How the special and additional needs funding system works
Schools block funding
The high needs block
Overall sufficiency of funding for special and additional provision
Local authority-level issues
- The requirement on health and social care bodies to contribute to meeting children and young people’s needs
- Effective collaboration between the health, care and education sectors
- Collaboration between local authorities
- Securing value for money for out-of-authority provision
- Transferring money from the schools block to the high needs block
School-level issues


This document sets out practical advice and guidance for members involved in discussions on the funding of special and additional needs at school- and local authority-levels. The briefing:

  • explains key features of the funding system for special and additional needs;
  • identifies issues at school- and local authority-level that occur most commonly; and
  • describes ways in which those responsible for representing the interests of NASUWT members can engage with these issues effectively.

This document will be of interest to teachers and headteachers with a direct professional interest in special and additional needs, including special educational needs co-ordinators (SENCOs), teachers working in special and alternative settings and teacher members of governing bodies.

This document will be of particular relevance to Local Association and Federation officers with responsibility for negotiating with local authorities and schools, especially those who are members of schools forums. NASUWT Representatives will also be able to use much of the information it contains to assist discussions in their schools on the resourcing of special and additional needs.

How the special and additional needs funding system works

Funding to support pupils with special and additional needs is derived from two principal sources:

  • funding devolved to individual schools through the schools block, and
  • the high needs block.

Schools block funding

Almost all funding received by schools is drawn from the schools block allocated to local authorities. The money in the schools block is divided between schools according to a locally-applied funding formula determined by local authorities in consultation with their schools forum, a body comprised of representatives of local schools and other stakeholders. The overall size of the schools block funding received by local authorities is determined by the Department for Education (DfE) and the Education and Skills Funding Agency (ESFA) with reference to the National Funding Formula. 

Regardless of the terms of the local funding formula, each school’s allocation includes funding for pupils with special and additional needs whose additional support costs are less than £6,000. The DfE states that, ‘… schools and academies should have sufficient funding in their delegated budget to enable them to support pupils’ [special educational needs and disabilities] where required up to the mandatory cost threshold of £6,000 per pupil’.

While schools have significant discretion over the use of this funding, it is important to note that all mainstream schools receive an indication of the overall size of their notional budget. As considered below in further detail, awareness of the indicative notional budget can be of considerable assistance in supporting engagement with schools on the levels of support they provide for pupils with special and additional needs.

The high needs block

The high needs block allocation to local authorities is also set according to a nationally-determined formula. However, local authorities can transfer additional funds from the schools block to the high needs block. Such decisions must be undertaken after consultation with the schools forum and with local schools more generally. A transferred of more than 0.5% of the value of the schools block the high needs block requires the approval of the Secretary of State. While the school forum can object to such an application, it cannot veto it.

The high needs block serves a range of functions. The most important of these include:

  • providing £10,000 basic per-pupil place funding in state-funded special and alternative settings and non-maintained special schools in;
  • topping-up funding for pupils with needs that cannot be met from settings’ basic budgets;
  • meeting the cost of placements in independent settings; and
  • providing specialist special and additional needs services.

Overall sufficiency of funding for special and additional provision

Many discussions at school and local authority level about provision for pupils with special and additional needs often focus on the extent to which funding is sufficient to meet pupils’ needs and to provide sufficient support to teachers and other members of staff that work with them.

The NASUWT is clear that there are legitimate concerns about overall levels of funding for special and additional needs. The Union has continued to insist that current levels of resourcing for special and additional needs are inadequate and need to be increased as a matter of urgency. The insufficiency of funding continues to impede the ability of schools and local authorities to address all the barriers to achievement that children and young people with special and additional needs might face.

However, underinvestment in the special and additional needs system does not remove the responsibility of schools and local authorities to ensure that available funding is used as efficiently, equitably and transparently as possible. The NASUWT continues to identify cases where funding is not used fairly or effectively and where reasons for decisions about the use of resources to support pupils’ needs are difficult to justify. As a minimum expectation, decision-makers must be held accountable for their actions, explain why these actions have been taken and why any available alternative options have not been adopted.

Local Associations, Federations and NASUWT Representatives have a critical role to play in identifying and challenging inappropriate decisions about special and additional needs funding. Essential considerations in addressing some of the most commonly occurring issues in this respect are set out below.

Local authority-level issues

i. The requirement for health and social care bodies to contribute to meeting children and young people‘s needs

The current statutory framework for special educational needs and disabilities makes clear that the purpose of the notional budget and the high needs block is to remove the barriers to educational achievement that pupils might face. However, this framework also recognises that many pupils also face issues related to their health and care needs. It is for this reason that statements of special educational need have been replaced by Education, Health and Care (EHC) plans to recognise the often multi-faceted nature of pupils’ needs.

When children and young people’s needs have dimensions other than those relating to their educational progress and achievement, health and care agencies are under a legal obligation to contribute to meeting these needs and are expected to make use of the public funding available to them to meet these obligations.

However, it is clear that in many circumstances, health and care agencies do not make the financial contribution expected of them. As a result, school and high needs budgets are placed under undue pressure by a need to fund provision that should be met from health and social care budgets.

In circumstances where the sufficiency of the high need block is under consideration, it is entirely legitimate to question the extent to which school and local authority budgets are being used to resource provision that should be met from other sources. Local authorities should investigate any misuse of education funding in this way, particularly if reductions in educational support for pupils with special and additional needs are being contemplated.

In cases where it is clear that financial contributions from health and social care agencies to meet pupils’ needs are inadequate, NASUWT representatives will press local authorities to engage with these agencies so that matters can be corrected urgently.

It is important to note that while health and social care budgets are under significant pressure, it is entirely unacceptable for these pressures to be addressed by using education-related funding to supplement these budgets.

ii. Effective collaboration between the health, care and education sectors

As well as ensuring that all sectors make an appropriate financial contribution to meeting pupils’ special and additional educational, health- and care-related needs, it is also critical to the efficient use of resources that agencies across all these sectors work collaboratively. Schools, local authorities, health and care services are under a statutory obligation to co-operate in the area of special and additional needs. Evidence makes clear that the quality of inter-agency working across the system is highly variable currently and may not always meet minimum legal requirements.

While the NASUWT remains clear that the DfE must take more effective action to ensure effective inter-agency collaboration is established in all local authority areas, local authorities should engage pro-actively with local statutory health and care partners with a view to establishing coherent and sustainable co-operative arrangements.

Local authorities should be able to demonstrate that joint working arrangements are:

  • in place across education, health and care sectors;
  • kept under review and revised where necessary;
  • working to secure efficient use of resources by identifying any duplication of provision; and
  • addressing the extent to which education, health and care budgets can be aligned and pooled to secure better use of available resources. 

Local authorities should be able to set out a clear and coherent narrative on how they are promoting effective use of resources through inter-agency collaboration, particularly in circumstances where funding pressures are being cited to justify adverse changes in provision. While issues in respect of inter-agency working can be complex, it is essential that local authorities' policies and practices in this area are scrutinised and challenged where appropriate.

Discussions about this feature of high needs provision emphasise the value of securing NASUWT representation on local authority committees and other bodies that consider broader children and young people’s service issues. Such representation can be a helpful means of gathering effective intelligence about matters related to local health and care agencies.

iii. Collaboration between local authorities

In many cases, significantly improved use of scarce resources can be secured through collaboration between local authorities on special and alternative provision. Such collaboration can promote the establishment of shared provision across local authority boundaries and reduce reliance on relatively costly out-of-authority provision. 

When external provision needs to be commissioned, local authorities working together can often negotiate more reasonable charges than when they are required to negotiate with providers on an individual basis. Evidence of local authority collaboration in the North West of England, for example, highlights the potential for collaboration of this type to secure enhanced levels of provision and significant economies of scale.

It is important to recognise that political and logistical factors can act as barriers to collaboration, as does the DfE’s ongoing failure to promote it effectively. However, given the existence of examples of successful collaboration, it is reasonable to encourage local authorities to examine options in this respect if they have not done so previously.

iv. Securing value for money for out-of-authority provision

Many local authorities are particularly dependent on relatively expensive out-of-authority provision for pupils with special and additional needs. Residential independent sector places can generate particularly significant additional costs on high needs blocks.

It is clear that, in some circumstances, such provision represents the best available option for meeting the special and additional needs of some children and young people. However, it is essential that where such provision is used, it does not place unwarranted pressure on high needs blocks.

Evidence commissioned by the DfE confirms that local authorities do not always secure good value for money for the provision they commission from external providers.

In circumstances where local authorities’ high needs block funding is reported as being under pressure, they should be asked to demonstrate that:

  • they only make use of provision that provides a clear breakdown of costs and overheads;
  • information has been obtained about the fee structure of the institutions in which pupils are placed;
  • top-up funding from the high needs block is not used to cover costs that should be met through any place funding received by settings, such as utility and maintenance costs; and
  • money is not spent by settings receiving local authority funding on supporting parents’ legal costs in appealing against decisions not to send pupils to these settings.

It is highly unlikely that a local authority unable to respond appropriately to enquiries of this nature is making the most effective use of its high needs budget. In considering the cost-effectiveness of provision, it may be helpful to make use of the ESFA's high needs benchmarking tool. This facility allows local authorities’ expenditure on critical areas of high needs funding to be compared with that of other similar local authorities.

v. Transferring money from the schools block to the high needs block

As noted above, local authorities can transfer funds from the schools block to the high needs block. To gain the Secretary of State’s permission to make such a transfer, local authorities must set out a clear case for doing so and must also seek approval from their schools forum.  In particular, a local authority must be able to demonstrate that its high needs budget is under significant pressure. The DfE expects local authorities to set out a full breakdown of the budget pressures that have led to the need for funding to be transferred between blocks. This breakdown should include information about the changing nature of demand on the high needs budget and how additional funding is necessary to meet this demand.

Local authorities are also expected to accompany any request for a transfer of funds with a plan for ensuring that patterns of provision are likely to be sustainable in the longer term.

The NASUWT believes that these expectations are reasonable and should be met before any request to transfer funds should be considered. Specific attention should be paid in this respect to matters relating to the financial contribution made by health and care services to meet pupils' needs, the extent of collaboration between local authorities and the costs of external provision, considered above. Particularly sympathetic consideration should be given to strategic plans that seek to reduce excessive reliance on expensive out-of-authority provision.

Where local authorities have set out a plausible case for transferring money to the high needs block, consideration should then turn to the extent to which a corresponding reduction in the schools block might be managed.

Key to this consideration will be the state of schools’ finances. The NASUWT is aware of cases where schools forums have objected to transfers from the schools block in circumstances where many schools have significant reserves in school balances. Information on school balances is available from the DfE’s Schools Financial Benchmarking website. 

Consideration of the merits or otherwise of transferring money to the high needs block should also take into account the impact of any reductions in high needs funding on the ability of mainstream schools to continue to benefit from the full range of local authority-provided support that may have been available previously. It should be made clear to schools seeking to prevent a reasonable transfer between blocks that unaddressed pressures on high needs funding may, in turn, generate pressures on their own budgets. This consideration will be of particular importance in the case of schools that have underspent their notional budget, considered in further detail below.

School-level issues

Schools are under a legal obligation to ‘use their best endeavours’ to ensure that pupils’ special educational needs and disabilities (SEND) are met. The statutory code of practice also requires schools to publish a special educational needs information report setting out the kinds of provision they make available.

In circumstances where there are concerns that schools are not committing enough resources to meet pupils’ SEND-related needs, it is important to assess whether they are using all the resources available to them. Any school failing in this respect is unlikely to be deemed to be meeting its legal obligation to use its best endeavours in respect of pupils with SEND.

Such an assessment requires scrutiny of schools’ financial standing, in particular, the size of their unspent balances. It is not acceptable for schools to sustain such balances while failing to ensure that pupils with SEND are receiving the support to which they are entitled. Detailed information about individual schools current financial circumstances can be obtained from the DfE’s Schools Financial Benchmarking website. 

It is also important to assess the extent to which a school failing to support pupils’ SEND is matching the level of expenditure specified in its notional SEND budget.

As noted above, in addition to core funding, mainstream schools are allocated a proportion of funding (the notional budget) to address pupils’ SEND. Schools are given an annual indication of the overall size of this budget. Any school failing to meet this level of funding should be challenged, particularly if it has significant reserves in its balances. Investigation should focus on identifying those elements of expenditure to which notional budget funding is being diverted.

As a matter of good practice, the DfE is clear that schools should undertake regular reviews of their budgeting. As part of this process, schools failing to meet the needs of pupils with SEND should investigate the extent to which their budgets can be rebalanced in ways that do not have adverse implications for staff and pupils, and that could increase resources available to support pupils with special and additional needs. In the NASUWT’s experience, expenditure on supplies, services and educational consultancy should be subject to particular scrutiny in this respect. 

In some circumstances, schools may continue to experience difficulties in securing adequate provision for pupils with special and additional needs despite using all the resources available to them in their notional budgets.

If it is clear that the notional budget allocated to a school is not adequate to meet pupils’ needs, it should be encouraged to approach the local authority with its concerns. The local authority has scope to use funding from the high needs block to address any shortfall in funding.