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16th September 2019

“Unsustainable” Funding System for Pupils with Special Educational Needs

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The National Audit Office (NAO) has concluded that the system for supporting pupils with special educational needs and disabilities (SEND) is not, on current trends, sustainable. It reports that some pupils with SEND in mainstream and special schools receive high quality support that meets their needs. But, it raises what it describes as “significant concerns” that indicate that many other pupils are not being supported effectively, and that pupils with SEND who do not have education, health and care (EHC) plans are particularly exposed.

As at January 2019, 14.9% of all pupils (1.3 million) were recorded as having SEND. Of this figure, 20.6% (270,800) have ECH plans, nearly half of whom are in mainstream schools and nearly all the rest attend special schools. Over 90% of pupils with SEND who did not have EHC plans attended mainstream schools.

The NAO estimates that the DfE provided £9.4 billion in 2018-19 specifically to support pupils with SEND which represented 24% of the £39.3 billion “dedicated schools grant” allocated to local authorities for schools. Funding for pupils with SEND consists of “schools block” funding (from which schools are expected to meet the first £6,000 of support per pupil with SEND) and “high-needs block” funding (which pays for places in special schools and alternative provision and top-up funding for mainstream schools beyond the £6,000 per pupil threshold).

Whilst the DfE has increased school funding, the NAO concludes that funding has not kept pace with the rise in the number of pupils. Whilst over the four years from 2013-14, high-needs block funding has increased by 7.2% in real terms, a rise of 10% in the number of pupils in special schools and those with EHC plans in mainstream schools, high-needs funding per pupil fell by 2.6% in real terms, from £19,600 to £19,100. Per pupil funding in the schools block also reduced over the same period, despite a £754 million real terms increase in total funding.

The NAO concludes that the ways in which the DfE and local authorities are responding to overspending on high-level needs budgets are not making the system sustainable:

• An additional £125 million of high-needs funding in both 2018-19 and 2019-20 is
   less than the net overspend of £282 million in 2017-18.

• Local authorities have used dedicated school grant reserves accumulated in
   previous years as the main means of funding the overspend on high-level
   needs. Total net reserves fell from £1,070 million at the start of 2014-15 to £144
   million at the start of 2018-19.

• Most local authorities have transferred money from their schools block to their
   high-needs block. The amount transferred has increased from £49.8 million in
   2018-19 to an expected £100.7 million for 2019-20.

• Despite an announced extra £100 million of capital funding for SEND provision
   between 2018 and 2021, the DfE forecasts that there may be insufficient places
   in state special schools to meet demand.

Ofsted had rated 91.8% of the state special schools open in August 2018 as ‘good’ or ‘outstanding’, compared with 85.0% of mainstream schools and 78.3% of independent special schools. The proportion of state special schools graded as ‘inadequate’ or ‘requires improvement’ dropped from 10.4% in 2014 to 8.2% in 2018. At August 2018, 7,660 pupils were in state special schools graded as less than good.

The NAO’s report can be accessed here.