As always, it is a great pleasure to serve under your chairmanship, Mr Owen, but this is a debate I would prefer not to have; I would prefer that it was not necessary. However, some of the Government’s decisions on funding for post-16 high needs provision may damage some of the most vulnerable young people in Warrington—young people whose disabilities are profound and whose care needs are extensive. We have a duty to ensure that they are provided with the best we can give them. Yet when Warrington received its allocation in late December, it found itself plunged into a crisis because the amount of money allocated to it for the provision was far less than the amount needed for the number of places it required. I believe that that is not what the Government intended.
When the Secretary of State for Education announced changes to the funding system last March in a written ministerial statement, he said:
“Improvements to funding for high needs provision will mean it can be more responsive and will enable greater choice for children, young people and their parents.”—[Official Report, 26 March 2012; Vol. 542, c. 89WS.]
The Government’s own impact assessment said that the changes should
“improve accessibility of such provision to disabled pupils and students and should impact positively on equality of opportunity for this group.”
However, we cannot have choice if there are not enough places. We cannot have equality of opportunity if no funding is available. That is the position that young people in my local authority may find themselves in next year, because when the responsibility to commission post-16 high needs provision moves from the Education Funding Agency to the local authority, the amount of money that transfers over will be less than what the authority is spending now and will certainly not be enough to meet the number of places required next year.
Part of the problem is that the funding is based on the number of places needed in 2010-11—that is a three-year time lag. It is different from the way we fund other post-16 provision, which is based on the previous year’s figures. I would be grateful if the Minister explained why it is different and why young people with such special needs should be disadvantaged in this way. Warrington’s funding will be based on a year when it required 88 places, but it already requires 151, and next year it will require 186. Even with the uplift given to the 2010 figures, Warrington estimates that it will have enough funding for only 109 places—£1.5 million—whereas the amount it estimates will be needed is £3.9 million.
I commend officers and the portfolio holder for children and young people, Councillor Colin Froggatt, on the work they have done. They have said that they fear being able to fund only what are called elements 1 and 2 for special needs provision, which is course fees plus £6,000; they do not believe that they will have money for any top-ups at all. That will leave disabled young people in Warrington at a disadvantage compared with those in boroughs that can afford to pay top-ups to providers. I do not believe that we should fund special needs provision in such a way. Whether someone can get a place in the appropriate facility should not depend on the borough they happen to live in. I do not believe that that is either the Minister or the Government’s intention, but that is the consequence we are facing.
I can find no logic in the figures for Warrington. The special educational needs block grant of EFA funding is 35% nationally, whereas in Warrington it is 25%, yet the proportion of people with special needs in Warrington—0.5%—is close to the national average of 0.53%. There is no logic to the figures.
The EFA has sought to focus attention—wrongly, I believe—on the increase in the numbers of young people placed with independent specialist providers in Warrington. Interestingly, the EFA took 2009-10 as its start point, which is completely different from the one it uses to assess funding. True, only six young people were placed with ISPs that year, but there were 12 in 2010 and there are 19 now. The EFA is funding them, so presumably it agrees that that provision is appropriate for their needs. Warrington does not spend a much larger percentage of its budget on ISPs than is spent nationally—it spends 41% as opposed to 39% nationally. The Minister will know very well that, on the sort of numbers we are dealing with, the difference between those percentages is statistically insignificant and can be accounted for by one young person with vey high needs.
Nor is it the case that Warrington has not sought to improve its special needs provision. The local authority is seeking to build a special needs campus on the site of the former Woolston high school, with provision included for post-16 young people. However, the Government have delayed that by threatening to take the building away to give to a free school. They cannot have it both ways; they cannot say, “You must place fewer people outside the borough,” if at the same time they are delaying provision inside the borough.
Everyone has agreed that the figures on the number of places the authority will need next year are robust. Officials from the Department have been through them with local council officials, and there is no dispute about them. I have asked the authority to provide me with some examples of the sort of young people we are talking about. It gave me an example of a young man who is severely learning disabled, has communication and behavioural difficulties and is a wheelchair user. He needs one-to-one support throughout the day and access to physiotherapy, occupational therapy and a hydrotherapy pool. He is placed in independent specialist provision at the moment, but the Minister will know very well that for young people with such a high degree of need, it is often impossible to cater for them in-borough, because the numbers are so low that the facilities required cannot be built. The authority also gave me the example of a young person who has a place locally. He has epilepsy, autism and communication difficulties, and he too needs one-to-one provision throughout the day. Those are the kind of young people who deserve the best we have to offer.
A local authority cannot control the numbers needing that type of provision, nor can it magic them away. It must deal with the young people as they are. If we do not provide for their needs, we let down not only them, but their families, who invest an enormous amount of time, effort and emotional energy in caring for them. The least we can offer them in support is the right care and education for their children.
What, then, is the authority to do? It has been suggested to it that it should take some of the money allocated to under-16 SEN provision, but the Minister knows as well as I do that that budget is already stretched to its limit. He will have seen people in his surgery, as I have, who cannot get provision for their children of school age. Even if the authority can do that, there will still be a gap of approximately £700,000. Where is that money to come from?
The council was told by officials that it could take the money from elsewhere in its budget. Frankly, those officials are living in cloud cuckoo land. Warrington has already faced cuts of £50 a head in spending power. It has had to take £32 million out of its budget, and according to the Government’s own figures—the Government may have to revise those figures, because I know a number of authorities double-counted some things—as a result of this year’s settlement it will have to reduce its spending by 5.5%, or about £12 million. As in all authorities, adult social services, which might have been expected to provide some of the extra funding, are under huge pressure because people are living longer and requiring more support. It is unreasonable to argue that we should take money from other vulnerable groups to fund those in our community with the most pressing need, whether they are children with special needs at school or vulnerable adults.
The authority finds itself in an impossibly difficult situation. Seventy-seven young people could be left without funding for their places next year. No guidance is coming from the EFA on which young people should be allocated places. The authority’s hands are tied, because the guidance states that it should honour existing commitments and, to paraphrase, should not seek to renegotiate existing contracts, except in exceptional circumstances. Apparently, exceptional circumstances do not include not having enough money. In any case, the providers of many of those services are few and far between and operate, as the Minister knows, in a sellers’ market. To suggest that the contracts could be negotiated down is unrealistic and untenable.
We are left in an appallingly difficult position, which I hope the Minister will help us to resolve. The test of a society is how it deals with the most vulnerable—those who have no voice to argue on their own behalf, which is the case for many of those young people. The test of a Government is how they deal with unintended consequences. I do not believe that this Government intended these consequences, or that they intended to leave young people with serious disabilities and a high level of special need without places in the coming year.
There has to be another look at the provision. There has to be a way of resolving the problem through discussion between the council and the Department, because at the heart of this dispute are those young people. They did not seek this problem, they do not deserve to have the consequences foisted on them, and they deserve to have their needs met. That is what I hope the Minister can do for us this afternoon. It is simply morally wrong that those young people should be left without the provision they need next year. I hope that, in his answer, the Minister will offer us a way to resolve the issue, to the benefit of some of the most vulnerable young people in our area.
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.
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.
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.
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.
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.
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.
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?
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.