Further to Martin’s post above, if you don’t have an element 2 funding allocation from the ESFA then the funding would normally be drawn down via your local authority once you’ve reached an agreement with them.
You can only indicate a learner has high needs on the ILR if you receive Element 3 from your LA. See below:
“This field is only completed for 16-19 (excluding Apprenticeships) funded students where a local authority has actually paid element 3 ‘top-up’ funding for a student whose agreed learning support costs are greater than £6,000. It must not be used in any other circumstances, for example, where costs are less than or equal to £6,000 or where the local authority has made no in-year contribution to the costs even if they are judged/agreed to be greater than £6,000.”