practitioner has decided that is where they should receive their education.

Some local authorities commission such services through hospital schools or PRUs. In all cases, local authorities should ensure that there is clarity on how hospital education is provided and funded locally. Local authorities should report their planned and actual expenditure on such provision in maintained schools, or provision funded as a central service, in the relevant tables of the s251 budget and outturn statements.

Funded hospital education places can be found in maintained special schools (usually a particular type of special school known as a hospital school), maintained PRUs (sometimes known as medical PRUs), special and AP academies and free schools. Often these schools will have a combination of hospital education places and other high needs (AP and SEND) places.

The School and Early Years Finance (England) Regulations require that hospital education places in maintained schools and PRUs are funded at least at the same level per place as in the previous funding year. This requirement is also reflected in the funding arrangements for hospital education places in academies. The DSG: conditions of grant require local authorities to treat academies the same as maintained schools in their funding arrangements. These requirements will remain in place and be incorporated in the regulations and conditions of grant for 2023 to 2024.

Local authorities are reminded that the high needs NFF provides them with a 5% increase in hospital education funding, compared with the 2022 to 2023 allocations of hospital education funding. Local authorities should consider carefully, following discussion with their maintained hospital schools, academies, and other providers of hospital education, how much of this increase is passed on to them, taking into account any increase in their costs. If a local authority intends to pass on an increase to an academy funded for hospital education places, this must be notified to ESFA via the 2023 to 2024 place change notification process.

The hospital education funding guidance explains the process for those local authorities wishing to apply for additional funding due to new hospital education provision. We are aware that many hospital schools will have had to change their delivery of educational provision during 2021 and 2022, because of COVID-19, and that some of these changes may ultimately be more permanent. Local authorities should engage with their maintained hospital schools and academies, other hospital education providers, and the relevant NHS hospital trusts, to plan for 2023 to 2024, including discussion of the funding implications of temporary or permanent changes in provision.

Medium secure adolescent psychiatric forensic units, which cater mainly for young people aged 16 and over, are funded using the same hospital education funding methodology of an amount per place no less than their funding per place in the previous funding year. Such education provision exists in a very small number of units, most of which are in maintained schools and academies where the funding is allocated, either from the local authority or ESFA, respectively.

Local authorities’ duties may require them to commission hospital education from other independent providers, usually registered as independent schools and not in receipt of funding directly from ESFA.

In these circumstances, local authorities would be expected to pay the costs of this education from their high needs’ budgets. In discharging their duties, the law does not necessarily require local authorities to commission a particular education provider, although decisions about education provision should not unnecessarily disrupt a child or young person’s education or treatment.

Independent hospital education provision may be funded either as a single service by the local authority in whose area the provision is located or based on the payments for individuals from those authorities where the child or young person normally resides. In both cases, the provider should confirm with the relevant local authority that they are content to commission and fund the education provision.

If funding is provided as payments for individual children and young people, the provider should receive such confirmation from the local authority in writing (if possible), before delivering the education provision to the child or young person, and certainly before requesting any funding.

15. High needs funding: post-16 special circumstance

15.1 High needs place funding: local flexibility to allocate differently

Mainstream academy and free school sixth forms, including AP academy sixth forms, and all general FE colleges, sixth form colleges, ILPs, and 16 to 19 maintained schools and academies are funded at £6,000 per high needs place (sometimes referred to as element 2). This funding is deducted from the local authority’s DSG and paid to the schools and colleges via ESFA, based on the published data on place numbers from the annual place change notification process. For maintained schools and PRUs, this funding remains in local authorities’ DSG high needs allocations to fund schools direct, and local authorities have flexibility to make changes to the place numbers.

There remains the flexibility introduced previously, whereby a local authority can reach agreement with any of the types of school/college referred to above, that this element of the educational provider funding can be calculated and paid in a different way directly by the local authority, subject to the following requirements:

• there should be agreement on the alternative funding approach between the local authority and the school or college involved, and this agreement should be reached by autumn 2022

• the alternative arrangement must ensure a continuation of the £6,000 cost threshold for top-up funding, and reflect high needs students attending from other local authorities to maintain consistency in the high needs funding system

• in other words, the funding methodology should continue to provide schools and colleges with funds to meet the additional costs of supporting students with special educational needs up to £6,000 per annum, with top-up funding meeting the costs in excess of that threshold

• local authorities should be aware that the import/export adjustment will continue to operate as explained above whatever alternative methodology is used

The schools and colleges involved must, therefore, continue to provide information about students with high needs through the school census and ILR according to the current definition. This means that such students must have been assessed by the local authority as having high needs, and the provider must be receiving top-up funding for their support costs in excess of £6,000. This school census and ILR information provides the data that allows the import/export adjustment to operate fairly for local authorities.

The local authority can make such alternative funding arrangements by agreement with its maintained secondary and 16 to 19 schools and PRUs without any formal notification to ESFA.

Where an alternative funding methodology is agreed with an academy or college, the local authority should notify ESFA through the place change notification process that the place number is to be reduced. The place number would be zero if the local authority has agreed with the academy or college that the alternative methodology covers the equivalent of all their place funding, including those places filled by students placed by other authorities.

In all cases, the deduction from the local authority’s high needs allocation would reflect the reduced place number, because the local authority has agreed the change with the academy or college involved and will pay the funding to the academy or college concerned directly.

It is important for local authorities to note that no changes will be made to the import/export adjustment in the NFF, because the provider local authority (the local authority area where the school or college is based), will still be expected to meet the costs of all the places in the school or college. This includes those places to be occupied by students for whom other commissioning local authorities are paying the top-up funding.

This flexibility encourages local authorities and their schools and colleges to work together in making special provision for their students. Examples of alternative approaches could be:

• an agreement to fund a college, a lump sum directly per year over 3 years, to provide certainty to the local authority and college on the level of provision; and funding that will be made subject to specified tolerances relating to the actual number of students with high needs receiving support

• an agreement that a school sixth form will be funded for its students with SEND based on similar proxy measures, as are in the local pre-16 funding formula

We may collect further information from local authorities about any alternative funding calculations they devise.

15.2 Post-16 study programmes/supported internships

Most young people with high needs attending a school, college or SPI will be subject to an EHC plan. Local authorities must use the evidence from the EHC plan to make consistent, effective and robust assessments of the support the young person will need to move towards a positive outcome.

Local authorities and the schools and colleges offering places for students with high needs should work together to agree a suitable study programme for a young person, which must be tailored to their individual aspirations and support needs.

A full-time study programme has a minimum duration of 580 hours and there is no set maximum. Neither local authorities, nor schools and colleges should set an arbitrary maximum number of hours for a study programme, but instead students should be provided with the number of hours they require to complete the programme. A funding requirement for all programmes is that they meet the condition of funding for maths and English.

A supported internship is a full-time study programme for young people aged 16 to 25 who have an EHC plan, and for whom a move into employment is the next step, but who need extra support to do so. The costs of additional support associated with providing an effective supported internship placement can include indirect costs (for example, engagement with an employer to ensure the suitability of a placement for the young person, or with their family to ensure they are supportive).

Access to Work funding from the Department for Work and Pensions or other funding sources may contribute to some supported internship costs, subject to any limits imposed on what these funds can be used for. Access to Work is a discretionary grant scheme, further information about the support it can pay is available in supported internships. Local authorities should not assume that an application has been successful. To avoid paying the same support costs twice, they may wish to ensure that Access to Work funding has been sought in accordance with the guidance when deciding on any high needs top-up funding requirement.

Where the costs excluding any other available funding (such as Access to Work), are more than £6,000, these may be eligible to be funded from local authorities’ high needs budgets. Students on supported internships whose support costs are less than £6,000 must not be regarded as students with high needs, even though they have an EHC plan.

15.3 Part-time or part year students: post-16

We also consider young people to be high needs students when they are part-time or part-year, and their additional support funding would total more than £6,000, if provided over the full academic year, as agreed with the local authority in which the student is resident. For more information, see guidance regarding the funding rates and formula, used in the funding arrangements for 16 to 19-year-olds.

Where a school or college has enrolled, or is considering enrolling, a high needs student who will attend on a part-time or part-year basis, they should hold discussions with the relevant local authority as commissioners of high needs provision. The normal funding approach should then apply, in line with the principles outlined in this guide.

15.4 Students aged 19 to 25 with an education health and care (EHC) plan and funding restrictions in schools

Students aged 19 to 25 with an EHC plan who are continuing in education may have a range of options, including attending FE colleges, ILPs and SPIs. The school funding regulations require that a local authority may not use its high needs budget to fund places, or pay top-up funding, for 19 to 25-year-olds attending a school, for example, a maintained school, academy, an NMSS or an independent school. There is an exception for those 19-year-olds who are completing a secondary education course started before they were 18.

If a school considers that it has the appropriate specialist expertise to prepare students aged 19 to 25 with an EHC plan for adult life, including independent living and employment, it will need to establish separate post-16 provision to do so. To receive high needs funding for such young people, a school would have to set up a legally and financially separate entity to provide the appropriate environment for young people of that age group. Such new post-19 specialist provision would normally be set up as an SPI. To be eligible to receive high needs place funding from ESFA for the first time, SPIs must have been included in ESFA’s annual place change notification process by a local authority and must successfully complete the high needs funding: due diligence process for special post-16 providers.

More information on how new SPIs are funded can be found in special post-16 institutions.

For information on learners aged 19 to 25 without an EHC plan see annex 5: other information.

15.5 Students aged over 25

A local authority must keep an EHC plan under review. For a student with an EHC plan when they are 24 years old, the plan normally ceases when the student turns 25, although local authorities have a power to extend an EHC plan until the end of the academic year in which the student turns 25.

If a local authority extends the EHC plan until the end of the academic year, the local authority must continue to provide top-up funding to the FE college until that time.

If the local authority makes an exceptional decision not to extend the EHC plan to the end of the academic year, it must discuss the transition arrangements for the young person with ESFA. Place funding is allocated to the FE college by ESFA for the full academic year and would not normally be clawed back if the EHC plan is not extended.

Local authorities are not responsible for commissioning provision for students with SEND who are 19 to 25 without an EHC plan or who are over the age of 25. Links to the funding arrangements for these students are at annex 5: other information.

15.6 Further information

If having read this guidance, there are any points which require clarification, please use our online enquiry form.

Maintained schools should contact their local authority.

Additional guidance on SEND support for schools, colleges, children’s services and parents and carers can be found at SEND: detailed information.

16. Annex 1: special schools minimum funding guarantee

The minimum funding guarantee (MFG) protection for maintained special schools and special academies in 2023 to 2024 is set by a condition of grant that applies to local authorities’ DSG. A 3% MFG has been set for special schools in 2023 to 2024. Recognising that some local authorities have already passed on additional funding for pressures in 2022 to 2023, instead of making a year-on-year calculation, the comparison will be with schools’ 2021 to 2022 funding baselines.

This means those special schools already receiving an appropriate increase in 2022 to 2023 may not require a further increase to reach the MFG level. We would nevertheless expect local authorities to respond appropriately to schools’ cost pressures in 2022 to 2023 and 2023 to 2024 to secure the provision required for the pupils they place there, taking account of any risks to the schools’ financial viability.

In 2023 to 2024, as in previous years, the MFG for special schools and academies will apply to their combined place and top-up funding on a per pupil basis, assuming the number and type of places remains the same.

In 2023 to 2024, the MFG must be calculated based on a comparison of the combined place and top-up funding per pupil in the 2021 to 2022 and 2023 to 2024 financial years. The top-up funding must be set at a rate to ensure a school’s total budget is 3% higher per pupil than in 2021 to 2022.

The 3% MFG, using the 2021 to 2022 baseline, is set at a level to achieve broad equivalence with the MFG for mainstream schools over the same period (considering the schools supplementary grant funding that mainstream schools receive in 2022 to 2023). We expect this level of MFG to be affordable for local authorities, given the 21% increase in high needs funding at a national level between 2021 to 2022 and 2023 to 2024 and that many local authorities have already increased top up funding rates in 2022 to 2023, in light of the additional funding allocated for that year to meet cost pressures. Where there are extenuating circumstances, the process to request disapplication of the MFG will remain in place, with details set out below.

The MFG calculation must assume that all pupils in the school are placed by the provider local authority and that all top-up rates received by the school are those set by the provider local authority.

High needs funding that the school receives in place of the TPG, the TPECG, and the pensions supplementary fund, should be excluded from the MFG calculation. Similarly, the additional funding for 2023 to 2024 that local authorities are required to pass directly to maintained special schools and special academies, as explained in additional funding for 2023 to 2024 and annex 2 of this guide, should also be excluded from the MFG calculation. That funding increase for 2023 to 2024 should be additional to the required MFG 3% increase over 2 years.

When calculating protection, local authorities should make sure that they are comparing like for like. Adjustments should be made for changes in the nature of the provision. For example, if previous top-up funding rates included an element for a commissioned service which is no longer provided by the school, the value of that element can be discounted when calculating the MFG protected level.

Once the MFG assessment confirms 2023 to 2024 top-up funding rates received by the school are in line with the guarantee, they can then be applied to reflect the actual number and type of places at the school. There may be reasons why a local authority is not planning on passing an increase up to, or beyond the level of the MFG on to its special schools in 2023 to 2024. For example, a local authority may have increased its top-up funding rates by a significant percentage in 2021 to 2022 and considers that is sufficient to make cost increases over the current 2-year period manageable for the schools, given the level of reserves they have accumulated. Alternatively, a local authority might be working with all its schools to re-balance the top-up funding that is allocated between mainstream and special schools, to enable the former to meet a wider range of needs or have undertaken a benchmarking exercise and aligned top-up funding levels for its schools to ensure similar provision for pupils with similar levels of need are funded on a consistent basis.

Where a local reorganisation or review of funding levels takes place and there are changes to bandings, the 2021 to 2022 pupils and their categories of need should be attributed as far as possible to the new bandings for 2023 to 2024 to assess whether any school receives less than the MFG.

Breaches of the MFG should only be in exceptional circumstances. In all circumstances where the MFG is proposed to be breached and the local authority intends to fund one or more schools below the guaranteed level, the local authority must formally request that the relevant condition of grant is disapplied using the disapplication proforma accompanied by supporting information. Local authorities are expected to produce a worked MFG calculation prior to considering a disapplication request – see example tables in the MFG modelling section below.

Disapplication requests from local authorities seeking exceptions to the MFG rule will be considered on a case-by-case basis and that each request will apply for one year only. No prior year approvals will be carried forward. Local authorities submitting repeat requests covering the same schools should ensure the disapplication request is comprehensive, as if a new request was being presented, comprising the necessary up to date supporting information and financial modelling, in line with this guidance.

Where a local authority wishes to adjust the top-up funding across several schools, for example, following a review of its top-up funding rates and as a result some schools gain funding and others face a reduction, a disapplication will be required, although the request will only be relevant to those schools whose funding would fall below the guaranteed level.

Consequently, local authorities should not, through this process, seek endorsement of the entirety of a new top-up funding scheme that they are intending to implement across some or all their special schools.

16.1 Disapplication request and supporting information

Before completing a disapplication request, local authorities should read the best practice tab of the disapplication proforma, to ensure that in their request there is sufficient relevant and contextual information for an informed, fair and reasonable decision to be made. The information should include:

• how the impact on specialist education being provided to pupils by the schools that are not meeting the MFG has been considered

• why this request is the local authority’s preferred option, what alternatives have been considered, and why they were discounted (an options appraisal)

• any transitional arrangements that the local authority is putting in place to minimise the impact on special schools and to provide assurance of their ongoing viability

• relevant local contextual information, for example, the results of recent Ofsted inspections

Specific supporting information should be included with the request, as follows:

• financial modelling and the modelling for the preferred option to be in line with the examples provided in this annex, to show the financial impact on those schools not meeting the MFG. The modelling should include the change in total funding between 2023 to 2024 and 2021 to 2022

• information about any previous changes in funding, that have been approved by the Secretary of State and/or agreed with the schools affected

• information on funding changes in 2022 to 2023

• information on the affected schools’ financial health, reserves or deficits and analysis of in-year balances over previous years, as evidenced from published data

• details of the local authority’s DSG balance as evidenced from published data and the forecast balance at the end of the financial year 2022 to 2023. If the local authority has a DSG deficit, please provide a copy of an up-to-date recovery plan, and explain how the disapplication of the MFG links with this plan

• a summary of the consultations that have been undertaken with the schools affected and other interested parties, such as parent/carer groups. There is also a requirement that high needs funding arrangements are discussed in the local schools forum, so details of any schools forum consultation or consultations with a wider range of schools and colleges may be necessary

• an equalities impact assessment of the impact on children and young people with protected characteristics

We would ask those local authorities who are planning to submit a disapplication request to contact ESFA at LA.Disapplications@education.gov.uk for an initial discussion before starting the process.

Local authorities that have safety valve agreements with the department should make disapplication requests to the safety valve team at SafetyValve.Programme@education.gov.uk. Local authorities that are engaged in safety valve discussions with the department during 2022 to 2023 should make disapplication requests as part of those discussions. Local authorities may wish to discuss with the safety valve team in advance what form those requests should take.

16.2 MFG modelling

The worked modelling examples below provide 2 scenarios of how the MFG is calculated for a 100-place special school. The first (table 4) shows the funding in 2021 to 2022, when it was occupied by a total of 90 pupils, 30 in each of 3 different bands. This is considered a baseline and the same number of places, pupils and levels of need should be used for 2023 to 2024. The calculation then highlights the impact of any proposed changes to the top-up funding rates, assuming the school is offering the same level of provision.

In the first modelling scenario (table 5), one of the 3 top-up funding rates has reduced. Overall, the funding for the school would remain above the 3% MFG, as place funding has been considered and the number and types of places remained the same. Therefore, 2023 to 2024 top-up funding rates are in line with the guarantee and funding to the special school should reflect these rates (for pupils placed by the provider local authority), the number of students in each band and the actual numbers of places.

In the second modelling scenario (table 6), 3 top-up funding rates have increased by 3%. However, in this case, the funding for the school is below the 3% MFG level as place funding has not been considered; and so, the rates will need further adjustment to be compliant with the condition of grant.

As part of the MFG assessment, this calculation will be needed for each special school. Local top-up funding arrangements vary, although many local authorities have developed top-up funding bands that are the same across all their special schools, it is possible for rates to vary between schools, or for school-level factors to be included. Such arrangements can also be used on a temporary or transitional basis to ensure that all their schools’ funding levels are protected and covered by the 3% MFG. If top-up funding rates are set at a level which means that one or more of the local authority’s special schools’ funding is lower than 3% - on a like for like comparison of 2021 to 2022 and 2023 to 2024 funding levels - a disapplication request must be made in respect of those schools.

Table 4: MFG calculation – a worked modelling baseline example

Special schools funding: 2021 to 2022	Band 1	Band 2	Band 3	Total
Number of places	30	35	35	100
Number of pupils	30	30	30	90
Top-up rate	£5,000	£7,500	£10,000	N/A
Place funding	£300,000	£350,000	£350,000	£1,000,000
Top-up funding	£150,000	£225,000	£300,000	£675,000
Total funding	N/A	N/A	N/A	£1,675,000

Table 5: MFG calculation – a worked modelling example where the funding is 3% MFG

2023 to 2024: MFG scenario 1	Band 1	Band 2	Band 3	Total
Number of places	30	35	35	100
Number of pupils	30	30	30	90
Top-up rate	£4,500	£8,500	£11,175	N/A
Place funding	£300,000	£350,000	£350,000	£1,000,000
Top-up funding	£135,000	£255,000	£335,250	£725,250
Total funding	N/A	N/A	N/A	£1,725,250
MFG % difference from 2021 to 2022	N/A	N/A	N/A	3.00%

Table 6: MFG calculation – a worked modelling example where the funding is below 3% MFG

2023 to 2024: MFG scenario 2	Band 1	Band 2	Band 3	Total
Number of places	30	35	35	100
Number of pupils	30	30	30	90
Top-up rate	£5,150	£7,725	£10,300	N/A
Place funding	£300,000	£350,000	£350,000	£1,000,000
Top-up funding	£154,500	£231,750	£309,000	£695,250
Total funding	N/A	N/A	N/A	£1,695,250
MFG % difference from 2021 to 2022	N/A	N/A	N/A	1.21%

17. Annex 2: Additional funding for 2023 to 2024 - calculating how much funding to allocate to schools

17.1 Calculations to be used

The calculations to be used for allocating the additional funding for maintained special schools, special academies, pupil referral units and AP academies are as follows:

Maintained special schools and special academies and free schools

Local authorities must allocate 3.4% per place, based on the place funding of £10,000 per place plus the average top-up funding they pay for a pupil placement in financial year 2022 to 2023, using the total number of places being funded in academic year 2022 to 2023. If a revised number of places has been agreed with the school for the academic year 2023 to 2024, through the place change process where applicable, the local authority may use that number to calculate seven twelfths of the allocation (for the period September 2023 to March 2024)

For example, a special academy is funded for 200 places in academic year 2022 to 2023. It therefore receives place funding at £10,000 per place for those places. 150 of those places are occupied by pupils placed by the provider local authority that previously maintained the school, 100 of which attract that authority’s top-up funding rate of £9,000 per pupil, and 50 of which attract a higher rate of £15,000 per pupil. The local authority therefore pays an average top-up funding rate of £11,000 per pupil ((100 × £9,000) + (50 × £15,000) / 150). In the calculation, the top-up funding paid by other authorities using the remaining places is not taken into account. The calculation of the additional funding to be passed on to the school is therefore as shown in the table below:

Table 7: additional funding calculation – a worked example

2022 to 2023 data	Pupils placed by provider local authority in 2022 to 2023	Places funded in 2022 to 2023	Top-up funding (£)	Place funding (£)
Top-up funding paid for pupils at £9,000 each	100		900,000
Top-up funding paid for pupils at £15,000 each	50		750,000
Total top-up funding paid	150		1,650,000
Average top-up funding paid per place	150	150	11,000
Total places funded		200	2,200,000	2,000,000
Additional funding at 3.4%		200	74,800	68,000

Total additional funding for 2023 to 2024		£142,800

This additional funding for special schools must be excluded for the purpose of applying the 3% minimum funding guarantee for 2023 to 2024, more information on this is in annex 1.

Pupil referral units and AP academies and free schools

Similarly, local authorities must allocate 3.4% per place, based on the place and top-up funding these schools receive. As the top-up funding AP schools receive is more variable and includes funding directly from schools commissioning placements, the calculation must be based on data provided through schools’ income and expenditure returns. For maintained pupil referral units, the latest published 2021 to 2022 data should be used. For AP academies, the latest published data is from the 2020 to 2021 academic year, so that should be used. We have published details of the income categories and the data for each school that should be used for this calculation. In each case the increase can simply be calculated as 3.4% of this income amount.

For example, the relevant income amount for a pupil referral unit in 2021 to 2022 was £2.46 million. The additional funding to be passed on by that authority to the school will therefore be:

• relevant income amount, in this example £2.46m × 3.4% = £83,640

Maintained and academy hospital schools

The additional funding for those hospital schools that are special schools or academies should be calculated on the basis of a 3.4% increase in the amount they are funded per place in the 2022 to 2023 financial year, for the number of places funded in the 2022 to 2023 academic year. For hospital schools that are pupil referral units or AP academies, or if they are not funded wholly on a per place basis, their income data should be used as for other AP. References to special and AP schools below should be understood as also referring to hospital schools as appropriate

All specialist schools

All maintained special schools and pupil referral units, and special and AP academies, must receive from the local authority an allocation of additional funding for the 2023 to 2024 financial year pro rata for as long as they are open during that year, including new free schools opening during the year.

These additional funding allocations do not count towards the requirement for local authorities to pay extra high needs funding equivalent to the historic teachers’ pay grant and teachers’ pension employer contribution grant.

This funding is also additional to the 2023 to 2024 NFF allocations and will not affect the value or operation of the import/export adjustments, or of the DSG deductions for academies’ place funding.

17.2 Data to be used for the calculation of additional allocations

The place numbers for the academic year 2022 to 2023 have been published: local authorities have provided these numbers for their maintained schools and ESFA have published the numbers for special and AP academies. The total place number should be used for both maintained schools and academies. The links to the data are as follows:

• section 251 2022 to 2023 budget data for maintained school place numbers
• academy place number data for 2022 to 2023

For the calculation of additional funding for pupil referral units and AP academies, the local authority should use income data from the maintained schools’ and academies’ financial returns to the department. Local authorities and schools can find the appropriate information for the calculation of this additional funding in the pupil referral unit (PRU) and alternative provision (AP) academy additional funding allocations for 2023 to 2024 document.

Local authorities must allocate this funding for the period April 2023 to March 2024. In addition, local authorities must consult the affected schools and academies, so that significant differences between the published data and more recent developments can be taken into account. Such developments will include:

• new free schools, where there are no published data

• significant differences between the number of places being funded in the 2022 to 2023 academic year and those planned for funding in 2023 to 2024

17.3 Varying the amounts calculated in accordance with the specified data

Local authorities must pass on to all schools and academies a minimum of the amounts calculated in accordance with the published data as indicated above, except where a reduction in the number of places for funding in academic year 2023 to 2024 has already been agreed between the authority and school. In the case of an academy, such agreement will have been notified to ESFA as part of the annual place change notification process that concludes in February 2023.

As a result of local consultation and data collection, local authorities can allocate more additional funding on the basis of place number data, top-up funding rates (in the case of special schools) and grant income information (in the case of AP) that is missing from the published data or more up to date. For example, an AP academy could provide the local authority with the relevant income data from 2021 to 2022:

• where a new school’s income is not included in the published data

• if the published 2020 to 2021 income data is significantly lower than normal because the academy received lower levels of top-up funding due to a temporary reduction in the number of placements during the COVID-19 pandemic

Local authorities can also propose amounts lower than the minimum calculated using the specified data, by requesting a disapplication of the relevant condition of grant. They will be able to seek approval to use different data or a different calculation that gives a lower increase if there is an error in a specific school’s data or their circumstances will be significantly different next year. We expect such requests to be rare, for example:

• when a reduction in the number of places to be funded in 2023 to 2024 has not been agreed between the local authority and the school – although in this case ESFA may seek to resolve any disputed place number, if it relates to an academy, before a decision on the disapplication request. A local authority may wish to request information from ESFA on the number of 2023 to 2024 academic year places to be funded in AP free schools, before requesting a disapplication in the case of an AP free school, although this information will not be available until March 2023

• when there is evidence of a significant reduction to the published place numbers, the top-up funding or the relevant income data for a pupil referral unit or AP academy or free school, because of a significant change in the school’s circumstances, which would result in the school receiving an excess amount of additional funding. Such circumstances might be a significant change in the planned provision to be made (for example, the closure of a residential facility, or a planned reduction in the top-up funding because a greater proportion of the school’s places are for pupils with a lower level of need)

Local authorities wishing to submit an additional funding disapplication request should do so by 10 February 2023 using the disapplication request proforma, to allow for decisions to be notified before local authorities’ and schools’ budgets are finalised for the 2023 to 2024 financial year. Late requests will be considered exceptionally. Local authorities submitting disapplication requests should provide relevant supporting information giving the reasons for the request, evidence of the alternative data proposed for use in the calculation and/or alternative calculation, and details of the consultations that have been carried out with the schools affected.

18. Annex 3: responsibility for children and young people who move between local authorities

Local authorities are responsible for conducting the EHC plan needs assessment and, where necessary, issuing EHC plans and securing the provision specified for children and young people in the local authority’s area (section 24(1) of the Children and Families Act 2014). Local authorities should fund any special educational provision for children and young people with EHC plans from the high needs block of the DSG, which is allocated on a formulaic basis, including factors relating to the characteristics of the children and young people resident in their area. Further information can be found in the high needs national funding formula: technical note. Therefore, responsibility for SEN and high needs funding is normally based on where the child or young person lives.

Under the Children and Families Act 2014, local authorities are responsible for children and young people with SEN who are wholly or mainly resident in their area. These duties are based on where the child or young person lives and not on where they are educated. Where a child or young person is educated outside the local authority area where they usually live, it is the local authority where the child normally lives that is responsible for conducting the EHC needs assessment and issuing an EHC plan, where necessary, and for securing and funding that provision. Some children and young people may require residential educational placements (particularly those with the most complex needs). In such cases, it is the department’s view that the child or young person continues to be considered as living in the local authority area that placed them in the residential provision (since a residential school or college placement, even for 52 weeks of the year, is educational provision and not a place where a child or young person lives. That is, the child or young person will remain resident at their family home), and, therefore, they would continue to have the duty to maintain any EHC plan.

The high needs NFF and data used relating to the children and young people resident in the local authority’s area, includes a basic entitlement factor and import/export adjustment that together ensure local authorities are appropriately compensated for the high needs place funding for schools and colleges. This funding allocation is paid directly to the schools and colleges either by the local authority that maintains the school or by ESFA in the case of academies, NMSS and colleges.

Where a child or young person moves from the area of one local authority into the area of another (for example, changes where they usually live), the new local authority becomes responsible for meeting the statutory SEN duties (as detailed in the SEND Code of Practice, section 9.157 to 9.162). This may happen where a child’s family moves, or if a young person decides to remain living where they have been educated. If the child or young person already has an EHC plan, the old local authority is required to transfer the EHC plan to the new local authority on the day of the move, or within 15 working days of becoming aware of the move. The new local authority then becomes completely responsible for maintaining the plan and funding the specified educational provision. The new local authority must review the EHC plan within 12 months of the plan being made or being reviewed by the old authority, or within 3 months of the plan being transferred (whichever is later). The new local authority may conduct a new EHC needs assessment, regardless of when the previous EHC needs assessment took place, since local variations may mean that arrangements in the original EHC plan are no longer appropriate.

18.1 Looked after children

Looked after children (LAC) are those who have been taken into care or who are being provided with accommodation by a local authority in its statutory role under the Children Act 1989. More than half of looked after children have some form of SEN, and it is likely that a significant proportion of them will have an EHC plan. A significant proportion of looked after children live with foster parents or in a children’s home and attend schools in a different local authority to the local authority that looks after them. The Care Planning, Placement and Case Review Regulations 2010 distinguish between the responsible authority (the local authority that looks after the child) and the area authority (the local authority in which the child is placed). Local authorities placing looked after children in another local authority’s area (for example, with foster parents) need to be aware of that respective local authority’s SEND local offer if the children have SEND. Where an EHC plan assessment has been started, it must be carried out by the local authority where the child lives (is wholly or mainly resident), which may not be the same as the local authority that looks after the child, as set out in section 10.8 of the SEND Code of Practice. If a disagreement arises, the local authority that looks after the child will act as the corporate parent in any disagreement resolution.

When a local authority places a looked after child with an EHC plan in another local authority’s area (for example, with foster parents), the local authority where the looked after child lives (is wholly or mainly resident) becomes responsible for maintaining their EHC plan (including paying any top-up funding), in the same way as any child or young person who moves from one local authority’s area to another.

The policy intention behind this is that the local authority where the child lives knows their local schools and educational provision better, so they are better able to assess whether the child needs special educational provision on top of what is ordinarily available.

The Inter-authority Recoupment (England) Regulations 2013 permit the local authority where a looked after child with an EHC plan lives to recoup the cost of primary or secondary education, which includes additional SEND educational provision (for example, the costs of top-up funding), from the local authority responsible for looking after the child. Recoupment of education costs will not normally be appropriate, however, as from 2018 the high needs funding formula and associated arrangements have been designed to ensure that local authorities’ allocations of funding for SEND are based on the characteristics of the children and young people living in their area, including any looked after children. In addition, there are adjustments to reflect the costs relating to the movement of pupils and students living in one local authority area who receive their education in another local authority area.

Inter-authority recoupment may remain appropriate in some circumstances, however, following mutual understanding and agreement on how the costs of educating looked after children are funded through the local authorities’ respective funding allocations. For example, recoupment may be appropriate for cross border pupils (Wales). In the case of emergency or temporary placements by the local authority responsible for the looked after child/children, it may be reasonable for the placing local authority to pick up the costs (via recoupment) until a more permanent placement is made and/or the transfer of the EHC plan is arranged. Although such costs may be met directly in these circumstances, inter-authority recoupment may be appropriate in the short term, for example, where a temporary placement decision of the local authority responsible for the looked after child/children has an unreasonable short-term financial consequence for another local authority because they have not had time to plan for the expenditure from their high needs budget. It should be noted that the recoupment regulations do not provide for recoupment of costs of FE provision, so costs of additional SEND provision for young people in FE settings cannot be recouped in this way.

The Education (Areas to which Pupils and Students Belong) Regulations 1996 (the ‘Belonging’ Regulations), as amended, are used to determine which local authority a person belongs to for the purposes of recoupment only. Regulation 1(4) makes clear that the ‘Belonging Regulations’ do not apply for the purpose of determining which authority’s area a child is in for the purposes of section 24 of the Children and Families Act 2014. They should not be used to determine which local authority is responsible for conducting an EHC needs assessment and maintaining, securing, and funding the provision in an EHC plan, since this must be determined under the Children and Families Act 2014.

18.2 Post-19 provision for young people accommodated under the Care Act 2014

For a young person aged 19 to 25, the local authority where they live is responsible for conducting any EHC needs assessment, issuing an EHC plan where necessary, and for securing and funding that provision.

Children cease to be looked after when they are over the age of 18 (some children will cease to be looked after at 16 or 17 and others will continue to be looked after until their eighteenth birthday). The Inter-authority Recoupment (England) Regulations 2013 apply only to looked after children (up to their eighteenth birthday), and so do not apply to those aged 19 or over. Once they are no longer looked after, the recoupment regulations no longer apply. This should not matter as the local authority where the young person lives will have been funded through the high needs funding formula to meet the costs, in the same way as for any other young person who lives in their area.

Some care leavers will remain living with their former foster parents past their eighteenth birthday in staying put arrangements, but they are no longer looked after. The local authority which looked after a child remains responsible for meeting their leaving care duties regardless of where the young person may now be living in England or Wales (section 23A(4) of the Children Act 1989).

This includes providing the young person with support for the expenses associated with living near where they are seeking work, working, or receiving education or training.

Decisions on adult social care placements may change the local authority responsible for making SEN provision. It is the departments view that, where a young adult is accommodated under the Care Act 2014 in a residential adult social care placement (as opposed to residential education) made on a long-term basis (for example, with the intention that it is to be permanent for the foreseeable future), it is likely to be considered to be a change in the adult’s residence. Therefore, if a young person aged 19 to 25 has been accommodated under the Care Act 2014, in a permanent residential care placement in a different local authority area, it is likely they will have moved into the area of the new local authority, unless there are factors indicating otherwise. Therefore, for the purposes of the Children and Families Act 2014, the new local authority would be responsible for securing and maintaining any EHC plan.

19. Annex 4: Health and social care costs

Where a child or young person with SEND has relevant health or social care needs, these should be addressed within an integrated EHC plan. Responsibility for securing the provision specified in the plan sits with the relevant statutory bodies: the local authority for education and social care provision, and either the Integrated Care Board (ICB, replacing clinical commissioning groups) or (in some cases) NHS England for health provision.

The high needs block is intended to meet the educational costs of children and young people with SEND or who require AP. The DSG may only be used for the purposes specified in the DSG: conditions of grant and School and Early Years Finance (England) Regulations. This means that the high needs block may not be used to meet non-educational costs, except where specifically permitted. The costs of securing health provision (specified in section G of an EHC plan) should be met by either the ICB or NHS England. The costs of securing social care provision (specified in sections H1 and H2 of an EHC plan) should be met by the local authority from their social care budgets.

However, the Children and Families Act 2014 acknowledges that specific types of health or social care provision may be considered as education or training. The Children and Families Act 2014 requires that health or social care provision which educates or trains a child or young person must be treated as special educational provision (that is, deemed educational provision). This particularly applies to therapies such as speech and language therapy, physiotherapy and occupational therapy. This means that it will be recorded in section F of an EHC plan and will be treated as special educational provision and, therefore, in scope of the high needs budget. However, all decisions about whether health care provision or social care provision should be treated as special educational provision must be made on an individual basis, as set out in section 9.74 of the SEND Code of Practice.

While independent and non-maintained provision frequently offers integrated education, health and social care provision, only educational costs (including deemed educational costs) should be funded by the DSG. In some cases, the integrated package of support will be costed and charged through a single fee. In these cases, the local authority should charge non-educational costs to the responsible partners. We would expect the relevant partners to have agreed the basis for the placement and its funding before it is confirmed (for example, before a final EHC plan is issued). The social care element of accommodating children with SEND in schools should be charged appropriately.

20. Annex 5: other information

This section provides information that may be useful but is not covered in this guidance.

20.1 Support funding through ESFA adult education budget

Support funding is available through ESFA adult funding methodology for learners aged 19 and above without an EHC plan via the adult education budget (AEB). Support funding (learning and learner support) enables providers to meet the additional needs of learners who may have certain barriers to start or complete their learning goal.

20.2 Learning support

Learning support is available to meet the cost of putting in place a reasonable adjustment, as set out in the Equality Act 2010, for learners and apprentices who have an identified learning difficulty or disability, to achieve their learning goal.

Learning support must not be used to deal with everyday difficulties that are not directly associated with a learner’s or apprentice’s learning on their programme.

All learning support claims must be reported in the ILR. To claim any costs that exceed the fixed monthly rate the earning adjustment statement (EAS) must also be used. There are 2 exceptions where the entire cost can be claimed through the EAS:

• where the learning aim is delivered in less than one calendar month

• 16 to 18 traineeships without a 16 to 19 study programme

Further information on claiming costs can be found in partnership working of the AEB funding rules.

20.3 Exceptional learning support claims above £19,000

Learners who need significant levels of support to start or continue learning can claim exceptional learning support (ELS) if their support costs more than £19,000 in a funding year.

Learners aged 19 to 24 requiring significant levels of support should have an EHC plan provided by their local authority and, therefore, would access funding from them.

Providers must submit ELS claims at the beginning of the learner’s programme, or when it is identified that the learner requires support costs more than £19,000 in a funding year, by completing and sending the ELS claims document.

To claim ELS for a learner aged 19 to 24, confirmation must be provided as to why the individual does not have an EHC plan. This should be a letter or email from the learner’s local authority stating the reasons why the individual does not need an EHC plan.

20.4 Learner support

Learner support is available to provide financial support for learners with a specific financial hardship preventing them from taking part or continuing in learning. Before providers award support to a learner, they must identify their needs within:

• hardship funding: general financial support for vulnerable and disadvantaged learners

• 20+ childcare funding: for learners aged 20 or older on the first day of learning who are at risk of not starting or continuing learning because of childcare

• residential access funding: to support learners where they need to live away from home

Further information on ESFA AEB funding and performance rules is available within the who we fund section of the AEB funding rules.

20.5 Support funding through the apprenticeships funding methodology

Funding support for apprentices (all ages) is met by ESFA through the apprenticeship funding methodology. ESFA provides learning support for apprentices to help with learning that affects their ability to continue and complete their apprenticeship.

Learning support is there to meet costs of putting in place reasonable adjustments for apprentices who:

• have a learning difficulty or disability as defined in section 15ZA(6) of the Education Act 1996 (as amended by section 41 of the Apprenticeships, Skills, Children and Learning Act 2009)

• because of this learning difficulty or disability, require reasonable adjustments to be able to complete their apprenticeship, including any reasonable adjustments to complete English and maths requirements and end-point assessment

For all age apprentices, both learning support and learner support follow the apprenticeship funding rules.

Apprentices (aged 16 to 24) with an EHC plan can access learning support and exceptional learning support as detailed in the apprenticeship funding rules. Any apprentice can access learning support (or exceptional learning support), however, an assessment must be undertaken to identify whether an apprentice has a learning difficulty or disability that directly impacts their ability to complete the apprenticeship on which they are enrolled.

Additionally, apprentices aged 16 to 18, and apprentices with an EHC plan, or care leavers aged 19 to 24 will qualify for an additional payment of £1,000 towards additional costs associated with training, for both the provider and the employer. They will receive this payment at the start of the apprenticeship if the apprentice is either:

• aged between 16 and 18 years old (or 15 years of age if the apprentice’s 16th birthday is between the last Friday of June and 31 August)

• aged between 19 and 24 years old and has either an EHC plan provided by their local authority or has been in the care of their local authority

Full details are available in the additional payments section of the apprenticeship funding rules.

More information on apprenticeships is available within the further education and skills apprenticeships guidance.

20.6 Free meals for further education (FE) colleges

Further information on free meals for FE colleges can be found in the 16 to 19 education: financial support for students guidance. This includes information on where the cost of meals is sometimes included as part of the package of support that is agreed with local authorities.

20.7 Special educational needs and disabilities (SEND) code of practice

Local authorities, maintained schools and academies, general FE colleges, non-maintained schools and all independent special schools and SPIs on the section 41 approved list must consider the department’s statutory guidance on the SEND system for children and young people aged 0 to 25.

20.8 Welsh students studying in English FE colleges

The Welsh Government may consider paying high needs funding for students from Wales studying in English FE colleges. The college should assess the needs of the student and then contact the Welsh Government to discuss payment of high needs place and top-up funding (elements 2 and 3). The funding through the 16 to 19 NFF (element 1) will be paid in the usual way direct by ESFA to colleges.

Colleges are not expected to recruit students from outside their normal recruitment area and should note that the Welsh Government may decide not to make payments of high needs funding for students at an English college where suitable provision is available nearer to their home.

20.9 Welsh pupils with high needs attending English schools

English and Welsh local authorities continue to have a statutory basis for the recoupment of the costs of certain pupils with high needs who are attending schools across the border from where they live. The Inter-authority Recoupment (England) Regulations 2013 enable local authorities to recover the costs of pupils with EHC plans or an individual development plan (IDP), pupils in special schools, and pupils in hospital education.

There are no equivalent statutory arrangements for pupils or students from other countries in the UK or elsewhere. Local authorities, schools and colleges are able to negotiate the recovery of costs as they consider appropriate, taking account of other relevant legislation, such as the Equality Act 2010.