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The voice of specialist further education

Finance and funding

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

This section describes both these sources of funding, provides links to training videos, and also describes LA contracts and the process of negotiating fees.

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 – about 6,200 – in specialist colleges fall into the high needs group.

Natspec offers a training course for college staff on the funding system, available in-house or as a public course. Please complete an expression of interest form if you would like to attend.

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 to determine numbers. These two elements are called 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: Specialist colleges are audited under the same process as Independent Learning Providers, and must conform to the funding compliance requirements in the following document:

ESFA oversight of independent training providers.

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: The following links take you to ETF and CDC guides on the funding system.

The Council for Disabled Children guide to funding students aged 16 to 25 with SEND.

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. Natspec recommends the use of the national schools and colleges contract, agreed between NASS, Natspec, and local government organisations in 2013. Download the contract, including additional GDPR guidance, below.

Negotiating fees, procurement systems and LA commissioning

Various reports prepared for Natspec by acl consulting are available to download below.

The first report, on negotiating fees, makes some suggestions for good practice that Natspec member colleges might adopt when negotiating student placements with local authority commissioners.

The main purpose of the report is to set out a systematic approach to programme pricing that should help ensure the fees charged to local authority commissioners by colleges are sufficient to cover their reasonable operating costs, including the significant fixed costs (management and other central staff, premises, utilities, etc.) that do not directly relate to an individual student’s programme.

The report does not recommend particular fee levels, or specify funding approaches, such as banding, and there is no (implicit or explicit) recommendation that fees may be or should be increased from levels previously set.

The second report relates to recent developments relating to procurement systems for high needs placements – specifically Frameworks and Dynamic Purchasing Systems. The report suggests a “light touch” method for LAs wishing to use such systems, and will be of interest to Natspec members currently participating in procurement systems or contracting with LAs that are considering such systems.

The third report was commissioned by the Local Government Association, Natspec and the Association of Colleges and examined how the HN funding system and LA commissioning operates in practice, from the point of view of both LAs and providers. It concludes that a radical review is required.

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