The high cost pressures of safety valve deals

Cash-strapped local authorities are under pressure through safety valve deals to place high-needs young people in placements that may not be suitable for them

Cash-strapped local authorities are under pressure through safety valve deals to place high-needs young people in placements that may not be suitable for them


Cash-strapped local authorities are under pressure through safety valve deals to place high-needs young people in placements that may not be suitable for them.

Councils are under increasing pressure from the government to drive down soaring high-needs deficits, predicted to rise to more than £3.5 billion by March next year.

But attempts to save cash by not funding specialist provision for learners with complex needs are creating a new set of challenges.

These challenges are particularly evident in councils that have signed “safety valve” deals with the Department for Education. In return for short-term cash lifelines, councils sign up for longer-term savings plans that have stringent conditions.

Since 2021, 38 have signed deals worth more than £1 billion.

While most of these deals have conditions on making mainstream schools more inclusive and reducing reliance on costly independent special schools, their reach also extends to FE.

Of the 28 “safety valve” authorities that responded to a freedom of information request from FE Week, more than half (15) were reducing the use of post-16 independent specialist provision – thereby increasing pressure on general FE colleges to accept more young people with high needs. Five councils made pledges around reducing reliance on “out of borough” provision to slash transport costs.

Barnsley Council says there is “clear evidence” of “many young people accessing specialist provision who could have their needs met in local mainstream provision post-16”.

It set the “key objective” to “transition ALL our young people with high needs placed in out-of-borough specialist settings to in-borough settings from year 12, over a three to four-year period”.

Only two councils say they do not intend to reduce post-16 specialist provision, with the others vague as to their intentions.

Hounslow set a target of no more than 3.3 per cent of young people with a education, health and care plan (EHCP) to be educated in a special post-16 institution.

Devon is making a capital funding bid to the DfE as part of its safety valve plans to boost high-needs capacity in local FE colleges by more than 300 places. It has also targeted savings for 2023-24 of £1.97 million in post-16 placements.

Catriona Moore, policy manager at the Independent Provider of Special Education Advice (IPSEA, says safety valve councils are aiming to “reduce the number” of young people attending specialist colleges, and “setting explicit targets for mainstream placements”.

“These actions not only undermine the rights of children and young people with SEND, but also risk local authorities exposing themselves to more legal challenges than ever before.”

Deal failure

The main aims of the deals – to plug high-needs deficits and make those councils more financially resilient – are not being achieved while demand for EHCPs soars. In 2019, 77,587 16 to 19-year-olds had EHCPs. This increased by more than a third to 105,900 in 2023.

A third of the safety valve councils say the risk of them not being able to deliver their statutory duties for children and young people with SEND have increased in the past 12 months – despite cash injections.

Richmond’s deal set a target to keep its spending on independent schools and colleges to 28.9 per cent of overall spend, but in the year up to March 2023 it had spent 30.4 per cent.

It also maintained a controversial £3,486 target for average costs per placement at its FE colleges, which it exceeded by £53. Its high-needs block spending continues to rise month on month.

Scott Gardner, senior SEND management accountant for Achieving for Children, the community interest company that runs its children’s services, says Richmond had been “highlighted by the DfE as a success of the [safety valve] programme. However, if the funding ceases there is a high risk that within five years the borough will be in the same financial position it was before [it] was introduced”.

Dorset, which signed a deal in 2021, says its “progress” has “not yet translated into financial savings or efficiencies”.

“Authorities that are in better financial positions may be in a more adversarial position with children and families,” a council report noted.

Councils with safety valve deals are also trying to cease as many EHCPs as they can, which means more young people with SEND entering college without support arrangements in place.

Merton made its intentions in this respect quite explicit: “Work on ceasing plans is continuing and dedicated staff in the post-16 team are concentrating on this.”

Tony McCardle DfEs safety valve deal negotiator

Bankruptcy threats

In 2020, the government issued a “statutory override” of standard accounting rules, letting councils across England keep their dedicated schools grant (DSG)  – which includes college high-needs funding – deficits off their general revenue books. This meant they could still set balanced budgets, despite the overspends.

That override is set to end in March 2026, after which councils are expected to have eradicated their DSG deficits.

But this seems unlikely for many.

More than a third (38 per cent) of the safety valve respondents said they are at risk of issuing a section 114 notice – meaning they cannot balance their budgets – in the next three years, partly driven by the escalating cost of SEND provision.

These notices restrict council spending to the statutory minimum.

Stoke-on-Trent told FE Week it is facing “a risk of section 114 due to pressures and demands across all of children’s services”. It is “not on track” to balance its DSG deficits by 2025, as agreed in its safety valve deal, with its officers in “constant dialogue with the DfE”.

Similarly, North Tyneside’s risk of not being able to ensure financial sustainability without raiding reserves is currently flagged as an “A1 risk” with “very high likelihood”.

However, the authority said this did not mean that it expected to issue a section 114 notice between now and 2028.

Five councils have been forced to issue section 114s in the past two years.

They include Birmingham, which after issuing the notice last year indicated that it would cut back on placements at the specialist college The Hive. But the college’s executive principal, Kim Everton, subsequently, said council staff had u-turned and “acknowledged the needs of these young people for access to education”.

Birmingham is cutting back post-16 SEND transport – as are Kent and Cheshire East Councils.

Another 54 councils are part of the government’s “delivering better value in SEND” programme, in which cost-cutting experts are parachuted in to help them find ways of driving down costs.

Clare Howard, the chief executive of Natspec, the membership body for specialist colleges, says her members are “feeling the effects” of the safety valve. 

Specialist colleges in safety valve areas are “being told that there’ll be across the board, no inflationary fee increases”, she says.

“Colleges have clearly had increased staffing and energy costs, and have experienced inflationary pressures. Yet the amount they’re getting for each learner is exactly the same.”

Clare Howard of NATSPEC

Duty to admit

School and post-16 education systems operate very differently.

While just under half of children with EHCPs attend special schools, only 11 per cent of college students – those who generally have the most acute needs  – are in specialist provision, with the other 89 per cent registered at general and land-based FE colleges.

“This means that although local authorities sometimes think they might be sending too many young people to specialist colleges, there’s not many cutbacks they can make,” says David Holloway, senior SEND policy manager for the Association of Colleges.

And unlike independent special schools, relatively few (15 per cent) of the 130 post-16 specialist colleges are private equity owned companies with an eye on profit marginsalthough several private equity owned companies operate special schools offering provision up to age 19.

But some councils are cutting post-16 services wherever they can, and not just in safety valve areas.

Holloway believes there is growing evidence of local authorities becoming “more aggressive” in their use of the “duty to admit”.

Even in instances where a general FE college has indicated it would be unable to meet a particular young person’s needs, and where the young person’s family stipulate a preference for a specialist provider, councils are sometimes still obliging mainstream colleges to accept these placements.

“This is very problematic,” said Holloway. “It’s leading to young people being in the wrong place for them”.

David Holloway senior SEND policy manager for AoC

Conflicting duties

Specialist college placements tend to be much more expensive because of higher staff to learner ratios and specialist facilities and equipment for students with more complex needs.

In Richmond-upon-Thames, for example, the average placement cost in 2023-24 of an independent specialist post-16 provider was £37,693, compared with £3,306 in FE colleges and £40,907 in independent special schools.

Last year Holloway held a webinar on “duty to admit”, expecting to get maybe 30 people on the call. About 180 people from “nearly every college in the country” signed up, indicating the growing scale of the problem.

He emphasises that college SEND managers “go into the job to be inclusive”, and “hate saying no” to potential students – only doing so where there is a “good reason for it”.

While he understands the need for a “duty to admit” to be applied to the school sector where some have been accused of not being inclusive, “the same medicine should not be applied to colleges because we don’t have that problem”.

Colleges are sometimes reluctant to accept a young person whose behaviour cannot be managed safely, or because they lack the appropriate staffing to meet medical needs. A young person may have learning needs too profound to suit their local college classes, or the college may lack the appropriate facilities.

Holloway believes that “deeply misguided” commissioning by councils is “placing colleges in a really difficult position from a safeguarding perspective”.

“Commissioning decisions are being made on financial grounds, sometimes in defiance of what the college has said it can do…you hear colleges saying, ‘we’ve got legal duties to admit the students under the Children and Families 2014 act – but The Health and Safety Act trumps those’.”

Howard says that some councils are also placing some young people in specialist colleges that are “entirely unsuitable” for their needs – often chosen because they are local – to limit transport costs.

Lynette Barrett of National Star College

Disorganised commissioning

Young people with high needs are also bearing the brunt of “disorganised commissioning” by overstretched councils, says Holloway.

Often decisions about which college to name in an EHCP are made by caseworkers “without real knowledge of the post-16 landscape”. And these are made long after the March statutory deadline when a provider should be named on a young person’s EHCP for the upcoming academic year.

Howard believes that missing the deadline is “so routine” that it is “unusual to find a council that has actually complied with the law”. Some placements are not confirmed until after the term has begun, leading to “money wasted” because colleges bring in more expensive supply staff to plug staffing shortages.

Lynette Barrett, the chief executive of National Star College, a SEND college in Gloucestershire, says delays to naming provision on EHCPs is “leaving families in limbo” and means her college ends up planning for placements that never materialise.

But Barrett believes that “as much as the system is broken, local authorities are victims in all of this too. They’re in an untenable position with so many demands, they don’t have the resources available to provide for it all.”

National Star College which relies on fundraising donations for capital funding

Funding complexities

Schools get what’s called “notional SEN” funding for those with low special educational needs, but there is no equivalent for colleges. For them that money comes under the disadvantage fund, which is allocated based on other factors. AoC research in 2022 found large disparities between colleges in how much they received based on economic disadvantage levels, with some getting 12 times more than others. This makes the fund effective in predicting need based on economic disadvantage, but “it’s not working for students with SEND”, says Holloway.

There is also unfairness when it comes to the £2.6 billion high-needs provision capital allocations (HNPCAs) pot distributed by local authorities for building projects for learners with SEND.

With schools, colleges and early years providers all in scope, councils are meant to consult before it is allocated. But they often only consult school representatives.

Research by Special Needs Jungle, the parents’ network, shows that in previous rounds, 99 per cent of all HNPCA spending was on schools, with the remaining 1 per cent split between early years and FE.

 “The obvious consequence of skewed investment is that accommodation in the college SEND sector is not improving to meet demand,” says Holloway.

Howard also says it is “ludicrous” that specialist colleges are exempt from the £1.5 billion FE capital transformation fund, leaving some “having to raid their reserves for maintenance, and reliant on fundraisers to carry out essential repairs”.

Kent Council acknowledges this challenge in a council report that explains how post 16 training providers “cannot draw down” capital funding, which “hinders the development of their offer across the county, as premises costs are high”.

The governments SEND improvement plan contains reforms yet to be rolled out

Some positive progress

Much of the disorganised commissioning is laid bare in the 32 Ofsted area SEND inspections that have taken place since January last year. Overall, nine (28 per cent) were graded 3 (‘systemic failings’), the same percentage grade 1 (‘typically positive’), while 14 (44 per cent) were grade 2 ‘inconsistent’.

The reports are particularly critical of post-16 SEND arrangements. Only a quarter were generally positive, 16 per cent mixed and 59 per cent poor, our analysis revealed.

Ofsted found that in North Northamptonshire, “inaccurate” EHCPs do not support students to “access appropriate placements”.

In Bury (a safety valve council) inspectors reported “systemic failings” – with no provision in place for 18 to 25-year-olds to access an ADHD or autism assessment.

In Haringey, EHCPs “do not adequately address preparation for adulthood”.

However, Middlesbrough was praised for how “young people learn about pathways” to FE. In Oxfordshire planning for adult transition was found to be “coordinated” and avoided “delays”.

Some councils are keen to engage more with colleges around SEND provision. Hertfordshire Council was last year criticised by Ofsted for “systemic failings” and admitted that until recently, “increasing demand coupled with resource constraints, high sickness levels and high staff turnover has led to strain on existing systems”.

But after a meeting was arranged in April with representatives from four Hertfordshire colleges and then Watford MP Dean Russell, the council launched a “new regional partnership”, including colleges in strategic planning for specialist provision and high-needs funding discussions.

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