IN THE UPPER TRIBUNAL	
ADMINISTRATIVE APPEALS CHAMBER

Before:	Mr E. Mitchell, Judge of the Upper Tribunal

Hearing:	7th July 2015, Royal Courts of Justice, London.

Attendances:	

For the local authorities:	Mr Sean Bowers (solicitor advocate, Baker Small solicitors) for the London Borough of Hammersmith & Fulham,

Mr Adam Fulwood (of counsel) for Lancashire County Council, instructed by the Council’s legal department,

For the parents:	Mr David Wolfe Q.C. (of counsel) for F, instructed by Maxwell Gillott solicitors,

			Mr Russell Holland (of counsel) for O,

			Ms F Slomovic (lay representative) for L,

			Ms Foster (lay representative) for H.

DECISIONS

Under section 12 of the Tribunals, Courts and Enforcement Act 2007, the Upper Tribunal decides as follows:

(1) London Borough of Hammersmith & Fulham v L (Upper Tribunal case no. HS/5656/2014): the decision of the First-tier Tribunal of 7 November 2014 (ref. no SE/205/14/0006) involved a material error of law but it is not set aside.

(2) London Borough of Hammersmith & Fulham v F (Upper Tribunal case no. HS/3540/2014): the decision of the First-tier Tribunal of 17 June 2014 (ref. no SE/205/13/00015) did not involve a material error of law. The decision is not set aside.

(3) O v Lancashire County Council (Upper Tribunal case no. HS/4981/2014): the decision of the First-tier Tribunal of 17 June 2014 (ref. no SE/888/14/00023) involved a material error of law. The decision is set aside. I direct that the appeal is remitted to the First-tier Tribunal for re-hearing before a differently-constituted Tribunal panel. Any further case management directions are to be given by a judge of the First-tier Tribunal.

(4) H v Lancashire County Council (Upper Tribunal case no. HS/5454/2014): the decision of the First-tier Tribunal of 25 September 2014 (ref. no SE/888/13/00068) involved a material error of law. The decision is set aside. I direct that the appeal is remitted to the First-tier Tribunal for re-hearing before a differently-constituted Tribunal panel. Any further case management directions are to be given by a judge of the First-tier Tribunal.

Under rule 14(1) of the Upper Tribunal (Tribunal Procedure) Rules 2008 I hereby make an order prohibiting the disclosure or publication of any matter likely to lead to a member of the public identifying any of the children with whom these appeals are concerned. This order does not apply to (a) the children’s parents, (b) any person to whom any parent discloses such a matter or who learns of it through parental publication (and this includes any onward disclosure or publication), (c) any person exercising statutory (including judicial) functions in relation to the children. The children’s real names are not used in these reasons. 

REASONS FOR DECISION

Introduction

1. From the perspective of the Upper Tribunal, during 2014 the outcome of special educational needs (SEN) appeals in England, where parents sought independent schooling, started to resemble a lottery. This was certainly not due to lack of care on the part of the First-tier Tribunal. The problem was that different tribunals took very different approaches to quantifying the costs of rival schools (maintained and independent). Yet the tribunals all said their approached was called for by the statutory school funding regime.

2. One approach, which some tribunals thought was compelled by a new school funding regime, results in maintained schools being treated as significantly more expensive. That can tip the balance in favour of independent schooling. The other approach weights the balance towards maintained schools. 

3. With the agreement of the parties, these four appeals were consolidated and heard together. These are by no means the only cases raising this issue. Some have been disposed of by the Upper Tribunal on other grounds and some await this decision. I was also informed by the legal representatives at the hearing that inconsistent approaches persist. The approach set out in these reasons avoids that inconsistency. 

Structure of these reasons

4. These reasons set out in some detail how the maintained school funding legislation for England operates and how the case law about comparing the costs of rival schools has developed. These are relevant issues for these appeals. Furthermore, an inordinate amount of time has clearly been spent across England in arguing about and trying to understand these matters. I hope that this reasonably comprehensive treatment of, or reference point for, the topics will reduce that and, to some extent, free up education resources to be used elsewhere.

5. In these reasons:

(a) paragraphs 10-28 describe the factual background to the four appeals;

(b) paragraphs 29-37 contain an outline of the relevant provisions of the SEN legislation;

(c) paragraphs 38-40 concerns the nature of the parental preference principle in section 9 of the Education Act 1996;

(d) paragraphs 41-66 sets out how the maintained school funding legislation works, including relevant differences between maintained special schools, maintained mainstream schools with SEN-reserved places (typically specialist units) and other maintained mainstream schools;

(e) paragraphs 67 to 101 describes the evolution of the case law about the application of section 9 of the Education Act 1996 in SEN school naming disputes;

(f) paragraphs 102 to 113 summarise the parties’ arguments;

(g) paragraphs 114 to 128 contains my conclusions on the main issue of legal principle, that is the implications of the school funding regime for quantifying the additional costs of a maintained school;

(h) paragraphs 129 to 145 explain the outcome of each appeal;

(i) paragraphs 146 to 153 set out my concerns about SEN appeals being heard in venues that preclude a child who wants to participate in a hearing from doing so. Linked recommendations are made.

The outcome in a summary

6. I will set out now a summary of my decision on the key issues. This is, however, only a summary. 

 7. 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. 

8. 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, any additional funding required in order to meet the child’s needs is to be taken into account as required by both Kent and Oxfordshire. 

9. One appeal also raises the important issue of the appropriate venue for SEN hearings so that children may effectively participate. 

The circumstances of each case

London Borough of Hammersmith & Fulham v L

10. Madeline was aged 6 when the Tribunal decided her appeal on 7 November 2014.  She has global developmental delay and, according to the Tribunal, “a complex profile of speech and language difficulties, visual perceptual difficulties and motor planning problems”. 

11. Under section 326 EA 1996 Madeline’s parents appealed to the First-tier Tribunal (“the Tribunal”) against the contents of her statement of SEN. The local authority specified a maintained mainstream school with specialist (reserved) SEN places rather than the independent school sought by Madeline’s parents. It was not disputed that, at the date of the Tribunal hearing, the school had three places available. 

12. The key issue was whether a placement at the independent school would constitute unreasonable public expenditure for the purposes of section 9 EA 1996. 

13. The relevant cost of the independent school was its fees of £27,450. It was agreed the maintained school’s costs included local authority ‘top-up’ funding of £13,300 and £5,500 transport costs. The parties disputed whether the school’s ‘place funding’ of £10,000 (funding allocated in advance and not directly affected by actual pupil numbers) was an additional cost. The authority argued not because the funding was already in place. The Tribunal disagreed and so, for section 9 purposes, the independent school cost less than the additional costs of the maintained school.

14. The Tribunal’s reasons for counting the place funding were that: the school funding regime had changed so that “special needs education should be demand led” which “in effect…removed the concept of pre-funding”; place funding was the “broad equivalent” of AWPU-funding which the Court of Appeal in Kent (see below) said was to be treated as an additional cost; the Court of Appeal’s decision in Oxfordshire (see below) was given under a “significantly different funding system” so that it did not call for place funding to be left out of account.

15. The Tribunal allowed the parents’ appeal and ordered the independent school to be specified in Madeline’s statement of SEN. Both schools could meet Madeline’s needs but as the independent school was less expensive and preferred by the parents there was no reason not to specify it.

London Borough of Hammersmith & Fulham v F

16. Alice was aged ten when the Tribunal decided her appeal on 17 June 2014. The Tribunal found that her SEN “relate to a severe language disorder that affects her expressive and receptive language and communication skills”. 

17. Again, the local authority refused to specify the parents’ preferred independent school, which Alice was in fact attending under a private arrangement, and named instead a maintained school with specialist (reserved) SEN places. 

18. The Tribunal decided that the maintained school’s place funding was an additional cost for section 9 purposes. On the Tribunal’s findings, the independent school cost about £1,500 more than the maintained school’s additional costs which the Tribunal found was not unreasonable public expenditure. 

19. This Tribunal gave similar reasons for including the place funding as did the Tribunal in the other Hammersmith case. In addition, the Tribunal directed itself that the Court of Appeal’s recent decision in Haining (see below) meant that it was required to “include all public expenditure”.

20. Sensibly, the Tribunal also considered the unreasonable public expenditure issue on the assumption it wrongly included the place funding (i.e. assuming that the independent school was £11,500 more expensive). The Tribunal would still have specified the independent school. If Alice transferred to the maintained school, another transfer would be required a year later when she finished primary schooling. Given her anxiety condition, the first transition would be difficult and affect her education. Overall, the advantages in staying at the independent school for the time being outweighed the extra costs so that there was not unreasonable public expenditure. 

H v Lancashire County Council 

21. Rafi, who has autism, was aged five when the Tribunal decided his appeal on 25 September 2014. Rafi has always attended an independent school under a private arrangement. Rafi’s parents wanted the local authority to pay the independent school’s additional fees for learning support but were content to pay the standard fees. That was not thought by the Tribunal to be an achievable result under the EA 1996.

22. The local authority specified a maintained mainstream primary school in Rafi’s statement. The additional costs, according to the authority, were £2,835 (standard per pupil funding for the school) plus ‘top-up’ funding for additional SEN services of £2,733. £6,000 in SEN-related costs was not to be included because mainstream schools are expected to meet the first £6,000 of SEN-related costs from their own budgets. The independent school’s fees were £7323 (standard fee) plus £9082 (additional fee for learning support services). If the authority were right, the independent school would, for section 9 purposes, cost nearly £11,000 more than the maintained school. 

23. The parties disagreed as to the costs of providing Rafi with a full-time learning support assistant. The authority’s evidence was that the salary would be £11,568 per annum but that “the actual costs of the teaching assistant was not taken into account by the LA as the LA would simply pay top-up according to its banding system and not by way of a refund of actual costs”. Unrealistically low, said Rafi’s parents, relying on a recent council job advert which gave a salary bracket for a learning assistant of £15,598-£16,988. Rafi’s parents also argued that ‘on-costs’ such as local government pension contributions should be included. 

24. The Tribunal found the £6,000 ‘notional SEN funding’ was not an additional cost because it had already been paid to the school. Furthermore, the teaching assistant dispute was irrelevant. The school was not entitled to any re-imbursement of costs exceeding £6,000 so that the costs of the teaching assistant did not matter. The result was that the independent school cost £11,000 more than the maintained school. The gap was so great that the independent school would involve unreasonable public expenditure. The parents’ appeal was dismissed. 

O v Lancashire County Council

25. Javi was aged 11 when the Tribunal decided his appeal on 23rd July 2014. He has autism and, according to the Tribunal, “significant speech and language difficulties, auditory processing difficulties, a complex sensory profile and marked delay in his fine and gross motor skills”. 

26. Having reviewed Javi’s statement in advance of his transfer to secondary education, the local authority specified a maintained special school rather than the parents’ preferred independent school.

27. The Tribunal found that £10,000 place funding for the maintained special school was not an “additional cost to the public purse” and ignored it. For section 9 purposes, therefore, the independent school was £12,000 more expensive than the maintained school. This was an “inefficient use of resources” given the “gulf between these two sums, in light of the adequacy and appropriateness of the provision at both schools”. I note the wrong test was applied (although this was not a ground of appeal). Inefficiency of resources permits a local authority to avoid the duty to specify a parent’s preferred maintained school (under Schedule 27 to the EA 1996: see below). Here, the parents were not seeking a maintained school placement. What section 9 addresses is “unreasonable public expenditure”. While there is some common ground – using resources inefficiently will tend to amount to unreasonable public expenditure – the tests are different. The correct test needs to be applied. 

28. The independent school’s fees were only around £3,000 more than the additional cost, on the local authority’s own figures, of the maintained school. However, transporting Javi to the school would cost £9,000 per year. This was found to be an additional cost, it seems, although the parents argued an existing taxi service could be used.  The Tribunal’s finding as to the costs of the independent school was somewhat equivocal: the cost would be “£24,606 (subject to some adjustment if it were established that transport costs could be reduced)”.

The legal framework: legislation and previous authorities

Part IV of the Education Act 1996

29. Part IV of the EA 1996, which is devoted to special educational needs, forms part of a detailed and inter-locking scheme for the provision of primary and secondary education by the state. “Primary education” and “secondary education” are defined by section 2(1) EA 1996 with the effect that education must be “suitable to the requirements” of a particular child. 
30. Each of the present children has SEN within the meaning of section 312(1) EA 1996 namely “a learning difficulty which calls for special educational provision”. That provision is “educational provision which is additional to, or otherwise different from, the educational provision made generally for children of his age in schools maintained by the local authority (other than special schools)” (section 312(4)).
31. For a child with a statement of SEN, a legislative presumption favours mainstream schooling. Section 316(3) EA 1996 states a child “must be educated in a mainstream school unless that is incompatible with (a) the wishes of his parent, or (b) the provision of efficient education for other children”.   Every school is a mainstream school unless it is of an excepted type such as “a special school” and most independent schools (but not Academies) (section 316(4)).  None of the present independent schools are mainstream schools. A special school is a school that is (a) specially organised to make special educational provision for pupils with SEN and (b) is maintained by a local authority or is an Academy or a non-maintained special school (section 337).  
32. Section 324 EA 1996 requires a child’s statement of SEN to detail the local authority’s assessment of the child’s SEN and specify “the provision to be made for the purposes of meeting those needs” (section 324(3)). The type of school considered appropriate must always be specified (section 324(4)(a)) and, normally, a specific school must be as well. In the prescribed form of statement, Part 4 is the place to specify a school. 
33. A local authority must “arrange that the special education provision specified in the statement is made for the child” (section 324(5) EA 96). This is only avoided where “the child’s parent has made suitable arrangements”. Where an independent school is specified, the authority must pay the whole of the fees for the child’s education (section 348 EA 1996). 
34. Section 326(1A) EA 96 provides a right of appeal to the First-tier Tribunal against, amongst other things, “the special educational provision specified in the statement (including the name of a school so specified)”. Section 326(3) permits the Tribunal to order the local authority to amend the specified provision although a particular school can only be ordered in limited cases, including where a school was proposed in the proceedings by any party (section 326(4)). All the present independent schools were proposed, one way or another, by the parents in the relevant Tribunal proceedings. 
35. When the Tribunal comes to make its decision, it is “bound at that stage to look at the overall picture as to the particular special needs of the child at that time. It is not for the tribunal simply to address the issues as at the stage when the statement is drawn or when the appellant lodges her appeal” (Wilkin v Goldthorpe (Chair of the SEN Tribunal) CO/1251/97).
36. Schedule 27 to the EA 96 allows parents to express a preference for a particular maintained school, and confers connected rights and duties. While no parent in the present appeals sought a maintained school for their child, case law about Schedule 27 has had some influence on section 9 case law.
37. Schedule 27(3)(1) requires a local authority to make arrangements for enabling a parent, in various cases, to “express a preference as to the maintained school at which he wishes education to be provided for his child and to give reasons for his preference”. Where a preference is duly expressed, the school must be specified in the child’s statement unless either of the following apply: 
(a) “the school is unsuitable to the child’s age, ability or aptitude or to his [SEN]”; or
(b) “the attendance of the child at the school would be incompatible with the provision of efficient education for the children with whom he would be educated or the efficient use of resources”.
Section 9 of the Education Act 1996
38. Section 9 EA 1996 is the heart of this appeal. It reads as follows:
“In exercising or performing all their respective powers and duties under the Education Acts, the Secretary of State and local authorities shall have regard to the general principle that pupils are to be educated in accordance with the wishes of their parents, so far as that is compatible with the provision of efficient instruction and training and the avoidance of unreasonable public expenditure.”
39. This provision can be traced back to the Education Act 1944. A body of authorities has developed. The following features of section 9 are I believe uncontentious:
(a) section 9 applies expressly to both a local authority’s powers and its duties. The powers and duties are those under the “Educations Acts” which are listed in section 578(1) EA 1996. There must be hundreds of powers conferred and duties imposed by the Education Acts the exercise of which is capable of being influenced by section 9. Thus it operates in a wide range of statutory contexts;
(b) the “general principle” is not absolute. It is qualified: “pupils are to be educated in accordance with the wishes of their parents” but only “so far as compatible with the provision of efficient instruction and training and the avoidance of unreasonable public expenditure”;
(c) “public expenditure” in section 9 encompasses “expenditure incurred by any public authority as a result of the discharge by the local authority of the education functions” (Haining v Warington BC [2014] AACR 28, [2014] WLR(D) 152);
(d) the proper application of section 9 will often call for relevant findings to be made and properly reasoned. There are no hard and fast rules given that each case is unique but in many Tribunal cases, where the application of section 9 is a key contested issue (as it often is), relevant facts need to be found. Typically, this will involve findings as to the additional costs for the local authority of the rival schools (the specificity of which will depend on the circumstances). If necessary (where the independent school costs more) the Tribunal’s next task involves an exercise of judgement in deciding whether, on the costs identified, a placement at the independent school would involve unreasonable expenditure. That judgement has to be adequately reasoned but, in assessing adequacy, it must be borne in mind that the Tribunal is making a judgement on a topic falling within its area of particular expertise;
(e) even if a parental preference, in whole or in part, survives the section 9 filtering process, it is not determinative. The parental preference principle is simply something to which regard is to be had. It is possible to have regard to the principle without implementing a parent’s wishes. As Denning LJ said in Watt v Kesteven County Council [1955] 1 QB 408 at 424:
“[Section 9] does not say that pupils must in all cases be educated in accordance with the wishes of their parents. It only lays down a general principle to which the county council must have regard. This leaves it open to the county council to have regard to other things as well, and also to make exceptions to the general principle if it thinks fit to do so.”
And Lord Slynn giving the judgment of the House of Lords in Harrow made the same point, albeit this was probably obiter: “I do not consider that section 9 of the Act means that parental preference is to prevail unless it involves unreasonable public expenditure”.
40. That said, cases tend in my experience to be argued on the basis that, if there is no unreasonable expenditure, effect will be given to parental preference. The key point of dispute in most cases, therefore, is simply whether a parental preference would involve unreasonable public expenditure.
Financing maintained schools – introduction 
41. “Unreasonable public expenditure” is a component of section 9. Deciding whether public expenditure is unreasonable involves, in the present context, comparing the costs of a maintained school with those of an independent school. Whether or not a particular item is brought into account can have significant ramifications. Here, different First-tier Tribunals came to opposite conclusions about the significance of place funding yet all said their approach was called for the school funding regime. To borrow from Sedley LJ in Oxfordshire, it cannot be right for different Tribunals to come to different conclusions about the treatment of materially identical sums. One or other of the present Tribunals must have misunderstood the funding regime.  
42. The present Tribunals derived their understanding of the school funding system from national funding guidance. They started in the wrong place. The correct place to start is the detailed legislative scheme for funding maintained schools. Guidance is of secondary importance simply because, unlike legislation, it is not a form of law (which is why my case management directions asked for submissions by reference to the funding regulations). 
43. A local authority has a duty to maintain its maintained schools: section 22(1) School Standards and Framework Act 1998 (SSFA 98). This includes “the duty of defraying all the expenses of maintaining it” (section 22(2) & (3)). The duty is met, principally, through operation of the maintained school funding legislation.
44. The primary legislation is the SSFA 98 (as amended) and which is supplemented by the School and Early Years Finance (England) Regulations 2013 (S.I. 2013/3104) (“the funding regulations”). These Regulations applied to the financial year beginning on 1st April 2014 (the funding period). Below, references to regulations are to these regulations.
45. For every funding period, a local authority must allocate a “budget share” to a maintained school (section 45(1) SSFA 1998). A budget share represents a sum of money.  The budget share must be made available by the local authority “to be spent by the governing body” of the maintained school (section 50(1)).
46. Generally, budget shares are not hypothecated. Section 50(3) SSFA 98 provides that “the governing body may spend any such amounts as they think fit for any purposes of the school”. However, this is subject to any provision “made by or under the scheme”. This is a reference to the financial scheme which section 48 SSFA 1998 requires every local authority to have. Legislation does not require the whole budget share to be spent during the funding period nor, so far as I am aware, does it authorise clawback of un-spent sums. However, there appears to be scope for a financial scheme to adjust future years’ budget shares in the light of a surplus. 

47. The funding regulations control a local authority’s determination of a maintained school’s budget share. A formula for determining budget shares must be set by the authority, before the beginning of the funding period (reg. 10(1)). The authority “must use the formula…in all determinations of school budget shares in respect of the funding period” (regulation 10(2)). Certain elements must be included within the formula. That is why, to an extent, one can normally be sure that a maintained school will have certain funds for a certain funding period. The formula cannot be changed after the funding period has commenced (regulation 10(5)). 

Financing mainstream maintained schools – the AWPU

48. Regulation 13 links a mainstream maintained school’s budget share to pupil numbers. The “number of pupils in the school” must be ascertained and taken into account in the funding formula (reg. 13(1)). Regulation 13(3) states “the date for ascertaining pupil numbers is 3rd October 2013” and the picture is completed by the definition of “pupils” in regulation 1(5)(g). For reg. 13 purposes, this is “only those pupils who are recorded on the school census as either (i) registered solely at that school, or (ii) registered at more than one school, but attending that school for the majority of their time”. 

49. Once pupil numbers are identified, a specific minimum amount must be included in the school’s budget share for each pupil for the coming funding period: £2,000 for reception through to KS2 pupils and £3,000 for KS3 and KS4 pupils. This is the current incarnation of what has historically been referred to as the AWPU (Age-Weighted Pupil Unit), according to DfE guidance. I note a minimum amount must be included in the budget share. A local authority is free to include more than this per pupil in a school’s budget share. 

50. The time-line of the regulations means a school’s AWPU-funding for a funding period may not match its pupil numbers at the beginning of, or during, the period. AWPU funding for the period beginning on 1st April 2014 is fixed according to pupil numbers some six months earlier. Obviously pupil numbers may rise or fall during these seven months and also during the funding period itself. 

Funding SEN provision in maintained mainstream schools

51. Regulation 11(3) is also relevant because it deals with funding SEN services in maintained mainstream schools. It states:

“(3) When making a determination under paragraph (1) [of a maintained school’s budget share in accordance with Part 3 of the Regulations] the local authority must identify within each budget share an amount calculated by reference to the requirements, factors and criteria specified in Part 3 [of the Regulations] which are relevant to pupils with special educational needs, such amount must be calculated using a sum of £6,000 as the threshold below which school [sic] will be expected to meet the additional costs of pupils with special educational needs from its budget share.”

52. What an obscure enactment this is. 

53. The first part of regulation 11(3) is clear enough. It imposes a duty on a local authority to identify within each budget share a SEN-related amount, calculated by reference to the matters listed. I note this operates on a budget share as determined in accordance with Part 3 of the funding regulations. It does not itself require a SEN-related amount to be added to the budget share. Instead, the authority is required to flag up that part of the budget share related to SEN in the way it describes. However, the duty serves no obvious purpose under the funding regulations. It does not seem to be linked to any other provision of the regulations. What is it for?

54. The second part of reg. 11(3) enacts a statutory assumption, to be applied when determining the required SEN-related amount. The amount must be calculated “using a sum of £6,000 as the threshold below which [the school] will be expected to meet the additional costs of pupils with [SEN] from its budget share”. While I would not describe this as crystal clear, it does convey the idea that a certain amount of the additional costs of educating pupils with SEN are to be absorbed from the school’s budget share. Flowing from this is an implication that additional costs will be met by the local authority and that is certainly how it seems to work in practice. 

55. Now, I know exactly what was intended by regulation 11(3). Funding guidance shows the intended result is to require maintained mainstream schools to meet the first £6,000 of SEN-related costs for each child. However, it is arguable that what it actually does is expect schools to meet only the first £6,000 of all SEN-related costs during the funding period, rather than the first £6,000 for each pupil. The second part of regulation 11(3) seems to mirror the first part in referring to the “additional costs of pupils”, rather than, as it could have referred to, each pupil. While the Interpretation Act 1978 provides that unless the contrary intention applies “words in the plural include the singular”, it might be argued that this provision demonstrates a contrary intention. 

56. However, no party has argued that regulation 11(3) should be construed so that a school is only expected to meet the first £6,000 of all SEN-related costs in a funding period. I therefore make no finding on this point. But the Department for Education may wish to bring forward clarifying amendments. 

Maintained mainstream schools with reserved SEN places

57. Some maintained mainstream schools have reserved places for children with SEN. Neither these places (nor children occupying the places) attract an AWPU amount, in the sense described above, because the AWPU equation subtracts reserved places from pupil numbers (reg. 13(2)). 

58. Funding of reserved places is dealt with separately by regulation 14(2):

“In determining budget shares for primary or secondary schools maintained by the local authority with places which the authority have reserved for children with special educational needs, a local authority must include the sum of £10,000 for each place other than places for pupils in respect of whom a sixth form grant is payable and hospital education places.”

59. This amount clearly must be included in the school’s budget share whether or not the place is filled. Note the contrast between the language of regulations 13 and 14, in that reg. 13 (the AWPU provision) operates by reference to numbers of pupils but regulation 14, by contrast, operates by references to reserved places. 

Maintained special schools

60. Maintained special schools also receive a budget share but, generally, the date by which their shares are to be determined is 31st March 2014 (reg. 11(5)). In determining the budget share, local authorities must “include the sum of £10,000 for each place” (reg. 14(1)). As with reserved SEN places in mainstream schools, funding is determined by reference not to pupil numbers but to places. 

Re-determining a budget share

61. Regulation 23 concerns the re-determination of a school’s budget share if a pupil leaves or is permanently excluded from a maintained school. This does not permit re-determination of the budget share for a special school or in consequence of a child leaving a reserved place. But reg. 23 does provide for re-determination (reduction) where a child is permanently excluded from a maintained mainstream school or leaves to receive education at a school maintained by another local authority. 

Other features of the funding regime

62. I have not attempted to give an exhaustive account. It should be borne in mind that the regulations allow per pupil funding for maintained mainstream places to be increased, for example where there is “social deprivation” within the meaning of the funding regulations. There is also a procedure for the Secretary of State to alter the operation of regulation 11(3) (reg. 25). Sixth form funding is often treated differently as well.  

The School and Early Years Finance Regulations 2014

63. The 2013 funding regulations only apply to the funding period of one year from 1 April 2014. The 2014 Regulations apply to the current year. These Regulations are not before me and so I cannot make any finding about them. However, they appear to me to have essentially the same structure as the 2013 funding regulations, as described above. It seems to me likely that the 2014 Regulations have the same implications, for section 9 purposes, as the 2013 Regulations.

The Children & Families Act 2014

64. In England, Part IV of the EA 1996 is in the process of being phased out. Its replacement is Part 3 of the 2014 Act under which we have Education, Health and Care plans instead of statements of SEN.

65. At one stage, written submissions in these appeals suggested section 9 would not apply to the 2014 Act. That is not correct. The definition of “the Education Acts” in section 578 of the EA 1996 has been amended to include Part 3 of the 2014 Act. That Part is now one of the Education Acts and so the exercise of powers and duties under Part 3 of the 2014 Act must have regard to the general principle in favour of parental preference expressed in section 9 EA 1996. 

66. In practice, however, section 9 may become less significant in school naming disputes because the statutory right to request a school, and the linked qualified duty to accede to a request, has been widened, as compared with Schedule 27 EA 1996, to include non-maintained special schools and certain independent special schools (section 39(4) of the 2014 Act). The duty is avoided where a child’s attendance at the school would be incompatible with “the efficient use of resources” which may in some cases reduce the practical relevance of section 9 ( I note there is case law about cases in which both tests are to be applied). 

Previous authorities about section 9’s role in disputes about which school to name in a statement 

B v London Borough of Harrow (CO-1036/97)

67. This case ultimately came before the House of Lords - see below – having begun as a statutory appeal to the High Court against a SEN Tribunal decision. The High Court’s decision is relevant in the light of the House of Lords’ ruling. 

68. A mother and a local authority, Harrow LBC, disagreed as to the maintained school to be specified in a child’s statement. Accordingly, the choice was not between a maintained and an independent school. 

69. Harrow LBC favoured one of its own maintained special schools. The mother’s preference, Grangewood, was maintained by Hillingdon LBC. Since the dispute concerned maintained schools, Schedule 27(3) EA 1996 required Grangewood to be specified unless a statutory exception applied. Harrow argued that an exception did apply in that “the attendance of the child at the school would be incompatible with the…efficient use of resources”. The issue was whether efficiency of resource use was concerned only with the responsible local authority’s resources (Harrow’s) or whether, additionally, it was concerned with those of the authority which maintained mother’s preferred maintained school (Hillingdon’s). 

70. There was a funding dimension to this case, described by Moses J (as he then was) as follows:

“Harrow is required to pay the sum of between £11-12,000 to Hillingdon if "F" goes to Grangewood, pursuant to Regulation 3 of the Education (Intra-authority Recruitment) Regulations 1994…Whereas mainstream schools are funded by means of a formula which depends in part on the number of pupils which the school can attract, special schools' funding depends upon the number of pupils for whom it is expected those schools will have to make provision… That, of course, is a vast over-simplification of the way in which education authorities exercise their powers to distribute the budget between such schools, but it is sufficient in my view for the purposes of this judgment.  

In relation to special educational needs schools, it is hoped that there will be available provision for pupils with such needs.  This leads to the need to keep open and fund spaces which may in fact not be filled during the year.  

In this case [Harrow] says that if "F" leaves there will be an unfilled vacancy which Harrow will have to continue to fund, as well as paying the recruitment charge to Hillingdon.”

71. The SEN Tribunal found it would cost Harrow £11-12,000 for the child to attend the Hillingdon school which was not compatible with the efficient use of Harrow’s resources. And so the SEN Tribunal declined to specify the Hillingdon school. Before the High Court, mother argued the Tribunal erred in law by not comparing the costs of educating the child at the rival schools.

72. Rejecting mother’s case, Moses J held that Schedule 27(3) “directs attention to the resources of the authority who has made the statement of special educational needs”. He also found that, in inter-authority cases such as this, the responsible local authority will “be bound to consider the suitability of the preferred school in the other area, and balance the desirability of that school against the costs of paying the recoupment sum”. 

B v Harrow LBC [2000] 1 All ER 876, [2000] 1 WLR 223, [2000] WLR 223, [2000] UKHL 2

73. In agreeing with Moses J’s decision, the House of Lords (Lord Slynn) found:

“Moses J. was right to have regard to the differences between the funding arrangements made for special schools on the one hand and other schools on the other. In the latter case, funding is in part geared to the number of pupils actually attending the school, in the former it is in part geared to the number of pupils for whom it is anticipated the school will need to provide places. This means that places may be provided for which if eg. a child leaves to go out of the borough, will not be utilised but the cost will be incurred.”

Oxfordshire CC v GB & Others [2001] EWCA Civ 1358, [2002] ELR 8,

74. This has long been considered the leading case about section 9’s role in independent school naming disputes. A child had been educated in a maintained mainstream school but his parents moved him to an independent school. The local authority refused to amend the child’s statement to specify that school.

75. The independent school’s fees were £16,800 a year; that was its additional cost for section 9 purposes. The dispute concerned how to quantify the additional cost of the maintained school (were the child to attend) for the purposes of section 9:

(a) it was agreed that an annual sum of £2,473 for a learning support assistant was to be taken into account. My understanding is that this provision required additional funding from the local authority;

(b) the Age-Weighted Pupil Unit (AWPU) funding was £2,076. The AWPU was described as a fee paid to the school “for each pupil placed there”.  The parties agreed this represented an additional cost although I note that, subsequently, the Court of Appeal in Kent (see below) found that, in Oxfordshire, the court must have considered the AWPU to be a genuine on-cost (para. 21 of Kent);

(c) the parties disputed whether the 5 weekly hours of teaching from a teacher of the deaf was to be taken into account. The sum in issue was £5,500;

(d) the parties disputed whether transport costs were to be taken into account. The sum in issue was £4,000.

76. The local authority argued transport and the specialist teacher of the deaf would be supplied without incurring additional costs. Such a teacher was already on the school staff and an existing taxi service could take the child to school. Only the learning support assistant cost and the AWPU-funding were “genuine on-costs”. 

77. Sedley LJ, giving the only reasoned judgment, noted the absence of any authority directly on the point. He did refer, however, to the House of Lords’ decision in Harrow and, in fact, this was the only education case cited. Sedley LJ said:
“14. In other words, as we understand it, 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.” 

78. Sedley LJ also made the point, relevant in the present cases, that while “unreasonable public expenditure” is not a term of legal art, it is not “in its present context…capable of producing opposite outcomes on the same facts and figures depending on the individual tribunal’s choice of accountancy method”. 

79. Sedley LJ identified section 9’s purpose as to “prevent parental choice placing an undue or disproportionate burden on the education budget”. I note that, since then, the Court of Appeal has held section 9 is not limited to education expenditure (see Haining). However, that does not matter for present purposes. The thrust of the Court’s finding about the purpose of section 9 was not affected by Haining case and, in any event, the present appeals are only about education spending.

80. Sedley LJ found “the question is what additional burden it will place on the LEA’s annual budget” and “that means, generally speaking, that the existing costs of providing [the maintained school] and of staffing it and its hearing-impaired unit do not come into account”. And so “what Parliament has called for in the ordinary run of cases is a consideration of the burden which the respective placements will throw on the annual education budget when matched against their educational advantages and drawbacks for the child in question”.

81. Under that ‘additional burden’ approach, costs that the local authority “would be incurring with or without the proposed placement are accordingly not in general relevant”. In principle, therefore, the local authority’s arguments were accepted. If the required specialist teaching and transport would be provided under previously paid-for arrangements they were to be excluded for section 9 purposes. 

82. Once the additional burdens associated with the rivals schools are identified, a judgement can be made as to whether parental preference constitutes unreasonable expenditure. On this point Sedley LJ said:

“the parental preference for an independent school over an available state school, while perfectly reasonable, may have difficult cost implications for the LEA. In that event it is for the LEA, or on appeal the SENT, to decide whether those cost implications make the expenditure on the independent school unreasonable. This means striking a balance between (a) the educational advantages of the placement preferred by the parents and (b) the extra cost of it to the LEA as against what it will cost the LEA to place the child in the maintained school.”

83. I note that Sedley LJ said that his approach “chimes” with that taken by the House of Lords in Harrow, as referred to earlier in his judgment. In describing Harrow, I again note that Sedley LJ understood the decision to be that “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”.

Coventry City Council v SENDIST [2007] EWHC 2278 (Admin)

84. A local authority specified a maintained school in a child’s statement and refused to specify an independent school. The SEN Tribunal allowed the parents’ appeal. The independent school’s annual fees were £11,500. The Tribunal accepted that, at the maintained school, the child would require “additional teaching support” at an annual cost of £13,000. On those figures, it is not surprising the Tribunal concluded the independent school would not involve unreasonable public expenditure. 

85. The local authority appealed to the High Court, arguing the Tribunal erred in law by including the cost of additional teaching support because this was “not an additional cost to the LEA”. Under the statutory arrangements for delegation of funding for maintained schools, the maintained schools’ budget had been set and the child’s needs could be met from within that budget. There was no additional public expenditure.

86. Underhill J (as he then was) analysed Oxfordshire, in particular Sedley LJ’s finding that “the question is what additional burden it will place on the LEA’s annual budget”. He considered that Sedley LJ “plainly did not have in mind the distinction on which [the authority] relies between payment by the LEA directly from its own pocket and payment by the school under delegated arrangements”. The judge went on to find that “the precise route by which payment is made out of what is ultimately the LEA’s budget is plainly immaterial to the purpose underlying section 9”. Applying that, Underhill J rejected the authority’s appeal. 

87. I should add that I get the distinct impression from the judgment that Underhill J might have felt hampered in his consideration of the appeal by the paucity of the local authority’s arguments and the late stage at which many of them were put or refined. 

Slough v SENDIST [2010] ELR 687, [2010] EWCA Civ 668

88. The only reasoned decision of the Court of Appeal in this case was given by Sedley LJ who of course also gave the only reasoned decision in Oxfordshire. 

89. A Tribunal found that the annual cost for section 9 purposes of a maintained school was £32,000 whereas the annual fees for the parents’ preferred independent school were £10,000. The authority argued the Tribunal erred in law and should have found the “true (or marginal)” cost of the maintained school to be around £4,000. 

90. Factually, this case was unusual. The independent school’s usual fees were £36,000 but the parents’ fee was reduced to £10,000. This affected the Court of Appeal’s approach to the appeal, as Sedley LJ explained at paragraph 9 of his judgment. Since the Court of Appeal rejected the local authority’s challenge to the Tribunal’s finding that the fees were £10,000, the authority in fact had precious little scope to argue that any error made in identifying the additional costs of the maintained school was material. 

91. The Court of Appeal did not give a ringing endorsement of the Tribunal’s costings of the maintained school at £32,000. They were “delphic” (para. 11). However, the Tribunal also seemed to harbour doubts because it also found that, whatever the actual additional cost, it was more than the £10,000 charged by the independent school. Sedley LJ said that this was “a factual finding, made by a specialist tribunal with knowledge of the field, that the apportioned costs of providing for this child in a maintained school, whatever their precise amount, would inevitably exceed the £10,000 for which [the independent school] was prepared to accept [the child]”. 

92. That meant the Tribunal’s decision would stand unless the local authority were right that “admission to a maintained school with space for the child is cost-free apart from any special requirements that the child brings with her”. Sedley LJ said the authority’s argument was unsustainable. It was legitimate for the Tribunal to “take a short cut” and decide that, whatever the actual relevant cost of the maintained school, it had to be more than the £10,000 cost of the independent school. For my part, I consider that this case, given its unusual and opaque facts, does not advance matters one way or another. 

EH v Kent CC [2011] AACR 36, [2011] ELR 433

93. The rival schools were a maintained mainstream (not special) school and an independent school. The parents appealed against a decision of Upper Tribunal Judge Levenson on the ground that he erred in law by “holding that the FtT did not need to consider the real, full or notional per capita cost of a placement (and was concerned only with the marginal cost)”. 

94. The dispute centred on learning assistant costs. The First-tier Tribunal accepted the local authority’s evidence that the necessary 20 hours a week support would be supplied by the maintained school. My reading is that the authority argued this provision would be met by the school’s existing learning support assistants.

95. The Court of Appeal held it was wrong to argue that public expenditure did not occur unless and until a maintained school spends monies within its delegated budget share, so that a school’s accounts would need to be examined in order to resolve a section 9 dispute. Sullivan LJ said:

“25…It seems to me that there can be “public expenditure” for the purposes of section 9 at either or both stages of the process: when the LA allocates public funds to the school, and when the school spends those public funds.”

96. The Court also analysed Coventry and Slough. The local authorities there wrongly distinguished between payment by itself, and payment by the school, as a prelude to arguing that, even though there would be a need for additional payment by the school, the absence of an additional payment by the local authority rendered a maintained school placement “cost free”:

“the Tribunal was entitled to reject such a "cost free" approach as artificial, and as not being a fair reflection of the cost to the public purse of placing a child in a maintained school for the purpose of comparison with the cost of placing the child in the parents' preferred alternative.”

97. The Court went on to find “whether a child’s parents’ choice of school would be compatible with the avoidance of unreasonable public expenditure is a question of fact to be answered by the FtT in a common-sense way. It is for the FtT to decide what evidence it considers most helpful in resolving this issue in any particular case. In undertaking that task it is entitled to have regard to other information, such as a school’s accounts, if it is not satisfied that the figures based on the LA’s budgetary arrangements are a fair reflection of the cost to the public purse of educating the child at the school in question.”

98. Having added that the local authority’s budgetary arrangements (which I note are to a significant extent prescribed in regulations) will usually be a sensible starting point Sullivan LJ went on:

“30. If the LA's budgetary arrangements do make provision for the payment of an AWPU to the school there is no reason why the FtT should not accept that the AWPU, together with any additional costs specifically incurred in respect of the child in question, for example transport costs or the costs of therapy or learning support if an additional therapist or learning support assistant has to be employed by the school, or if an existing therapist or learning support assistant at the school has to be paid to work additional hours (if it is satisfied that there are such additional costs), are a fair reflection of the cost to the public purse of educating the child at that school.”

99. Sullivan also gave guidance on cases without an AWPU or where a Tribunal is satisfied that the AWPU-funding, plus the additional costs mentioned in para. 30 of its judgment, do not “fairly reflect the cost to the public purse”. In that case, however, there was “no reason to suppose that [the AWPU] did not fairly represent the cost of [the child’s] placement”. The Upper Tribunal’s decision was upheld. I note that, in this case, because of the type of maintained school involved, the Court of Appeal was not concerned with the implications of place funding. 

Haining v Warrington BC [2014] AACR 28, [2014] WLR(D) 152

100. The issue in this case was whether section 9 was concerned with public expenditure other than on education functions, for example the affect of a particular placement on social services expenditure. The Court of Appeal held that it was. 

101. The Court also said this:

“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. In many (if not most) cases, the only relevant public expenditure will be that incurred by the local authority in the discharge of its education functions in the particular case. In those cases, the question of whether there will be unreasonable public expenditure will depend on a comparison between the direct cost of placing the child at school A and the direct cost of placing the child at school B and nothing else.”

The arguments on these appeals

The arguments concerning place funding

102. In all four cases I granted permission to appeal on the ground that, arguably, the First-tier Tribunal erred in law in making findings about the implications of the maintained school funding regime for the purpose of carrying out the section 9 cost comparisons. 

103. In three cases, the issue is place funding (funding fixed before the relevant funding period according to places rather than pupils). In H v Lancashire CC the issue is different and concerns the implications of the £6,000 notional SEN budget under regulation 11(3) of the funding regulations.

104. On the place funding issue, Mr Bowers, for Hammersmith & Fulham LBC, argued that Oxfordshire requires place funding to be left out of account. Haining did not change that, nor did any recent funding changes. Mr Fulwood for Lancashire CC agreed, arguing that the £10,000 place funding was not an “additional burden” as contemplated by Oxfordshire.  At the hearing, Mr Bowers also relied on the underlying rationale for the different funding treatment of special schools which he said was to provide funding stability for the education of especially vulnerable children, that form of education requiring more complex organisation and planning than mainstream education.

105. Mr Wolfe Q.C. for F argued the Tribunal was entitled to find as fact that the £10,000 place funding was an additional cost. He further argued the concept of place funding under the funding regulations was akin to AWPU-funding and, in support, referred to national guidance showing, he said, that numbers of reserved places would usually be based on the number of students in the last academic year.  Mr Bowers did not agree with this interpretation of the guidance. Mr Wolfe also relied on a Hammersmith council policy document that said it would continue to “agree with each school the number of places to be provided for the year ahead”. Since AWPU-funding represented an additional cost (Kent), for section 9 purposes, place funding should too. L’s parents aligned themselves with Mr Wolfe’s arguments. 

106. Mr Holland for O’s parents argued that the Tribunal erred in law by excluding the £10,000 place funding. This should have been included, by parity of reasoning with the Coventry case. 

The arguments about SEN funding for maintained mainstream schools without reserved places

107. Mr H – who did not have professional representation – argued the Tribunal incorrectly calculated the direct costs of the maintained school. Haining prohibited the Tribunal from taking into account the authority’s budgetary arrangements. Mr H also argued the Tribunal had “completely failed to explain” how his son’s statement could be implemented at a cost to the public purse of £5,568.56. In particular, how could the learning support assistant be funded on these figures? Mr H also argued that further expenditure would be necessary because this maintained school had no surplus places. I need not address this point as the appeal is going back to the Tribunal for re-hearing and it will be concerned with current circumstances (as per the Goldthorpe case).

108. Mr Fulwood, for Lancashire CC, argued the Tribunal correctly discounted the £6,000 in SEN “base funding” in line with Oxfordshire. This “would have been spent” whether or not Rafi attended. Mr Fulwood also disputed that Haining affected the existing authorities, including Oxfordshire, about which costs were and were not to be taken into account. So far as the teaching assistant issue was concerned, he argued that the Tribunal rightly concluded it would not involve any additional cost for section 9 purposes. 

Whether the Tribunal’s alternative finding in F’s case involved an error of law

109. In F’s appeal, the local authority were granted permission to appeal on the ground that the Tribunal erred in law in making its alternative finding. To recap, this finding was that even if place funding was left out – making the independent school even more costly – Alice’s placement at the independent school would not constitute unreasonable expenditure.  

110. Mr Bowers for the authority argued there was “no evidence” to support the findings of transition-related anxiety; no provision made for anxiety difficulties in the statement nor was it included as a special educational need; “no evidence” Alice’s progress would be hindered by a placement at the maintained school; the Tribunal failed to take into account additional benefits for Alice of attending the maintained school; and the Tribunal failed to take into account any of the evidence about how the maintained school would support Alice in any transition.

111. Mr Bowers also argued that “as a matter of public policy, parents who agree to make their own educational arrangements for their children should not be able to benefit and have their school fees funded in circumstances where the child is close to a phase transfer and it is argued it would be prejudicial to move the child (see para. 20 of W v Gloucestershire CC [2001] EWHC Admin 481)”. This is simply not what Gloucestershire says. All para. 20 does is express confidence that Tribunals will spot parents who are “seeking to abuse the system”. No evidence has been put forward to suggest that has happened here, either before the First-tier Tribunal or myself. 

112. Mr Wolfe Q.C. countered by arguing that the Tribunal’s alternative finding was an exercise of judgement made by an expert tribunal which could not be interfered with on  an appeal concerned with points of law. He also refuted point-by-point the specific criticisms made by Mr Bowers. 

Treatment of transport costs in O’s case

113. Mr Holland in O’s case argued the Tribunal erred by including transport costs within the costs of the independent school placement or, at least, failed adequately to explain why it had rejected the parents’ offer to provide their own transport. I note that this was not the argument recorded by the Tribunal (it said the parents suggested an existing taxi service could be used) Mr Fulwood’s argument for Lancashire was that the local authority were under a duty to provide transport and so the Tribunal was entitled to take into account the costs of transporting to and from the independent school. 

Conclusion on the main issue: place funding and the application of section 9 EA 1996

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. 

117. I put this point to the parties at the hearing. Mr Wolfe Q.C. argued that in Harrow the distinction between funding mechanisms was relevant due to the particular funding regulations in place at that time. It could not be relied on for present purposes. I do not agree with this. The courts took into account the wastefulness of unused special school places. The potential for funded special school, or SEN-reserved places in mainstream schools, to go unfilled remains under the current funding legislation. 

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.

Conclusion on other issues and outcome of the appeals

Hammersmith & Fulham v L

129. The Tribunal in Hammersmith & Fulham v L erred in law. It misunderstood the effect of the statutory arrangements for maintained schools and wrongly took into account the maintained school’s £10,000 place funding. As the undisputed evidence was that there were vacancies at the school, the place funding should not have been brought into account for section 9 purposes. 

130. In particular, the Tribunal misdirected itself in law in the following respects:

(a) by finding that all providers, including those in the independent sector, are funded on an equivalent ‘Place Plus’ basis. This was wrong. To my knowledge, the statutory funding scheme does not allocate anything to independent schools. Instead, where an independent school is named in a child’s statement the local authority is simply obliged to pay the whole of the education fees;

(b) by equating, for section 9 purposes, place funding with AWPU-funding. They are not broad equivalents, for the reasons explained above;

(c) by finding that Oxfordshire was distinguishable because it was concerned with a “significantly different funding system”. The funding structure described in Oxfordshire – AWPU funds being related to pupil numbers, special schools being funded according to places – is similar to the funding system applicable when the Tribunal made its decision.

131. The parties were agreed that, in the event that I found an error on a point of law I should not set aside the Tribunal’s decision. That is because, since February 2015, a different London Borough has been responsible for making the provision in Madeline’s statement. I agree I should not set aside the Tribunal’s decision (under section 12 of the Tribunals, Courts and Enforcement Act 2007 the Upper Tribunal has a discretion whether to set aside a decision involving an error on a point of law). In the circumstances, to set aside the Tribunal’s decision, and the statement which it ordered, would be pointless. 

132. I wish, however, clearly to state that I do not decide that Madeline’s current placement represents unreasonable public expenditure. The Tribunal did not give an alternative decision, addressing section 9 in the event that it wrongly quantified costs. No one has any idea what it would have decided if it had addressed that point. 

Hammersmith & Fulham v F

133. The Tribunal erred in law by taking place funding into account as an additional cost for section 9 purposes. Since the undisputed evidence was that there was an unfilled place at the maintained school, the place funding should have been left out of account.  

134. However, I agree with Mr Wolfe Q.C. that the Tribunal’s alternative finding contained no error of law and so I do not set aside the Tribunal’s decision. 

135. Some of the local authority’s grounds of appeal were that the Tribunal had “no evidence” for its anxiety-related findings. But as Mr Wolfe points out, anxiety is referred to in Part 2 of Alice’s statement as is her tendency to “feel overwhelmed” and become “quickly upset” by challenging tasks. And, if the provision in Part 3 aimed at developing self-esteem is read with Part 2 in mind it is obvious that Part 3 was influenced by Alice’s psychological make-up. 

136. The grounds arguing the Tribunal did not take into account the maintained school’s ability to help Alice transition and provide her with educational benefits are answered by the points made by Mr Wolfe. The Tribunal recognised the maintained school’s strengths, including in relation to transition. They were not overlooked. Despite that, the Tribunal concluded that the psychological effects of a transfer at this point in Alice’s educational life to a school that she would only attend for one year were such that the cost differential did not constitute unreasonable public expenditure. As a Tribunal comprised of members chosen for their specialist expertise, it was entitled to make that finding. 

O v Lancashire CC

137. The Tribunal correctly left out of account the maintained special school’s place funding. It did not err in law in that respect. 

138. However, the Tribunal did err in law in its treatment of the disputed issue of transport costs and, for that reason, I set aside its decision and remit to the First-tier Tribunal for re-hearing. If there was no additional transport cost, it seems the cost difference between the rival schools would have been £3,000 rather than £9,000. That cannot be considered immaterial. 

139. The Tribunal made no clear finding as to transport costs. Despite that, it applied section 9 on the basis that transporting Javi to the independent school would cost some £9,000. It then hedged its bets by stating this might be reduced “if it were established that transport costs could be reduced”. Given the significance of this issue, the Tribunal either needed to make a clear finding as to transport costs or explain why, despite the uncertainty, the independent school placement represented unreasonable public expenditure. It did neither and so I accept Mr Holland’s argument that the Tribunal gave inadequate reasons for its decision. The decision is set aside.

140. I do not accept Mr Fulwood’s argument for Lancashire CC that, since the local authority was duty-bound to fund transport to the independent school, the Tribunal was entitled to take the cost into account. This misunderstands the relevant legislation. 

141. The source of a local authority’s duty to make school travel arrangements for a child is section 508B of the EA 1996. But the duty does not apply to a child where “travel arrangements relating to travel in either direction between his home and the relevant educational establishment in relation to him, or in both directions, are provided free of charge in relation to him by any person who is not the authority” (section 508B(2)). No guidance or internal policy, of the type I was referred to at the hearing, can change that legal fact. The authority was not bound to fund transport costs if someone else would provide transport free of charge. In the light of the limited facts found and explanation given in relation to transport, the authority’s potential duty to transport Javi to and from the independent school does not cure or render immaterial the error law described above. 

H v Lancashire CC

142. Mr H’s grounds of appeal argued the Tribunal wrongly left out of account £6,000 in SEN costs on the basis that these were to be met by the maintained school from its budget share. However, this was not pursued further in his skeleton argument. Given the potential importance of the point and since I have not had full argument on it, I do not make a finding as to whether all or any costs under the regulation 11(3) £6,000 threshold (the ‘notional SEN budget’) are to be treated as an additional cost for section 9 purposes. 

143. But I accept Mr H’s argument that the Tribunal gave inadequate reasons for its finding that the costs of the full-time learning support assistant would be absorbed by the school’s existing budget share. For that reason, its decision is set aside and remitted to the First-tier Tribunal for re-hearing. 

144. Regulation 11(3) of the funding regulations carries an implication that a child’s SEN-related costs, once they exceed, £6,000 will attract additional local authority funding. That additional funding has I believe always been viewed as an additional cost for section 9 purposes (see Kent for example) and I do not recall ever seeing a school funding appeal where it was left out of account. That was not done in this case because the Tribunal accepted the authority’s argument that “the actual costs of the teaching assistant was not taken into account by the LA as the LA would simply pay top-up according to its banding system and not by way of a refund of actual costs”. I am not at all sure what this means but, in my view, it was an error of law – a legal misdirection - not to include the difference between the £6,000 SEN threshold and the costs of employing a new teaching assistant to work exclusively with Rafi.

145. I also agree the Tribunal gave inadequate reasons for preferring the local authority’s figures for the costs of a teaching assistant to Mr H’s. I do not see how Mr H can understand why his case was rejected. If the recent job advert for a teaching assistant relied on by Mr H, with its significantly higher salary range, was correct, how could the local authority justify putting forward a much lower salary? I also agree the Tribunal failed to explain why it did not include, within the teaching assistant costs, those matters which Mr H said should be included, in particular pension contributions that the authority was required to make. It is difficult to see why these should not be included but this will need to be addressed by the next Tribunal. 

A child’s right to give oral evidence in proceedings before the First-tier Tribunal

146. Mr Holland, for Javi’s parents, also argued the Tribunal failed to give adequate reasons for refusing to allow Javi to give oral evidence. A sophisticated legal argument in support, by reference to a number of international human rights instruments, was deployed. But the facts got in the way.

147. Mr Holland’s argument assumed a fact, namely that the Tribunal refused to allow Javi to give oral evidence. Since the premise was not, on the face of it fanciful, I requested Upper Tribunal staff to seek the Tribunal judge’s account of what happened there being no mention of the issue in the Tribunal’s statement of reasons. 

148. The Tribunal judge’s emailed account (copied to the parties) was that the panel did discuss the question of Javi giving oral evidence with his parents. The judge thought the surroundings, being a formal courtroom at Manchester Crown Court building, were not a suitable forum for a child such as Javi to give oral evidence and this was likely to cause him distress due to his documented extreme anxiety. But the judge went on to say that, following the discussion, Javi’s parents withdrew their application for Javi to give oral evidence. This was hotly disputed by Javi’s parents and many witness statements in support were supplied (without invitation).

149. I accept the tribunal judge’s account. I without hesitation reject the point advanced by Mr Holland at the hearing that the tribunal judge’s account should be given less weight than the parents’ formal witness statements because it was not given as a witness statement. The judge was not a party to the hearing, and was certainly not going to be called to give evidence, so why in proceedings of this sort should a witness statement be required?

150. However, there is an important potential point of law here. On the judge’s account, the venue was an unsuitable one for this child to give oral evidence and that seems to have been why the parents abandoned the plan for him to give evidence. Under rule 24(b) of the Tribunal Procedure (First-tier Tribunal) (Health, Education and Social Care) Rules 2008 the child is entitled to attend the hearing. And the Tribunal is given an express power to permit the child to give evidence and address the Tribunal. On ordinary administrative law principles, the Tribunal will need to have a good reason for refusing such a request. 

151. I think Mr Holland is right to stress the importance of a child, who wants to appear before the Tribunal, being able to do so. The hearing will decide the child’s educational fate in the medium term at least and I also note Mr Holland’s argument that facilitating participation is expected by the UN Convention on the Rights of the Child. This hearing was listed for a venue that, in the tribunal judge’s opinion, precluded Javi from effectively participating. This concerns me and it is no answer at all to say, as did a salaried judge of the First-tier Tribunal when refusing permission to appeal, that “the Tribunal did not have to hear from [Javi] to be aware of his views”. On that reasoning, all children could be denied the opportunity to participate in a hearing and it overlooks the point that, of itself, participation may bring real benefits for the child even if the appeal fails.

152. My view is that it is potentially an error of law for the First-tier Tribunal to list cases in venues that preclude the participation of a child who wishes to participate although I recognise we do not live in a perfect world and countervailing considerations may apply in some cases.

153. I recommend that the First-tier Tribunal consider the wisdom of hearing SEN and school-related disability discrimination cases in venues whose characteristics, such as formality, are likely materially to inhibit the participation of a child who wishes to give evidence and/or address the Tribunal. 

Concluding remarks

154. I would like to thank all the representatives who attended the hearing of this appeal for their assistance, including the lay representatives. I would also like to thank the parties for the way in which they co-ordinated their submissions for the hearing and more generally for their co-operation. I should point out that none of the parties objected to the Upper Tribunal’s proposal to hear these appeals together given the common ground between them. 

155. Finally, I apologise to all for the time it has taken to give this decision. I had wanted to give the decision before the start of the new school year but due to a family matter, about which I have written personally to the parents, I had to be away from work for a significant unplanned period of time in July and August when I had wanted to complete this decision.  

				(Signed on the Original)
								E Mitchell
								Judge of the Upper Tribunal 
                                                                                                17th September 2015