Guidance

Hospital education funding: guidance for 2025 to 2026

Updated 17 December 2024

Applies to England

1. Introduction

Local authorities can apply for changes to their hospital education funding for 2025 to 2026. This may be a change in funding because of a change in the number of beds at a hospital, or a new or closing hospital setting or ward in the local authority area, due to a decision by the NHS. Local authorities should submit requests through the 2025 to 2026 high needs place change workbook, using the principles set out in this guidance.

This process relates to local authority level funding through the dedicated schools grant (DSG) high needs funding block. If, as a result of this change, there is also an impact on the number of hospital education places to be funded at an academy, you must notify these changes to the school level allocations to us in a separate section of the high needs place change workbook.

Read the ‘How to complete the high needs place change workbook for 2025 to 2026’ guidance for information on accessing and completing the workbook.

The deadline for this return is 8 November 2024. 

2. Background

Local authorities can fund hospital education either by an amount per place, or as a centrally funded service as explained at Section 14.12 of the ‘High needs funding 2024 to 2025: operational guide’. Hospital education provision covered by this process may be in maintained hospital schools, pupil referral units (PRUs) or the equivalent academies. Independent hospital provision is only covered if a single local authority funds the provision, regardless of where the patients come from.

This process is to recognise that a change in medical provision, such as a new hospital ward or mental health unit, can impact upon the level of hospital education the local authority is required to provide. Local authorities should work closely with the NHS and education providers at an early stage when new medical provision is proposed, to agree arrangements for the provision.

Local authorities can apply for additional funding in cases where an increase in provision that occurred in 2024 to 2025 will continue into 2025 to 2026, or where an increase in provision in 2025 to 2025 has been confirmed. There may also be cases where medical provision has closed or transferred between local authorities; local authorities should use this process to notify us of a reduction of funding allocated to a hospital education provider because the provision has reduced or ceased, or where a transfer of funding to another local authority is required.

We recognise that, because of COVID-19, some local authorities and hospital schools/education have changed their delivery of educational provision. In some cases, such temporary changes will now be considered to be permanent and will need to continue beyond the 2024 to 2025 financial year. If such changes are now deemed to be permanent, we will consider requests for a change in funding through this process.

3. Principles and scope

We will only consider requests relating to a change in medical provision where the local authority will incur additional and recurring costs for providing education. This includes hospital education provided directly by the local authority, or by maintained hospital schools, PRUs, the equivalent academies or independent hospital education provision fully funded through the local authority’s high needs budget.

Requests for the following are out of scope and will not be considered for additional funding through this process:

• funding for start-up or one-off costs, such as IT equipment
• funding for discrete services, for example:
  • those only accessible to pupils from the local authority and not pupils from elsewhere, such as home tuition
  • education provided outside term time
• changes to hospital education provision unrelated to a change in medical provision, for example:
  • extending education provision to cover an increase in teacher contact time for a similar number of pupils with similar needs
  • where education provision for pupils with medical needs is extended at an alternative provision (AP) setting due to a local authority decision, not resulting from an expansion of medical provision (such as, through the NHS)
• funding for cost increases, such as:
  • salary increases
  • pension or national insurance contribution increases
  • the cost of independent hospital education provision for individual patients

Such costs as those above may be met from the local authority’s high needs budget and other grants such as the Core Schools Budget Grant (CSBG). Local authorities are also reminded that the high needs national funding formula, which for 2025 to 2026 is being published later than usual, normally provides them with a percentage increase in hospital education funding, compared with the previous year’s allocations. Local authorities should consider carefully, following consultation with their maintained hospital schools, academies and other providers of hospital education, how much of any increase is passed on to them, taking into account any increase in their costs. A local authority intending to pass on an increase to an academy funded for hospital education places must notify us via the 2025 to 2026 place change notification section in the high needs place change workbook, rather than the hospital education funding process covered in this guide.

4. How to apply

Local authorities should submit requests through the hospital education template in the high needs place change workbook by 8 November 2024. If you have any questions relating to this process, please send them to:

highneeds.ESFA@education.gov.uk

Local authorities must first ensure the request meets the above principles for eligibility and is within scope. For audit purposes, we require Director of Children’s Services (DCS) sign-off. The following information must be provided in the form with evidence of the change in medical provision as set out in the ‘NHS supporting evidence’ section.

4.1 Health care provider

Include:

• the name of the medical provision that is changing
• the change in provision (for example, the number of new beds due to a new ward opening)
• the confirmed date of change (for example, when the new beds will be occupied)

4.2 Education provider

Include:

• the name, type, and establishment number of the education provision that the change relates to - the local authority should be given as the provider if the education is provided directly by the authority (for example, if teachers are employed directly to work in a hospital)
• the provider’s current funding level
• the change in funding requested
• supporting information to show the impact of changes in the number of beds (in the medical provision) to the number of children and young people to be educated

4.3 Resource breakdown

This must include a detailed breakdown of how the requested funding change has been reached, including:

• additional resources required (for example, the full-time equivalent (FTE) number of teaching, education support, administrative and clerical staff)
• costs relating to each of the above

It is important the resources show the net change at local authority level, not changes that can be met from current staffing levels within the authority. This must only include recurring costs, and not start-up or one-off revenue or capital costs.

5. NHS supporting evidence

To support the application, local authorities must also provide an NHS letter or document as evidence. You should upload this via the high needs place change workbook.

It should be brief (no longer than 2 pages) and must include the following information:

• name of hospital or health care provider
• name and type of new provision (for example, ward name and type)
• the net increase in inpatient beds for children and young people or the change in the average number of children or young people receiving day or ambulatory care
• dates (month and year) new beds became, or will become, available for occupation
• confirmation that the increase in medical provision takes into account the net change, and is not being offset by a reduction in other provision

Please note that we will be unable to consider any additional information provided by the NHS.

6. Next steps

The deadline for this return is 8 November 2024.

In January 2025 we will confirm the outcome of all applications submitted by the deadline. We may contact local authorities if additional information is required. We will not consider late requests.

Subject to the request being agreed, an adjustment will be made to the 2025 to 2026 local authority’s DSG high needs block. This adjustment will include retrospective funding if the change occurred during 2024 to 2025 and was not included or considered in last year’s process. Adjustments will be pro-rated if the change in medical provision occurs part way through the 2024 to 2025 or 2025 to 2026 financial year.

An illustration of how this may be calculated is shown in the table below:

Full financial year recurrent costs	Date of change in provision	Pro-rated adjustment by month	2025 to 2026 DSG funding adjustment
£100,000	April 2025	*12/12	£100,000
£100,000	June 2025	*10/12	£83,333
£100,000	November 2024	*17/12	£141,667