Pupil Referral Units

Motion made, and Question proposed, That this House do now adjourn.—(Paul Maynard.)

Pupil referral units perform excellent work in my constituency and across the country in complementing mainstream schools. There are two in my constituency, Youth Challenge and Lever Park, and both are run by Bolton Impact Trust. When I met the trust recently, I was made aware of how vital these units are to the pupils who rely on them and how fantastic they are at delivering the service and support they do to those pupils. Both were rated outstanding in their last Ofsted inspections.

It was a particular delight when I visited to hear of the relationship that Youth Challenge had with local business. It is an important fact about these units that often the experience of children is in vocational work and training and that often those are the kinds of careers they go into once they have finished school, whether that is at age 16 or 18. That transition into mainstream employment is very important. The close relationship that the unit has with local business is very good for local businesses, which increasingly understand the value that these children can contribute to their businesses, and also sets a positive direction of travel and gives the children the opportunity and vision to move into good and productive jobs once they leave education.

The services provided by Bolton Impact Trust really do make a difference. That can come in the form of 1:1 teaching support, which a teacher in a mainstream school, perhaps with a class of 30 or so pupils, cannot provide, but it does others things as well. There is one simple, straightforward thing that it does. Teachers often sit with children at lunchtime, and that engagement between adults and children can produce a useful environment that is more relaxed than a formal classroom setting. It also reinforces the support that referral units give to families. Mums and dads often have a very challenging time. Bringing up any children obviously has its challenges, but the support that these units can give by introducing more stable adult figures to children’s lives is very important.

There is concern about funding, as was confirmed by my visit to Bolton Impact Trust. As the Minister will know, the dedicated schools grant is split into four notional blocks, but I want to focus on the high needs block.

The hon. Gentleman has raised a vital issue. Given the importance of helping children who are ill, pupil referral units are an essential tool to retaining access to education that is specifically tailored to them. Should that not be protected at all costs?

I agree with the hon. Gentleman. Different schools and different parts of the educational structure serve different groups of children. The work done by referral units and, more widely, by specialist schools is very important, and ought to be protected. There will always be a need for these units, and they ought to be reassured that support will continue. Many of the people who work for them are very specialised and highly trained, and we must maintain that continuity in order to maintain that talent.

High needs funding is essential in helping to meet the educational requirements of pupils. The cost of those additional needs can be as much as £10,000 a year, £6,000 more than the normal average of £4,000. As the Minister is no doubt aware, local authorities determine the budgets for referral units and specialist schools on the basis of the number of places that are required before commissioning those places at £10,000 per place per annum, regardless of whether they are taken up.

In that context, it is important to recognise the difference between specialist schools, where there is a certain continuity, and referral units, where the intake can be slightly more erratic. If a place is taken up, the local authority funds a top-up on a daily and weekly basis. That funding model works very well for specialist schools. They normally experience less in-year movement of pupils, which means that forecasting income is comparatively straightforward. The situation in referral units is much more volatile. For example, in September there were 170 pupils on the roll in Bolton, but by the following June the number had risen to 260. There can be a stark contrast between the numbers at one point and the numbers at a later stage.

We need a responsive system. Because specialist schools have a longer-term relationship with children, there tends to be far more clarity about who will be in those schools, and hence more clarity about access to funding. Moreover, the main aim of referral units is to support pupils so successfully that they are able to return to mainstream schools, and an unfortunate consequence of that success is that a unit will lose between £12,000 and £14,000 per pupil per year. The current funding model provides no incentive for a referral unit to deliver successful outcomes. They will of course be focused on delivering successful outcomes, but there is a clear challenge in the funding model. Certain costs, such as for the building and the staff, are permanent regardless of the number of people in the unit, but the income can significantly vary over a period of time. Would it not make more sense to have a funding model that did not disadvantage referral units for successful outcomes, rather than one that could be seen as an incentive to units keeping hold of children? PRUs that are doing very good work, perhaps better than average, must not lose the money that is coming to them more quickly than the average, because that would be a disincentive.

I congratulate my hon. Friend the Member for Bolton West (Chris Green) on securing this important debate. He speaks from experience of his local PRU and the work it does with the local community, businesses and of course families to deliver good outcomes. I am aware that Bolton Impact Trust has been in discussion with the Department about the funding issues and I will write to my hon. Friend on that.

Alternative provision can offer a lifeline to some children and their parents, such as through smaller classes and more tailored support from teachers, helping them flourish, and I thank the hon. Member for Strangford (Jim Shannon) for raising the issue of children who may be very unwell. It is vital that young people in alternative provision, including those in pupil referral units, receive a high-quality education and are able to fulfil their potential. We need to be just as ambitious for pupils in alternative provision as we are for those in mainstream schools.

We have deliberately maintained a flexible approach to the funding of alternative provision, as we understand that local authorities discharge their responsibilities for those who are not in school in different ways. We expect local authorities to explore the most effective arrangements for alternative provision commissioning and funding in their area. They should always take account of the needs of local schools in determining the demand for alternative provision and how it is delivered, and encourage schools to think collectively about their use of AP, including the consequences of the decisions on excluded pupils.

Many local areas have developed strong partnership arrangements that seek to share responsibilities across schools for AP commissioning and funding. Local authorities and schools should be aware of the cost of maintaining good-quality AP in different settings and be able to make placement decisions on the basis of the cost and quality of what is on offer. There should be informed discussions in the local schools forum about how AP is funded. Funding for pupil referral units is normally provided as place funding and top-up funding. Funding of £10,000 per place is supplemented by top-up funding from the commissioner of the place.

Could the Minister outline what funding is provided for pupil referral units and alternative provision in order to provide the important inreach work being done in mainstream schools to support kids so that they do not end up in a pupil referral unit in the future?

I am grateful to the hon. Lady for that intervention. I hope that my remarks will continue to deal with the issue of funding and how much investment we are making.

As I was saying, the funding of £10,000 per place is supplemented by top-up funding from the commissioner of the place. Both the number of places to be funded and the amount of top-up funding are matters that are decided locally. Top-up funding is the funding that is required in excess of the £10,000 place funding to reflect the full cost of the provision needed, depending on how long the pupil is expected to be in the unit and on other local factors. It can also reflect costs that enable those units to remain financially viable, which goes to my hon. Friend the Member for Bolton West’s point. It is important that places are available when they are needed.

In our operational guidance, we have advised that commissioning local authorities and schools should carefully consider the top-up funding arrangements to ensure that there are no perverse incentives and that the funding achieves the intended outcomes. It is possible to develop a top-up funding system that more closely reflects the achievement of the desired outcomes, as a way of encouraging high-quality AP. For example, an element of the payment could be withheld from the pupil referral unit until the pupil returns to his or her mainstream school or achieves another outcome.

Funding for AP comes primarily from the high-needs block of the dedicated schools grant. Based on local authorities’ reports of their spending, the Department estimates that around 10% of the high-needs budget is spent on AP. The proportion of spend on AP from the high-needs budget has remained roughly stable in the past few years. Last year, local authorities reported approximately £632 million of expenditure on AP, including on pupil referral units. However, schools are also able to commission AP places and services directly, and when a school does this, it is funded from its delegated share of the school block, which the local authority distributes to it through its local formula. Last year, the core schools and high-needs budget was almost £41 billion. This is set to rise to £43.5 billion next year. While more money is going into our schools, including into the high-needs block, we recognise the budgeting challenges that schools face and that we are asking them to do more.

The Minister said that he would return to the point about the inreach work that PRUs do with mainstream education and about how much funding is allocated towards that work. I have listened with great intent, and I do not believe I have heard that question answered.

I am grateful to the hon. Lady for coming back on that point, which I was about to address. Local authorities can make arrangements for the supply of specialist support for mainstream schools by staff working in pupil referral units. The Department’s innovation fund has funded projects that include such measures and links between AP and schools. If she is unhappy with my response, and if she writes to me about a specific case, I will be happy to look at that as well.

I thank the hon. Member for Lewisham, Deptford (Vicky Foxcroft), my hon. Friend the Member for Bolton West and the hon. Member for Strangford, who is no longer in his seat, for contributing to this debate. I also pay tribute to the hard work of schools and local authorities, which continue to give their best and to raise the standards of our education system.

Order. Before I put the Question, I must inform the House that there was an error in calculating the number of votes of Members for English constituencies in the Division on motion 7 on the Higher Education (Fee Limits for Accelerated Courses) (England) Regulations 2018. The figures for the England-only vote should not have been announced as: Ayes, 269; Noes, 200. They should have been announced as: Ayes, 269; Noes, 194. The figures for the vote of the whole House are as previously announced, and the result is unaffected.

I appreciate the attention of the House. It is not an exciting announcement, but it is essential to set the record straight.