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Background: Grouping students into classes by ability on a subject-by-subject basis, also known as setting, is a common practice in many educational systems. An important issue is therefore the way in which setting decisions are made. While educators and policy-makers favouring setting claim that ability or achievement is the sole criterion used, critics counter that there is a tendency for factors such as pupils' socio-economic status background, gender and ethnicity to influence teachers' setting decisions. Purpose: This paper aims to examine the extent to which factors other than prior achievement influence setting decisions in England. In particular, we wish to study both schools' declared policies on setting and what data may reveal as to predictors of which set pupils will be placed in at year 7, the first year of secondary school. Research questions are therefore: (1) what factors do teachers say influence setting decisions in their schools; and (2) what variables are significant predictors of set membership of students? Sample: To test these hypotheses, we conducted a survey of schools and analysed national datasets. Twelve Local Authorities (LAs) in England were selected on a purposive basis to represent areas of ethnic diversity and social disadvantage. Within these LAs, 100 secondary schools were randomly sampled and contacted with a request to complete a survey consisting of questions on whether the schools set, how setting decisions were made, how often sets were reviewed and which pupils were in which sets (using Unique Pupil Numbers). In total, 44 surveys were returned completed. Methods: Data from the questionnaires was linked to data from the National Pupil Database. Pupil level analyses were conducted using statistical tests and multinomial logistic regression models in which set membership was regressed on prior attainment (National Curriculum Test Scores at the end of primary school), social background, special educational needs (SEN) status, ethnicity and gender. Results: In the survey, schools indicated that setting decisions were based on prior attainment and ability. Results showed that prior attainment was indeed the main predictor of the probability of being assigned to a particular set for both English and mathematics. However, although mentioned by respondents as being the main factor in their decisions regarding setting along with ability, it was a relatively poor predictor. Social background (as measured through ACORN categories and free school meals eligibility) and SEN were also significant predictors of probability of set assignment. Conclusion: These findings suggest that over and above the effect of attainment, pupils with no SEN and pupils from higher socio-economic status backgrounds are more likely to be assigned to higher sets and less likely to be assigned to lower sets. [ABSTRACT FROM AUTHOR]