Post-16 High Needs Provision (Warrington)

(Limited Text - Ministerial Extracts only)

Tuesday 15th January 2013 Westminster Hall

[The Minister for Schools (Mr David Laws)]

It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate the hon. Member for Warrington North (Helen Jones) on securing the debate, which is important for her constituents. It is, in particular, important for a group of vulnerable young people, whose case she is right to raise today. I am grateful for the opportunity to address her points and to explain the reason for our funding reforms. I will then talk more about the specific situation in her constituency and council area. I assure her that we are taking care to help local authorities and providers prepare for the changes that will happen later this year. We want to ensure that they are given the flexibility to use the funds that we will make available through their dedicated schools grant allocation in a way that best meets the needs of the children and young people they are responsible for.

I offer some reassurance that we take the concerns that have been expressed by local authorities, including Warrington borough council, seriously. Officials in the Education Funding Agency and other parts of the Department for Education have been working closely with local authorities for several months to help them understand the reforms and the necessary adjustments to funding, and that process is ongoing. We have relied heavily on the information that authorities and providers have given and used that to inform the distribution of funds. Where there have been discrepancies or anomalies, we have tried to be even-handed in our approach so as to get as fair a distribution of funding as possible.

Before I go into the detail of the process and of the particular local issues that have been raised by the hon. Lady, it might be helpful if I explain the rationale for the funding changes, which could lead to the consequences to which she referred. We have a disjointed funding system, with different arrangements for the funding of children and young people, depending on whether they are in the pre-16 or the older age group and on whether they continue to attend school or are in further education. Our aim is to establish much closer alignment between the pre-16 and post-16 funding arrangements for those young people who have special educational needs, learning difficulties and disabilities. Local authorities will be required to establish a single high needs budget for use in meeting the needs of all age groups up to 25.

Local authorities currently have statutory duties to make provision available for all students aged 16 to 19 and for those aged 19 to 24 who have a learning difficulty assessment. They only have a funding responsibility for such students in schools, however, not for students in specialist or general further education colleges or sixth-form colleges. Additional support funding for those institutions currently comes directly from the Education Funding Agency, as the hon. Lady mentioned. Although the agency takes into account the local authority’s decisions on student placements, we believe that better funding decisions will be taken, and a more efficient use of resources achieved, if the commissioning and funding responsibilities are more closely associated within local authorities. That is one of the key aims of our reforms to the funding of young people with high level needs.

In seeking arrangements that offer good value for money, as taxpayers expect, I assure the hon. Lady that we are not using the change as an opportunity to cut funding overall.

[Helen Jones]

I am listening carefully to what the Minister is saying, but does he not accept that if the responsibility for commissioning those places transfers to the local authority, the funding has to transfer as well? The funding that is transferring to Warrington is less than that which will be spent this year, and is certainly not enough to meet the places that we need next year.

[Mr Laws]

I understand the hon. Lady’s concerns, and I hope that I will be able to address some of them and put her mind a little at rest as I go on.

On the national picture, our plans are to increase funding for post-16 students with learning difficulties and disabilities. We spent £585 million in this area in 2011-12, and we are planning to spend £639 million in 2013-14, which is an increase of 9%. In previous years, the budget for specialist provision, which is now administered by the EFA, has not been fully utilised. We are not reflecting that underspend in the transfers we are making to local authority high needs budgets, so overall spending on young people with high needs throughout the country is set to increase by a significant amount over this period.

In the new system, post-16 funding will be of two kinds. To provide stability to providers, a proportion of funding will be based on places, which I think the hon. Lady understands. Providers will receive an amount per place of nearly £11,000 for the year. That funding will be guaranteed for the year, whether or not the places are utilised, and it will flow to all providers from the Education Funding Agency according to a national formula. The other kind of funding—top-up funding—will reflect the excess of additional support costs over the place-led funding, and will be paid in every case by the local authority responsible for placing each student. This element of funding will follow the student and therefore ensure that funding is not allocated to empty places.

The hon. Lady rightly highlighted the local impact of the changes that we are making. Hon. Members will understand from what I have just explained that to move to this better system we must make adjustments to local authority funding allocations. As the hon. Lady indicated, budgets have been based on what was spent on high needs students resident in each local authority area in the 2011-12 academic year, which is the latest full set of data that the Department holds. Since last August, the Education Funding Agency has shared information with, and gathered information from each local authority. That is to inform the distribution of funds between the place-led element, which is driven by a national formula, and the student-led element, over which the local authority has discretion. In fairness to all local authorities, we have not attempted as part of the process to redistribute the budgets between them.

We have encouraged authorities to collaborate with all the schools and colleges that are currently educating their students with learning difficulties and disabilities, so that they understand the scale of demand for future high needs provision and can decide how best to meet that within their high needs budget. This exercise will enable the place-led funding for each school, college or other provider to be settled so they can plan for their intake in September. The remainder of the funds will be with local authorities, as part of their high needs budget, to allocate as top-up funding for individual students.

The process so far has been complex for some local authorities, including Warrington, because the pattern of provision has changed significantly in some areas in recent years, or because the required information has not been readily available or verifiable. Some authorities claimed increases in the number of high needs students of 25% or more over three years. Warrington council was one that declared such an increase—in fact, an increase of some 65% from 113 in 2011-12 to a projected 186 in 2013-14.

[Helen Jones]

I want to draw two things to the Minister’s attention. First, the local authority tells me that part of that increase can be accounted for because it has become better at identifying those with special needs. Under the old system, which was run through Connexions, we were not good at identifying those with high-level special needs. Secondly, I hope the Minister accepts that the figures given by Warrington have been verified by his own officials. There is no dispute about how many will need provision next year.

[Mr Laws]

That is important because the Department must be able to distinguish between areas where the figures may be unreliable and those where they are reliable. We recognise that there may be issues in Warrington.

[David Mowat (Warrington South) (Con)]

It is true that the rate has gone up significantly in the last year, which is causing the anomaly. Even after it has gone up, it is still lower than the national average. Surely that is relevant to the way in which the computation is done, because it does not imply any abuse.

[Mr Laws]

My hon. Friend makes an important point. When looking at the statistics and trying to understand why the changes have taken place in specific authorities, my officials will carry out such checks to test the credibility of the data. We believe that this level of increase may in some cases result from misunderstanding or inaccurate predictions of the number of students with high-level needs because that scale of growth in numbers is not reflected across the country in the lower age groups. To manage expectations, the Education Funding Agency set a limit of 24% to cap the projected increase in the number of student places, and has encouraged authorities in some cases to provide more realistic estimates of places where the original increase reported cannot be justified. I am not saying that that is the case in Warrington, but in some areas that has been a concern. A cap has been necessary to be fair to all local authorities.

As a result of the exchange of information between Warrington council and the EFA, the position reached just before Christmas was that the post-16 element of its high needs allocation will be £677,000 next year, within a total high needs budget of £18 million. The EFA is now looking at more recent information from the council to see whether further adjustments are necessary to the amount allocated to it. The particular issue in Warrington is that it has predicted a significant increase of 65% in the number of places and a significant increase in consequent costs since 2011. Within the increase in recent years, a much larger number of students have, as the hon. Lady said, attended non-maintained and independent special schools and colleges, which tend to be more expensive.

Although the window for further adjustments to dedicated schools grant allocations has now generally closed, the further education and school sixth form elements of those allocations are not due to be finalised until early March. In general, we expect all local authorities to live within the overall dedicated schools grant that they have been allocated. For Warrington borough council that is £146 million, within which the high needs allocation is £18 million. We are aware that there may be unintended consequences arising from the changes due to specific local circumstances, such as those set out today by the hon. Member for Warrington North and my hon. Friend the Member for Warrington South (David Mowat).

An opportunity remains until 22 February for a few local authorities to make an exceptional case to the Education Funding Agency, and I assure them that the EFA and my officials will look carefully at whether adjustments can and should be made if the changes have affected particular areas in ways that were not predicted, and if they are material. In its review of such cases, the agency will ensure that any further adjustments are not to the detriment of other local authorities. We want to be as fair as we can to all authorities.

[Helen Jones]

I am grateful to the Minister for giving way. He is being very generous. Will he or a Minister in his Department meet a delegation from the borough council to try to iron out the issues, because they have serious implications for some very vulnerable young people?

[Mr Laws]

I will certain meet the hon. Lady and representatives from the council. Indeed, there will be a dialogue, as I have said, between the Department, the EFA and her local authority to ensure that there is a sensible conclusion. She will understand that until the process has been completed, I cannot give a cast-iron assurance of any outcome, but I can assure her that we are treating her concerns seriously, and looking into them. If adjustments are necessary, we are open to making them in a limited number of strong cases.

I am grateful to the hon. Lady for drawing attention to how students aged 16 to 24 with high needs will be funded. This is an important question for many young people and their families, and I hope that I have been able to provide some reassurance about the national picture and reassurance that concerns at local level will be treated seriously if they are based on clear evidence that changes in recent years have not been taken fully into account. Our funding reforms will be complemented by new legislation later this year. It is being designed to address some of the wider problems with the current support systems for young people with learning difficulties and disabilities. In the meantime, we will continue to work with local authorities, including Warrington, and schools and colleges across the country to implement the funding changes, and to monitor and assess their impact. We will of course make adjustments in future years if that proves necessary.

I thank the hon. Lady and my hon. Friend for raising this issue seriously and in detail. As I said, I cannot give a commitment today, other than to say that we are engaging seriously with her and her local authority. We will examine the issue carefully, and I am happy to meet the hon. Lady and her colleagues from the area, if that is appropriate, to discuss the matter with officials. If we believe that changes are necessary, we will implement them.