On the murder mile

The financial pressures on local authorities who have to finance special educational provision (SEP) for children with special educational needs (SEN) is well known, has endured for years, and shows no signs of abating in the foreseeable future. An interesting and inevitable development is the increased number of legal challenges to local authorities attempting to find cost saving measures, by skimping on provision. That phenomenon is sufficiently marked, that it has been noticed and picked up by the mainstream press: see this report at the latter end of 2018:

https://www.theguardian.com/education/2018/nov/10/councils-face-crisis-special-needs-education-funding

The problem is this: under the Children and Families Act 2014, local authorities have an absolute duty to provide SEP specified in Education Health and Care Plans for children and young people with SEN. No ifs, no buts. Once a child has been identified as requiring SEP which finds its way into a plan, this must be provided, without regard for the local authorities financial resources. The local authority is under a duty to find the money to pay for the SEP.

But in the real world, resources are finite. The local authorities do not have a bottomless chest of gold. Money spent on SEP has to be raised in local taxes, obtained from central government, or if those resources prove insufficient, moved from other areas of spending as a local authority robs Peter to pay Paul.

The long term answer is either to move substantially more money into SEP or to rewrite the duties contained in law, so that resources are taken into account. The amount of funding then dedicated to children and SEN, will then be dependent on the strength of its political constituency: and it should be noted that the disabled tend to do badly, when making an argument for more resources, as demonstrably observable in such fields as social care and social security spending.

There is of course, no appetite in the current Parliament, nor any plans, to deal with this problem of needs versus resources. How could there be, when every spare moment of political time is devoted to stirring the thick and rank cabbage soup that is the Brexit issue? From time to time, serving up reheated bowls of it, for ever decreasing public enthusiasm.  Thus I can predict with a degree of confidence that there will continue to be legal challenges in ever growing volumes: both at the individual level before the FTT and also at a systemic level, in the High Court.

One such case that caught my eye this week, is that of R v London Borough of Hackney exp AD and LH [2019] EWHC 943 (Admin). The issues in the case were described in these terms:

1. The Claimants attend mainstream schools within the London Borough of Hackney. They are all children who have special educational needs and disabilities (“SEND”). They challenge two policies operated by the Defendant local authority (“the Council”) in relation to the provision required to meet their additional needs.

2. The first policy, referred to as the “Resource Levels policy”, governs the way the Council funds schools to deliver the special educational provision (“SEP”) specified in Section F of the Education, Health and Care Plans (“EHC Plans”) it makes and maintains. By this policy the Council distributes the additional “top-up” element of this funding through five banded resource levels rather than, as the Claimants contend it should, by reference to the individualised cost of the provision specified in EHC Plans. In the alternative, if the Council is entitled to operate its Resource Levels policy, the Claimants challenge the decision of the Council made in February 2018 to reduce the value of the Resource Levels by 5% for the 2018-19 financial year (“the 5% reduction”).

3. The second policy, referred to as “the Plan Format policy”, is, the Claimants contend, one of “referencing” the special educational provision in Section F of EHC Plans to the outcomes in Section E, rather than to the educational needs identified in Section B. The outcome of this is, it is said, that there are needs in EHC Plans which are not matched by appropriate provision.

The challenge was made on the following basis:

4. The Claimants contend that these policies are in breach of the Council’s duty under s.42 of the Children and Families Act 2014 (“CFA 2014”) to secure provision to meet the needs of children with SEND, and breach other statutory duties, duties of consultation and the public sector equality duty (“PSED”).

The most interesting part of the case concerned whether the local authority, in its approach to formulating funding criteria for SEP was acting lawfully or not. The judgment records in great length the approach the local authority took to funding SEP, and why it contended a cut in the budget would not be unlawful:

7. Mr Andrew Lee, Assistant Director of Education Services at the Council, describes in his first witness statement (at paras 4-40) the overall structure of central government funding for both maintained schools and academies and the specific structure of funding for children with SEN. He describes how most children with SEN do not have an EHC Plan and their needs are met using up to £6,000 of “notional SEN” budget per pupil, also known as “Element 2 funding”. This per-pupil amount is set nationally and schools are allocated an “additional needs budget” (from which £6,000 of “notional SEN” funding is drawn for all children with SEN), based on specific indicators of need in their area. Most SEN children’s needs can be met by spending considerably less than £6,000 and as a result schools have a degree of flexibility on their overall SEN spending. For children with EHC Plans, the school still contributes £6,000 of “notional SEN” funding, but this is supplemented by “top-up” or “Element 3” funding. For children in mainstream schools, top-up funding is available at one of five pre-set Resource Levels.

8. Mr Lee states (at para 10):

“The fourth block of funding from the DSG is the High Needs Block. It is from the High Needs Block that the local authority funds that ‘top up’ or ‘Element 3’ funding that is allocated to individual pupils who have been assessed as requiring an EHCP. The High Needs block allocation to the local authority covers a wider range of responsibilities and spending than simply the top up (Element 3). In broad terms the Council allocates the funding to (1) Support Services – money that is spent on providing services to pupils, parents or schools and (2) Provision Budgets – money that is allocated to schools and settings (in this case, mainstream schools) to support provision for individual SEND pupils with ECHPs. …”
The “Support Services” budget includes Speech and Language Therapy (“SaLT”) Service. This is the only element of SEN provision that is directly commissioned by the Council. It also includes (1) SEN Pupil Access to Learning. This is the equipment budget used to purchase specialist/individualised equipment required to allow a pupil to access the curriculum. (2) SEN Administration Team; and (3) Educational Psychology (EP) Service. The service in the main provides the statutory EP advice as part of the ECHP process and is also commissioned by schools for specific pieces of work (see Mr Lee’s witness statement at para 11).

9. Mr Lee continues (at para 20):

“In addition to the five resource levels, it is possible for additional funding above level 5, to be made available in exceptional cases to children who require it on an individual basis in mainstream schools. Fundamentally, the Council’s obligation is to fund whatever provision is required to meet a child’s needs as assessed in the EHCP. Where additional funding is required to achieve this, we provide it.”

10. Mr Lee states that in the ten years he has been involved in the administration of SEND funding he believes that the majority of local authorities use some form of banding to allocate funds to schools (para 25). In his view the approach of costing individual provision would not be workable in practice (para 26). His statement continues:

“29. To my knowledge the Council has never set its SEND budget each year by aggregating the exact, unique cost of each child’s EHC Plan provision. I very much doubt this would be possible administratively. There are approximately some 1,850 young people with EHCPs at present in Hackney. It would simply be unworkable for the Council (and the settings) to keep track of its budget if it were required, in effect, to cost every single item of provision in each of these, as well as the variations to costs that would constantly arise as circumstances changed.

30. An approach of individually costing each element of Section F, according the individual and variable costs that each school or setting might dictate, would in reality impose a level of administrative burden which I do not think Hackney could cope with. I think most local authorities would find themselves in the same position. The construction of an individual and detailed costed plan for every child that is eventually assessed as needing a plan would engage both school staff and local authority staff to an extremely high degree, especially given that this would then be subject to annual (or more frequent) review. …”

11. Mr Lee states that additional funding is made available if a child’s needs are not being met. He states (at para 39):

“It is not the case that the banded approach leads to the under-funding of SEND provision. A child can move to a higher band, can have individual items of provision funded separately from the Resource Level funding if this is thought appropriate, or be awarded additional money above Level 5 funding where appropriate. The annual review process offers a regular opportunity for EHCPs to be reviewed in conjunction with parents and schools. This offers an opportunity for any concerns and issues to be raised and be addressed. In practice it is schools who raise issues when they think a resource level needs to change for a child. I know that this happened in respect of one of the claimants (AC), whose funding was increased to resource level 5 with effect from 10 March 2017 at the request of his school, following an Annual Review…”

12. At paragraphs 41-54 of his witness statement Mr Lee deals with the issue of costs pressures on High Needs funding in Hackney. Since 2014/15 the funding allocated by central government to the Council under the High Needs Block has remained virtually flat in absolute terms, and so has been eroded in real terms. He states (at para 43):

“The fact that the Council has exceeded its budget in this way demonstrates that, contrary to the impression given by the Claimants, it is not operating within a fixed budget in relation to top-up funding for children and young people with EHCPs. Quite the opposite: it is spending what is necessary to make provision for the needs identified in all the EHCPs for children and young people in its area, and far exceeding its provision budget in the process. Irrespective of the budget pressures, the Council like every other public body has a duty to achieve value for money in spending public funds. The current level of
budget pressure in SEND provision is not sustainable in the long term. The Council is therefore seeking to find efficiencies across the education service as a whole. As a part of that, and consistent with the requirement to meet identified needs in full, a review of spending for SEND provision was undertaken. While this was clearly prompted by budget pressure, nevertheless, the decision-making is determined by needs and not be seeking to constrain spend to an overall budgetary limit for provision.”

13. At paragraphs 55-66 of his witness statement, Mr Lee deals with the 5% reduction in the Resource Level bandings. He states, so far as is material:

“55. Against this background of severe and continuing cost pressures, in 2016 Finance and SEND officers undertook to analyse what savings could potentially be made from within the SEN budget, whilst still complying with our legal obligations. Working with Frank O’Donoghue, the Council’s Head of Business Services, a range of possible scenarios were identified including those for reductions in the element 3 Resource Levels. The latter ranged from reductions of 30% to 5%. For each of these reductions, we modelled the % reduction in total SEN funding for each pupil (bearing in mind that there was no proposal to reduce element 2 funding), the impact on the total funding available to each school in the borough, as well as the likely saving to the SEN provision budget.

56. These scenarios and other options for reducing spend were extensively discussed within a series of operational working groups and at SLT meetings, during 2016 and 2017. Although these meetings and discussions were not formally minuted, I was present at many of them and I can recall the nature of the discussions, the conclusions of which are set… out below. It was our judgment that it was possible for Hackney’s schools to absorb a funding reduction at this level without reducing or putting at risk the special educational provision of individual children.

57. Due to the scale of the costs pressures on SEND budgets, there was a desire to achieve the highest possible savings consistent with our legal obligations. It quickly became clear that higher levels of reduction that had been modelled would have a material impact on schools’ ability to make adequate provision for pupils with EHCPs. However, the Council considered that a reduction of 5% could be absorbed by schools making efficiencies, without compromising the special educational provision of individual children.

58. One factor contributing to our view that a reduction of 5% (to element 3 only) was within the capacity of schools, is that schools have considerable operational flexibility in their day-
Judgment Approved by the court for handing down. R (AD) and others) v LB Hackney
to-day use of resources in making the correct provision for pupils in a class, or in a whole school setting. We felt that a 5% reduction to the element 3 funding band could be absorbed through efficiency, without compromising the special educational provision of individual children. The provision made for a pupil with an EHCP in a mainstream school is not made in isolation from the rest of the staff or school, where personnel and resources are routinely switched or deployed between pupils, groups of pupils or classes. In this context, a funding change of between £249 and £833 for a pupil over the course of a year is in our view manageable. The lower sum of £250 for example might be equated to a day of cover for a teacher, and given the ability of schools to deploy staff internally to cover or provide support from a workforce of say 60-plus staff members, is both management and routine. There are many other day-to-day decisions on the deployment of staff and the use of resources through which this can be managed.

59. A second factor contributing to our judgment that the special educational provision for individual children could be maintained with a 5% reduction in Resource Levels was that the reduction in the overall funding available for an individual child arising from a 5% cut to the element 3 funding was lower than 5% in practice. It is in fact the range of 2.3-3.7%. This is because element 2 remained unchanged at £6,000. …

60. A third factor contributing to our view that a 5% reduction would not put at risk the special educational provision of any individual children was that the reduction would not be applied immediately to provision under existing EHCPs. Rather, the changes to the Resource Level amounts would be implemented at the point of the child’s next Annual Review. Since the Annual Review is a vehicle for reviewing needs, provision and resourcing, it provides an opportunity for the local authority to consider what the right Resource Level is for the child that year. …

61. A fourth factor contributing to the Council’s view that the 5% reduction was manageable for schools without putting at risk the special educational provision of individual children, was because it resulted in only a very small % reduction in the schools’ overall budgets. I analysed the figures for every school in the borough… In most cases the reductions were in the region of a few thousand pounds per school with the two outlier schools receiving reductions of £20,000 (for a very large secondary school) and £499 (for a small primary school). This is in the context of overall budgets of a few million pounds for each school. Very roughly then, the impact on each school’s total budget was in the region of 0.1%. …

64. Finally, the Council took account of the fact that the proposal was put to the Schools Forum for consultation in October 2017. Members of the Forum probed the proposal at a meeting on 8 November 2017. They asked questions about how it would work in practice. But they did not object to it. …

The Schools Forum

67. The Schools Forum is a representative body made up of Head Teachers and Chairs of Governors from schools in all education sectors, as well as a union representative. Its members are highly experienced in the governance and funding of schools and are able to provide expert advice and assistance to the Council in the often highly technical area of school funding. On some matters the Forum takes decisions on proposals put to it by the Council. On other matters its role is advisory.

69. Local authorities are required to consult Schools Forums on financial issues relating to arrangements for pupils with special educational needs, including the arrangements for paying top-up funding. The Council sought the views of Forum members on the proposed 5% reductions. A report was sent to Forum members in October 2017, enclosing a report for consideration at a meeting on 8 November 201[7]… At the meeting, there was a robust discussion during which Forum members probed Council members (including myself) about the practical implications of the proposal. This can be seen from the minutes. Forum members commented in general terms that a reduction in overall school funding would lead to a reduction in services. That was clearly a concern: that some services would be diminished. However, the Forum was not saying that the special educational provision in children’s Plans would not be met. The outcome of the discussion was in fact that the Forum ‘noted and received’ the report.

70. Whilst formally the Forum’s function is an advisory one, it is able to and sometimes does register an objection where it has serious concerns about a proposal put to it. Had the Forum chosen to do so in this case, I have no doubt that we would have reconsidered the 5% element 3 reduction.

Impact Assessment

71. The whole process that I have described above of assessing the effect of various proposed levels of reduction was a process of assessing potential impact. I did not carry out a more formal equality impact assessment of the 5% reduction. This is because I was constrained, throughout the process, by the fact that the Council is under an absolute obligation to make provision for identified need. I was well aware of that constraint. As a result, the whole purpose of the analysis that I carried out was to determine what level of reduction, if any, could be made while respecting this obligation – that is to say, while ensuring that children with SEN still had their special educational provision in their Plan provided to them. In doing so I had regard throughout the process to the need to eliminate discrimination against disabled children and young people and advancing equality of opportunity between disabled and non-disabled pupils. This was inherent in the exercise I was conducting, which was designed to ensure that children with SEN continued to receive the provision that meets their needs.”

The claimants assault on this approach failed. The High Court found no error of law in the local authority’s approach to funding:

38. I do not accept that there is the fundamental error in the Council’s approach, suggested by Mr Broach. The Council accepts that it has a duty to meet all SEN provision in children’s EHC plans. That this is so is clear from the evidence of Mr Lee (see paras 9, 12 and 13 above). It is thus common ground between the parties that the Council must meet the full SEN provision in each child’s EHC plan.

39. However, Mr Auburn submits, and I agree, there is nothing in CFA 2014 (or the 2014 Regulations or Code of Practice) which prevents local authorities from administering their High Needs SEN funding through a system of bandings. Provided the funding system secures the child’s overall SEN (Section F) provision in practice, it will not be unlawful.

40. I note that the DfE’s High Needs Funding Operational Guide 2018-19 (January 2018) provides that banding may be used for this purpose, stating:

“Local authorities should publish information about how the funding levels are set for different types of institution, including any banding or top-up funding values (para 61).
Other factors that could impact on the way local authorities determine the top-up funding [are…] the extent to which local authorities and institutions agree on standardised rates, local banding arrangements and streamlined administration to reduce the need for detailed negotiation of different top-up funding amounts for each pupil or student.” (para 73).
The 2019-2020 Guide identifies the benefits of banded funding:
“Many local authorities have systems which indicate the range of top-up funding which might be provided for children and young people with a particular complexity of need (sometimes referred to as ‘banded’ funding systems). This can be helpful in providing clear and transparent funding arrangements for many types of need that may be met in a range of different institutions. …” (para 91).

41. Mr Auburn makes the point that the Council could lawfully discharge its duty by deploying elements of centrally-commissioned provision, rather than channelling the funding for those elements through schools.

42. Mr Auburn observes that there is no evidence of any council doing individual costing.

43. That being so this first ground of challenge is essentially a “systemic” challenge. Mr Broach and Mr Auburn referred to various authorities in support of their respective submissions as to the test for a systemic challenge, including the recent cases of R (Woolcock) v SSCLG [2018] EWHC 17 (Admin), and Bayer plc v NHS Darlington CCG and others [2018] EWHC 2465 (Admin).

44. Mr Broach relies on the judgment of Warby J in Fox v Secretary of State for Education [2015] EWHC 3404 (Admin) where (at para 8) he stated:

“(2) ‘It is well established that a policy which, if followed, would lead to unlawful acts or decisions, or which permits or encourages such acts, will itself be unlawful’: Tabbakh’s case [2014] 1 WLR 4620, para 46 (Richards LJ, summarising one ground of Cranston J’s decision in that case [2014] 1 WLR 1022, without disapproval: see para 48); the Letts case, para 116. (3) A policy, or guidance, may encourage unlawful acts by dint of being ‘not clear and unambiguous’ and silent as to important circumstances, or ‘materially unclear or misleading’: the Letts case, para 119 citing R (A) v Secretary of State for Health [2009] PTSR 1680, paras 75, 78 per Ward LJ.”

45. Bayer concerned a challenge to the lawfulness of a policy headed “Treatment for Age-related Macular Degeneration” adopted by 12 clinical commissioning groups (“CCGs”). Considering the test to be applied in determining whether policy is lawful, Whipple J said (at para 196):

“The correct approach in a case like this must be to ask whether the policy is capable of lawful implementation… If… there are realistic methods by which the Policy can be lawfully implemented, then the Policy is not itself unlawful. Individual decisions made pursuant to it may be capable of challenge in due course.”

46. The test for such a challenge was, in my view, correctly stated by Wyn Williams J in R (Suppiah) v Secretary of State for the Home Department [2011] EWHC 2 (Admin) at para 137:

“I am content to accept that as a matter of law a policy which cannot be operated lawfully cannot itself be lawful; further, it seems to me that there is clear and binding authority for the proposition that a policy which is in principle capable of being implemented lawfully but which nonetheless gives rise to an unacceptable risk of unlawful decision-making is itself an unlawful policy.”

47. As Mr Auburn observes, the decided cases largely concern challenges to procedural rules of policies, where it is asserted that the rule is inherently likely to lead to procedural unfairness in individual cases. However, I agree with him that the relevant principles summarised by Hickinbottom LJ in Woolcock at para 68 may be applied to the present claim, in which it is alleged that the Council’s substantive policies lead inevitably to a substantively unlawful outcome, namely breach of the s.42 duty.

48. In Woolcock Hickinbottom LJ (with whom Lewis J agreed) stated at para 68, so far as is relevant:

“(iii) An administrative scheme will be open to a systematic challenge if there is something inherent in the scheme that gives rise to an unacceptable risk of procedural unfairness.

(iv) … there is a conceptual difference between something inherent in a system that gives rise to an unacceptable risk of procedural unfairness, and even a large number of decisions that are simply individually aberrant. The former requires, at some stage, consideration and analysis of the scheme itself, and the identification of what, within the scheme, gives rise to the unacceptable risk. As Garnham J properly emphasised recently in R (Liverpool City Council and others) v Secretary of State for Health [2017] EWHC 986 (Admin), … para 57 and following, the risk identified must be of, not simply some form of illegality, but of procedural unfairness. Despite the difficulties of distinguishing an inherent failure in the system and individual instances of unfairness which do not touch upon the system’s integrity, that is a distinction which the court is required to draw, e.g. by distinguishing examples which signal a systemic problem from others which, no matter how numerous, remain cases of individual failure.

(v) … Of course, the larger the number or proportion of aberrant decisions, the more compelling the evidence they may provide of an inherent systematic problem. … Nevertheless, in many cases, the number or proportion of aberrant decisions alone will not in itself satisfy the burden of showing that they result from something inherent in the system.

(ix) The threshold of showing unfairness is high…

(x) Where the system has an element that may lead to a risk of procedural unfairness…, then an important question may be whether the system has inherent within it the capability of reacting appropriately to ensure that the reducible minimum standard of procedural fairness is maintained…”

49. Mr Auburn submits that there is a fundamental factual deficiency in the claims in that no prejudice to the Claimants is shown to arise from the policies under challenge. Having considered the Claimants’ evidence, which includes the witness statements to which I have referred, and other statements submitted during the course of these proceedings, I have come to the conclusion that Mr Auburn is correct in his submission that none of the Claimants can demonstrate that there has been a failure to secure provision in his or her case because of the Resource Levels policy. Their concerns about provision are either disputed with contrary evidence, or attributable to some other cause, or both.

50. I am satisfied that the Council’s evidence demonstrates that the Resource Level policy does not lead to the underfunding of SEN provision (see the Council’s “Summary of specific issues with ECH Plans of individual children” and the references therein). Mr Auburn accepts that it is possible that on occasion schools have not done what they should have done, but in the main proper assessments have been conducted. Even if the Claimants had demonstrated a shortfall and this was attributable to the existence of banding, schools have a degree of flexibility in the way provision is delivered and in how they manage their budgets. There are flexibilities built into the Resource Levels policy: first, bandings are used in the context of a system in which the SEN provision for each child must be individually reviewed every year. Children can be allocated a higher Resource Level when provision is reviewed at the Annual Review (or during the year); and second, the Council can and does allocate additional funding in between bands, and above the highest band, where necessary (see paras 9-11 above).

51. In my judgment the Resource Levels policy is not unlawful (whichever test for a “systemic” challenge is adopted). I am satisfied that there is nothing inherent in the policy that gives rise to an unacceptable risk of unlawful decision making (Suppiah) or unfairness (Woolcock); and there are realistic methods by which the policy can be lawfully implemented (Bayer). The Claimants have fallen far short of making out a systemic challenge in this case.

I have underlined the key paragraph which demonstrates why this ground (and ultimately the challenge to this policy failed). At this stage in the game, there was no demonstrable prejudice to each of the individual claimants: any prejudice, and hence need for a remedy was anticipatory, if not theoretical. Of course, if the 5% cut did cause chaos once implemented, the evidence would change. But that stage had not been reached, and hence the challenge failed. The argument of systemic challenge was necessarily much weaker and more unattractive to a court, as it required a degree of speculation not grounded on concrete facts, and demonstrable examples.

The other policy under challenge can be stated much more succinctly: sections E and F of the plan were set out side by side in a new template EHC Plan devised by the local authority. But there is no template for an EHC plan. This was a deliberate departure from the old system of statements. As the High Court judge noted:

105. I do not accept the Claimants’ contention that the new format plan is inconsistent with the statutory scheme. CFA 2014 and the relevant regulations require that EHC plans have specified content (referred to as “sections”) which are “separately identified”. I agree with Mr Auburn that they leave the presentation of those sections within the plan to the discretion of the local authority. The Code of Practice also does not prescribe the particular format that an EHC plan must take (see para 9.62).

106. The Council’s plan format complies with the requirements set out in s.37(2) and (4) of CFA 2014 and regulation 12(1) of the 2014 Regulations to have specified content which is separately identified within the document. I do not accept that Sections E and F have been conflated, as Mr Broach suggests. Further, as Mr Auburn observes, it does not follow that because sections E and F are presented together, the reader cannot turn back the page to read section B.

107. I conclude that the Council is not prevented by CFA 2014 or the 2014 Regulations or the Code of Practice from adopting a plan format that has outcomes and provision next to each other on the page, which enables the reader to see what the provision was trying to achieve for the child.

It remains to be seen if this case, will proceed to the Court of Appeal, or whether a further judicial review might follow a year from now, if the fears of the claimants of shrinking provision come to pass.

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