HS/4254/2012

DECISION OF THE UPPER TRIBUNAL
(ADMINISTRATIVE APPEALS CHAMBER)

Decision

1. This appeal succeeds. In accordance with the provisions of section 12(2)(b)(i) of the Tribunals, Courts and Enforcement Act 2007 I set aside the written review decision of the First-tier Tribunal (Health, Education and Social Care Chamber) made on 16th October 2012 under reference SE305/12/00013. My intention is to name in part 4 of the statement of special educational needs the school that the appellant wanted the First-tier Tribunal to name, referred to in this decision as school P, which is a local authority special school maintained by the London Borough of Kensington and Chelsea, but physically situated in the county of Kent.. However, that would be subject to further action and acceptance by the school in question. I am told that this has now all been arranged but, rather then make an order that might not be enforceable, I refer the matter to the parties for implementation on the basis of this decision. Either party is at liberty to restore the matter to the Upper Tribunal for a further direction in the case of any difficulty with implementing this decision. That also avoids the difficulty that although such a direction would not be in the public domain, this decision is, and naming the school in this decision would breach the anonymity of the child and family in question.

2. The child in question, to whom I shall refer as T, is a girl born on 18th October 2001. She has a twin sister, K, in respect of whom there has also been an appeal to the Upper Tribunal (in HS/4264/2012). The two appeals raise essentially the same issues and I have, throughout, considered the two matters together, but T and K have separate statements of special educational needs and I have issued separate, although similar, decisions in respect of each of them.

Hearing

3. I held an oral hearing of this appeal on 1st August 2013. The appellant (the mother of T and K) was represented by Anne Lawrence of counsel. The London Borough of Bromley is the respondent local education authority (“the LEA” or “the authority”) and was represented by Len Blomstrand, a specialist SEN consultant. I am grateful to them for their assistance.

4. On 7th August 2013 Upper Tribunal Judge Williams decided WH v Warrington Borough Council [2013] UKUT 0391 (AAC), HS 1444 2013 (“the Warrington case”). On 21st August 2013 I invited the parties to make written submissions on the relevance of that decision for the present appeal. The parties have done so. 

Background 

5. T has an unusual chromosomal abnormality which has led to retardation of growth, global development delay, and communication and learning difficulties. The LEA has maintained a statement of special educational needs in respect of T since 2005. T did attend a special unit for pupils with social communication difficulties which was attached to Primary School A. However she was due for transfer to secondary education in September 2012 (shortly before her 11th birthday). Her parents wanted (and want) her to attend school P. This is a local authority special school maintained by the London Borough of Kensington and Chelsea, although it is physically situated in the county of Kent. The London Borough of Bromley named school R, which is a special school maintained by itself within its own borders. T’s parents take the view that school R is for pupils with more profound and diverse needs but that school P has provision more like that in Primary School A.

6. On 16th February 2012 T’s parents appealed to the First-tier Tribunal against the decision of the LEA to name school R. The tribunal heard that appeal on 2nd July 2012. There were clerical errors in its decision and a corrected decision was issued on 11th September 2012.  That is not the decision that is the subject of these proceedings. T’s parents applied for permission to appeal to the Upper Tribunal against the decision of 11th September 2012. On 17th September 2012 the presiding judge of the panel that had made that decision, refused permission to appeal to the Upper Tribunal but reviewed the decision (purportedly “in part”) and directed that the review be carried out by the same panel, but on the papers after the parties had a further opportunity to make written submissions on certain grounds. I must confess to some confusion over whether the judge had reviewed the decision, or whether she had simply directed that the panel review the decision. In any event, the panel reconvened on 15th October 2012 and its decision was signed on 16th October 2012. This was described as the “Review Decision” and stated that the earlier decision had been replaced by the review decision. I waive any irregularity involved in this process that would deprive the Upper Tribunal of jurisdiction to decide this matter.

7. The First-tier Tribunal ordered some amendments to parts 2 and 3 of the statement of special educational needs but dismissed the appeal against part 4, thus in effect confirming the LEA’s naming of school R. I deal below with further details of its decision.

8. On 29th November 2012 the Deputy President of the HESC chamber of the First-tier Tribunal refused the parents permission to appeal against the review decision. On 1st December 2012 T’s mother renewed the application direct to the Upper Tribunal and on 3rd January 2013 I gave permission to appeal, limited to arguments concerning the school to be named in part 4. On 18th March 2013, as requested by the LEA, I directed that there be an oral hearing of the appeal. I refer to paragraphs 3 and 4 above for the subsequent procedural steps. 

9. The LEA opposes the appeal and supports the decision of the First-tier Tribunal.

The Principal Relevant Legal Provisions

10. So far as concerns this appeal the following provisions of the Education Act 1996 are particularly relevant:

Section 9:	In exercising or performing all their respective powers and duties under the Education Acts the Secretary of State and local education 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.

11. Schedule 27 to the 1996 Act provides in paragraphs 2 and 3 for parents to express a preference as to the particular maintained school at which education should be provided and to give reasons for that preference. Paragraph 3(3) provides:

Paragraph 3(3): Where a local education authority make a statement in a case  where the parent of the child concerned has expressed a preference in pursuance of such arrangements as to the school at which he wishes education to be provided for his child, they shall specify the name of that school in the statement unless – 

(a)	the school is unsuitable to the child’s age, ability or aptitude or to his special educational needs 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.

12. In a case in which needs have been identified, and in which the local education authority and the parents each wish a different school to be named, and in which the First-tier Tribunal has to chose between the two schools, then in essence these provisions require three questions to be addressed:

(a)	Are both schools appropriate to meet the need? A school that is not appropriate cannot be named.
(b)	If they are both appropriate, which is the school preferred by the parents? Unless (c) applies that school must be named.
(c)	Would naming the school preferred by the parents be incompatible with (i) the provision of efficient education/instruction and training or the avoidance of unreasonable public expenditure or (ii) in the case of a child with a statement, efficient education or use of resources? If so the school suggested by the local education authority must be named.

The Decision of the First-tier Tribunal

13. The LEA has never disputed that school P would also be suitable to meet T’s needs but based its case on the issue of the respective cost of placement at the two schools. The First-tier Tribunal found that both schools would be suitable (paragraphs 43 and 44 of its written decision), and that finding is not challenged in this appeal to the Upper Tribunal.

14. In relation to cost the First-tier Tribunal rejected the LEA’s argument that, because it was prefunded, there was nil cost for a placement at school R. Dividing the budget by the number of places would give an average annual cost of £21,808 per child (paragraph 45). I doubt that this is the correct approach to the calculation and I deal further with this point below. The tribunal also rejected the parents’ argument that there would be annual transport costs of £5130. This was because the LEA already runs more than 25 escorted vehicles to the school daily and there are empty seats available.

15. The tribunal found (and the details of this were agreed, although not the implications) that if T were to be placed at school P, as desired by her parents, the LEA would have to pay to the London Borough of Kensington and Chelsea a “recoupment cost” of £30,386 annually for a day placement, plus a 10% administrative charge, making a total of £33,424 aside from any transport costs (paragraph 46). 

16. The First-tier Tribunal concluded that the difference in cost (over £12,500 annually) would constitute an inefficient use of resources (paragraph 47) and unreasonable public expenditure because there would be no added value or extra benefit (paragraph 48). It rejected the parents’ argument that it should consider public expenditure generally rather than the cost to any particular LEA. Essentially, it is on this last point that the appeal to the Upper Tribunal is brought, although it seems to have taken many pages of written argument to say so.

17. Other grounds of appeal were identified but either they relate to issues of fact that were for the First-tier Tribunal to decide and in relation to which I can see no error of law, or because of my decision it is unnecessary for me to comment on them, or they fall into both categories.

The Case Law – The Averaging Point

18. It is now well-established that what has to be taken into account for these purposes is the additional or marginal cost to the public purse of T attending either school. This was decided by the Court of Appeal in Oxfordshire County Council v GB and Others [2001] EWCA Civ 1358 and affirmed by that Court in EH v Kent County Council [2011] EWCA Civ 209, upholding my decision in [2010] UKUT 376 (AAC), S/3030/2009.

19. On this basis, it is an error simply to take the overall school “budget” and divide by the number of places. If the cost were to be the same if T did not attend the school (perhaps because all the costs were fixed, or because there is no doubt that another child would attend instead) then there would be no additional or marginal costs of T attending. The concept of “budget” is ambiguous in any event. If there is a “budget” in the sense of a book entry or mere accounting mechanism as between the LEA and the school, that would not be conclusive. What matters is the “budget” in the sense of the actual or, in most cases, the predicted (net) expenditure. (I believe that this is what the Court of Appeal meant in paragraph 25 of the EH decision).

20. These are matters of fact to be determined on the evidence. In the present case, if the LEA’s argument on the recoupment cost is correct, then there can be no real doubt that school R should be named since, disregarding transport costs, the difference in cost would be £33,424 for school P (the recoupment cost plus the 10% administrative cost) less the additional or marginal cost of T attending school R (which would clearly be a relatively small proportion of the average cost of £21,808).

The Case Law – The Public Expenditure and Resources Point

21. That leaves the issue of whether it is appropriate to take the recoupment cost plus the 10% administrative cost for school P as constituting “public expenditure”, on the basis that it would be expenditure for the LEA involved (the London Borough of Bromley), or whether it is not “public expenditure” because it is merely a transfer from one London Borough to another.

22. In the decision of the House of Lords in B v London Borough of Harrow and others [2000] 1 WLR 223; [2000] 1 All ER 876; 2000 ELR 109 (“the Harrow case”), the London Borough of Harrow wanted a pupil to attend one of its own maintained schools. The pupil’s mother wanted her to attend a school maintained by the London Borough of Hillingdon. This would cost Harrow over £11,000. In the appeal process the High Court and the Court of Appeal focussed on the wording of paragraph 3(3) with no substantive consideration of section 9. Lord Slynn (with whom all the others agreed) delivered the only speech. He took the view that parliament had clearly established separate schemes, one for special schools and one for other schools. The provision for special needs seemed to him likely to be more costly out of the area than in the area and proportionately more costly than the provision of education out of the area for children not requiring special educational need provision. (I am bound to say that this must actually be a question of fact in each individual case – Lord Slynn cannot have been setting out a binding legal principle on this question). Therefore it did not follow that if the resources other than those of the authority in whose area the child lives fall to be taken into account in regard to a non-special school that they must also be taken into account in regard to a special school. Since the scheme for special educational needs provision is for children who live in a particular LEA area, it is only the resources of that particular LEA that need be taken into account for the purposes of paragraph 3(3),

23. In relation to section 9 Lord Slynn said (at [2000] 1 WLR 229-230),

“I do not consider that section 9 of the Act means that parental preference is to prevail unless it involves unreasonable public expenditure. In dealing with special schools the authority must also observe the specific provisions of paragraph 3(3) of Schedule 27. A [parent’s preference] … is subject to the qualifications set out in paragraph 3(3), one of which is the efficient use of resources – in my opinion the [resources of the responsible LEA]. It may be as a result that a child seeking to go a special school out of his own [LEA]’s area may have more difficulty in doing so than a child seeking to go to another school. But that is what, in my view, Parliament has clearly provided”.

24. In fact paragraph 3(3) does not refer to a special school but to a child with a statement of special educational needs, and the balance has been swinging in favour of educating such children in mainstream schools where feasible.

25. The Harrow case was considered in the decision of my colleague Upper Tribunal Judge Ward in CM v London Borough of Bexley [2011] UKUT 215 (AAC), [2012] AACR 4, [2011] ELR 413, HS/0169/2011 (“the Bexley case”). He held that the meaning and application of section 9 was not in issue in the Harrow case and that Lord Slynn’s remarks were not part of the ratio decidendi (the point of law for which the case is authority) but were obiter dicta (things said by the way or incidentally). The Upper Tribunal is bound to follow the ratio in the Harrow case and to find that for the purposes of paragraph 3(3) it is only the resources of the paying responsible LEA that are taken into account. However, section 9 creates a distinct and separate exercise which must still be carried out, and “public expenditure” in section 9 is a different (and wider) concept from the concept of “resources” in paragraph 3(3). 

26. Judge Ward drew support from the decision of the Court of Appeal in C v Buckinghamshire County Council [1999] ELR 179 which held that section 9 is on the face of it relevant to all statutory functions under the Act, including functions relating to children with special needs, and from other cases which took, or favoured taking, account of the savings to other heads of local authority expenditure. 

27. I have referred above (paragraph 4) to the Warrington case. Another colleague, Upper Tribunal Judge Williams, identified a jurisprudential conflict between a wide view of the meaning of “public expenditure” for the purposes of section 9 and a narrow view. The narrow view is that it means the expenditure of the particular LEA (or possibly of education authorities in general). In the Warrington case the issue was whether social care and respite costs should be taken into account (which would reflect the wide view). Judge Williams took the narrow view and excluded those costs from consideration. Of course, that issue does not arise in the present case, and Judge Williams was not concerned with the position where one LEA is making a payment to another LEA. 

28. The parties have referred to several other decisions, but many of them have been discussed and analysed in the recent decisions by the Upper Tribunal to which I have referred, and it is not necessary for me to repeat the exercise. Neither is it necessary in this case for me to express a view on the decision by Judge Williams in the Warrington case (although I note that it is not inconsistent with my decision). 

29. However, I do agree with the analysis and conclusions of Judge Ward in the Bexley case. Section 9 creates an overriding principle and, whether or not “public expenditure” includes matters such as social care, in my view it certainly includes expenditure on schools by two different LEAs.

Conclusions

30. On my analysis any payment made in respect of T’s schooling by the London Borough of Bromley to the London Borough of Kensington and Chelsea would not constitute net public expenditure and therefore could not involve unreasonable public expenditure within the meaning of section 9. Any genuine additional expenditure involved in T attending school P would be small and would not displace the general principle that pupils are to be educated in accordance with the wishes of their parents. If there were any genuine additional public expenditure by the London Borough of Bromley were T to attend school R, that would only strengthen the case for her to attend school P.

H. Levenson
Judge of the Upper Tribunal 
24th October 2013