The voice of specialist further education

Finance and funding

Table of contents

Funding for students with SEND

In England, there are two main sources of funding in addition to the core funding for Further Education:

  1. High Needs Funding
  2. Learning Support Funding for Adults and Apprentices

Natspec has collated resources and relevant links to government advice on this page. We also provide links to Natspec training videos on funding, and research regarding LA contracts, procurement and fee negotiation.

1. High Needs Funding

The high needs funding system was introduced in 2013/14, a year prior to the Children and Families Act. A high needs student is defined as a young person who requires additional support costing over £6,000.

There is a close but not 100% correlation between those students with EHC plans and those who attract high needs funding. Students aged 16-19 can be high needs funded without a plan; those aged 19+ must have a plan to be high needs funded.

Almost all students in specialist colleges in England are high needs funded with EHC plans.

Natspec offers a training course for college staff on the funding system.

Funding components

The high needs funding system has the following components:

  • Element 1 is the basic funding formula for 16 to 19 year olds, and 19-25 year olds with an EHCP
  • Element 2 is £6,000 of support
  • Element 3 is additional (top up) funding to pay for further support costs.

E1 and E2 are paid directly to specialist colleges by the ESFA, using data from the previous year’s ILR returns. This is place funding, not linked to individual students. E3 is paid by the local authority agreeing the placement with the college.

Funding resources

Audit and compliance:

ESFA audit specialist colleges to ensure that funds are being used correctly. There are a range of audit and compliance tools, set out in the following guidance:

ESFA Post-16 Audit Code of Practice (see sections relating to use of funds for contracted providers)

ESFA oversight of independent training providers.

Financial health:

ESFA undertakes a financial health assessment of providers, using the following guidance:

Information about the financial health assessment.

High Needs guidance: The Education and Skills Funding Agency publishes an operational guide each year which describes how the funding system works.

Training and guidance:

Natspec offers a training course for colleges on the High Needs Funding System, including how funding is calculated and how you should calculate Element 3 funding. Members can watch a short part of the course, which offers an introduction to some basic questions you may have about High Needs Funding.

2. Learning Support Funding, Adults and Apprentices

For students with additional needs who are not high needs funded, there are a number of other funding sources. Watch our webinar on how to access and use learning support funding for young people and adults to find out more.

LA Contracts

Local authorities pay high needs funding Element 3 (sometimes called Top-Up funding). For students attracting high needs funding, the college will need to agree a contract with the commissioning local authority. Many LAs use the national schools and colleges contract, agreed between NASS, Natspec, and the local government organisation. Download the contract, including additional GDPR guidance, below.

Negotiating fees, procurement systems and LA commissioning

The following downloadable reports were prepared for Natspec by acl consulting.

Negotiating College Funding identifies practices that Natspec member colleges might adopt when negotiating student placements with local authority commissioners. It aims to provide members with a systematic approach to programme pricing. This should help ensure the fees colleges charge are sufficient to cover their reasonable operating costs, including fixed costs (e.g. management and other central staff, premises, utilities) not directly related to an individual student’s programme. It does not recommend particular fee levels or funding approaches.

LA procurement practices for High Needs placements is aimed at local authorities. It proposes a ‘light touch method’ for those wishing to use procurement systems for high needs placements such as Frameworks and Dynamic Purchasing Systems. It will be of interest to Natspec members currently participating in procurement systems or contracting with LAs that are considering such systems.

LA Commissioning and the HN funding system was jointly commissioned by Natspec, the Local Government Association, and the Association of Colleges. It examines how the HN funding system and LA commissioning operates in practice from the point of view of both LAs and providers and recommends some radical changes.

Capital Funding

Natspec is lobbying for more access to capital funding for specialist colleges. Both Special Post 16 institutions (SPIs) and Independent Learning Providers (ILPs) that offer specialist provision are out of scope for FE capital transformation funds and school condition funding.

ESFA funded SPIs are eligible for a small amount of capital funding from the School Conditions Allowance (SCA) and the Devolved Formula Capital (DFC).

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