Placements and comparative costs part 4

The finale of the Hammersmith decision is perhaps worthy of detailed consideration given the technical nature of the exercise that must be undertaken.

Later, he expressed his conclusions in these terms:

114 The early authorities drew a distinction between AWPU-funding (school funding that was considered to be directly related to pupil numbers) and place funding (funding for a pre-determined number of places rather than by reference to pupil numbers). In Harrow , the House of Lords held it was right to have regard to the fact that a funded special school place would go unfilled were a child to attend an out-of-area school. While that was not a section 9 case, it is significant for present purpose because it formed part of the reasoning process of the Court of Appeal in Oxfordshire .

115 In Oxfordshire , Sedley LJ began, in para. 14, by setting out his understanding of Harrow : “if unused special school places represent a loss which can be made good by making efficient use of them, then letting the child be unnecessarily placed elsewhere is an inefficient use of such resources”. That was all Sedley LJ really said about Harrow . Later Sedley LJ set out his ‘additional burden’ approach. Costs that the local authority “would be incurring with or without the proposed placement are accordingly not in general relevant”. Sedley LJ said his approach “chimed” with the House of Lords’ decision in Harrow .

116 Oxfordshire was not itself about place funding or something similar. However, the Court used, in the reasoning which led to its ‘additional burden’ test, the Harrow findings about the inefficiency of unused special school places. This was part of the rationale for deciding that services that were already been paid for – taxis and teachers in that case – were not to be treated as an additional cost. Once it is all un-picked, I believe part of the ratio of Oxfordshire is that place funding (in the sense described above) is not an additional cost of a maintained school, for section 9 purposes, if the school has unfilled places. The paid-for teaching and taxi service were akin to the unused special school place referred to in Harrow . That is why Sedley LJ said his decision chimed with Harrow and that is why his decision, to my mind, involves a finding that place funding for unused places is not an additional cost for section 9 purposes. The Upper Tribunal is bound by the Court of Appeal’s findings of law as expressed in the ratio of its decision….

118 If, however, I am wrong about the ratio of Oxfordshire I conclude that, by simply applying the Oxfordshire ‘additional burden’ approach, place funding under the 2013 funding regulations is not an additional cost for section 9 purposes. That funding is unaffected by attendance. It has to be made available to the school and, if the school has fewer children than funded places, I can identify no legislation for it to be clawed back. If the child does not attend, thereby leaving a place unfilled, the local authority will fund both that place and the independent school fees. The fees are an additional cost for section 9 purposes but the place funding is not.

119 It is true that, as Mr Wolfe Q.C. argued, place funding and the AWPU share some legal characteristics. Like place funding, the AWPU does not in fact directly match the number of pupils at the school during the funding period. AWPU funding is fixed by reference to pupil numbers in the October before the start of the funding period. Pre-determined AWPU sums must be made available regardless of actual pupil numbers at the start of the funding period. For this reason, Mr Wolfe argued that place funding and the AWPU were equivalents so that place funding, like the AWPU, should be taken as an additional cost for section 9 purposes. No party argued that, due to the similarities, the AWPU should be left out of account.

120 This is not in fact a new feature of the AWPU-funding mechanism:

(a) at the relevant time for the Oxfordshire decision, reg. 11 of the Financing of Maintained Schools (England) Regulations 2000 required pupil numbers to be ascertained on a date to be determined by the authority. If only one date was specified, this had to be before the start of the funding period. If more than one, at least one had to be a date before the start of the funding period;

(b) at the relevant time for the Kent decision, reg. 15 of the School Finance (England) Regulations 2008 required pupil numbers to be ascertained in the January before the start of the funding period;

(c) at the relevant time for the Harrow decision, the school funding legislation was less prescriptive and the important instrument was the authority’s financial scheme required by the Education Reform Act 1998 . Section 38(3) of the 1998 Act required the scheme to take into account pupil numbers on such date as specified in or under the scheme. A DfE circular (2/94) gave guidance to local authorities about the scheme but I have not seen a copy.

121 Under the current funding regulations, there are material differences between the AWPU and place funding:

(a) the regulations provide for a school’s budget share to be re-determined if a pupil leaves during the funding period. There is no equivalent for special schools and reserved SEN places in mainstream schools. Mr Wolfe argued in his skeleton argument that there is a mechanism for clawing back unspent place funding or something akin to that. I cannot find any legislative basis for that and none has been drawn to my attention;

(b) AWPU-funding is linked to numbers of pupils rather than places. While pupil numbers are to be ascertained some months before the start of the funding period, both dates fall within the same school year. I think it is likely that pupil transfers are concentrated in the gap between one school year ending and another beginning. At the hearing, the parties disputed whether special school, and SEN-reserved places, were fixed annually or biannually. However, that does not matter (although the Education Funding Agency’s 2014/15 Revenue Funding Arrangements guidance, relied on by Mr Bowers at the hearing tends to support his biannual view). Whatever the cycle, the differences between AWPU-funding and place funding remain.

122 One cannot be scientific about this but these differences probably generate a better match between actual pupil numbers and AWPU-funding than between the up-take of special places and funding of those places. While I accept that AWPU-funding (in its current and former guises) is not as closely related to actual pupil numbers as some of the earlier authorities have assumed, I do not accept Mr Wolfe’s argument that, for section 9 purposes, place funding is equivalent to the AWPU so that, in accordance with Kent , place funding is an additional cost for section 9 purposes. If there is any conclusion to be drawn from similarities between AWPU-funding and place funding, I do not think it is the one suggested by Mr Wolfe.

123 I do not accept the argument that Haining modifies or disapproves of the Oxfordshire decision. Oxfordshire was referred to in Haining and if the Court wanted to case doubt on its correctness it would have done so in terms. The additional burden approach set out in Oxfordshire is not called into question by Haining .

124 I accept the Court of Appeal’s finding in Haining that “the meaning of “public expenditure” cannot be affected by the particular budgetary arrangements that local authorities may make from time to time in managing their financial affairs” might appear to jar with Sullivan LJ’s statement in Kent , that a local authority’s “budgetary arrangements” ought to be the starting point for identifying the additional costs. However, the Court of Appeal in Haining was responding to a specific argument built on the point that virement of monies from a local authority’s social services budget to its education budget was difficult or impossible. Moreover, in Haining the Court’s finding had a particular premise, that a local authority could alter budgetary arrangements. A local authority has no choice about the budgetary arrangements that are required by the funding regulations. They must be complied with. When viewed in its correct context, Haining does not call into question what Sullivan LJ said in Kent .

125 I also do not accept that the Coventry decision (even if it were binding on the Upper Tribunal) is determinative. It cannot justify a different treatment of place funding than that called for by Oxfordshire .

In summary

126 Generally, a comparative cost analysis of an independent school and a special school, for the purposes of section 9 of the Education Act 1996 (EA 1996), is to proceed on the basis that, where the special school has a vacancy, its place funding is not to be treated as an additional cost. The same approach is to be taken when comparing the costs of an independent school with a maintained school with SEN-reserved places (a specialist unit). In both cases, AWPU-funding (Age-Weighted Pupil Unit) is irrelevant (there is no AWPU). But, in line with the Court of Appeal’s decisions in Oxfordshire and Kent , local authority ‘top-up’ funding for the child’s placement is an additional cost to be taken into account.

127 Where the choice is between an independent school and a maintained mainstream school without reserved places, the AWPU normally represents an additional cost for the purposes of section 9 , in accordance with Kent . Further, additional funding required in order to meet the child’s needs is to be taken into account, in accordance with Kent and Oxfordshire .

128 If a local authority has some kind of dispensation from the normal requirements of the regulations or it has a financial scheme that deviates from the funding norm, it must bring this to the attention of the Tribunal and the other party. The same applies if its per pupil funding for maintained mainstream schools is greater than the AWPU minimum. That is the sum to be taken as the additional cost since it is the money that follows the pupil.

The decision is to be welcomed as a thorough analysis of the funding position under the former regime and which contains useful pointers on how comparative costs are to be dealt with in common scenarios going forward under the Children and Families Act 2014.


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