ITEM NO
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REPORT FROM
THE S TRATEGIC DIRECTOR FOR CHILDREN’S SERVICES
TO
SCHOOLS FORUM
ON
18 TH MARCH 2015
___________________________________________________________________
TITLE:
FUTURE FUNDING ARRANGEMENTS TO SUPPORT THE DELIVERY OF
EARLY EDUCATION AND CHILDCARE FOR
3 AND 4 YEAR OLDS IN SALFORD.
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RECOMMENDATION:
Schools Forum are asked to note the contents of this report and note the future funding arrangements for the delivery of free entitlement for 3 and 4 year olds in all early years settings for implementation from April 2015.
Schools Forum are asked to note that the EYSFF delivery will be model C as set out below.
Delivery Model C
A percentage increase of 4.95%, based on the minimum wage increase between
2012 and 2014.
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EXECUTIVE SUMMARY:
This report follows on from a report submitted to Schools Forum on 17 th September
2014 that set out the current funding arrangements for the universal entitlement for 3 and 4 year olds and a further report submitted to Schools Forum on 8 th October 2014 detailing the review that was undertaken.
The purpose of the previous reports was to seek permission to consult and review the Early Years Single Funding Formula and to look at future funding options for the delivery.
Following the reports a ‘cost analysis’ was carried out through completion of an online questionnaire with all Private, Voluntary and Independent funding providers to gather information on the cost of delivery for 3 and 4 year olds.
The details of the cost analysis process and its outcomes were outlined within the body of the report dated 8 th October 2014.
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Following that report a thorough consultation process has been undertaken with all early years settings to arrive at a revised hourly that covers the cost of delivery.
The details of the consultation process and its outcomes are outlined within the body of this report.
The purpose of this report is to support an informed decision, in the light of the outcomes of the consultation, on the future funding arrangements to support the delivery of the free entitlement of early learning/childcare for 3 and 4 year olds across the City
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BACKGROUND DOCUMENTS:
Early Education and Childcare Statutory Guidance for Local Authorities (September
2014) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/35159
2/early_education_and_childcare_statutory_guidance_2014.pdf
Children and Families Bill (2014) http://www.publications.parliament.uk/pa/bills/cbill/2012-2013/0131/2013131.pdf
Special educational needs and disability code of practice: 0 to 25 years
–
Statutory guidance for organisations who work with and support children and young people with special educational needs and disabilities (July 2014) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/34244
0/SEND_Code_of_Practice_approved_by_Parliament_29.07.14.pdf
More Great Childcare
–
Raising quality and giving parents more choice (January
2013) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/21966
0/More_20Great_20Childcare_20v2.pdf
More Affordable Childcare (2013) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/21267
1/More_Affordable_Childcare.pdf
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KEY DECISION: no
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1. Early Education and Childcare Background
1.1 The 3 and 4 Year Old Early Education and Childcare funding was introduced in 2004 following a National report into the effective provision of Pre-School
Education commissioned by Government that made clear links between the quality of early learning experiences on long term outcomes for children, particularly vulnerable children. Making it a legal entitlement for all 3 and 4 year olds across the country to access up to 12.5 hours of early education and childcare per week.
1.2 In March 2007 the DfE launched a consultation on School, Early Years and
14-16 funding. The consultation document detailed the government
’ s
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commitment to extending the free entitlement to 15 hours
’
free provision that could be taken more flexibly. The different funding methodologies for maintained schools and PVI providers posed a challenge for the funding the flexible provision in a consistent and fair manner.
1.3 The introduction of an Early Years Single Funding Formula (EYSFF) aimed to ensure that funding of PVI settings more closely resembled that of maintained schools. The EYSFF was implemented in April 2011.
1.4 The school funding formula changed significantly in 2013/14 in light of
Governments School Funding Reforms. Even though the EYSFF was not part of these reforms, it was felt that at an appropriate time a review of the EYSFF would be prudent, with a view to implement any changes in April 2015.
1.5 The principle outcome of the Early Education and Childcare is for children to take up high quality early education, regardless of their parents
’
ability to pay
–
benefiting their social, physical and mental development and helping them prepare for school. Evidence shows that regular good quality early education has lasting benefits for all children.
1.6 The Childcare Act 2006 placed a statutory duty on all Local Authorities to provide sufficient childcare places to meet the needs of working parents, the 3 and 4 Year Old Early Education and Childcare funding is one of the ways this statutory duty is met.
1.7 The 3 and 4 Year Old Early Education and Childcare funding can be taken up at nursery provision within a school or at an Ofsted registered childcare provider to support parental choice.
1.8 The Early Education and Childcare Statutory Guidance for Local Authorities
(Sept 2014), sets out the requirements that early years providers must meet in order to deliver the Early Education and Childcare funding.
1.9 The DfE suggest that the Early Years Single Funding Formula become more standardised, with a minimum number of supplements added to base rates and this is reflected in the revised
‘
Early Education and Childcare Statutory
Guidance for Local Authorities (September 2014).
2. Financial Context
2.1 The funding to support the delivery of the free entitlement for 3 and 4 year olds comes from the Dedicated Schools Grant.
2.2 The Early Years Single Funding Formula is currently applied to the 15 hours
Early Years Education and Childcare Funding for 3 and 4 year olds.
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2.3 In 2014/15 the budget for the Early Education and Childcare Funding is currently predicting an under spend which can be utilised to fund any changes to the Early Years Single Funding Formula.
3.
The Early Years Single Funding Formula
3.1 The objective of the Early Years Single Funding Formula was to arrive at a base rate that covered the cost of delivering the free entitlement.
3.2 It became statutory for all Local Authorities to have developed and applied an
Early Years Single Funding Formula in September 2010.
3.3 The current rates for the Early Years Single Funding Formula were last reviewed in September 2011
3.4 The current Early Years Single Funding Formula includes an hourly rate to cover the cost of delivery plus enhancements to support quality and deprivation. It is mandatory for all Local Authorities to apply an enhancement in additional to the base rate to support vulnerable children living in areas of deprivation.
3.5 The consultation process to date has included a review of the base rates and enhancements to ensure that they covers cost of delivery and support quality provision and meet the needs of vulnerable children.
4. Review Process
4.1
The review of the EYSFF was split into two broad areas, namely the cost analysis and a comparison across Greater Manchester and the proposed formula consultation.
4.2 A cost analysis exercise with Private, Voluntary and Independent settings has been undertaken to analyse the cost of delivery for 3 and 4 year olds in different sectors (Private Day Nurseries, Pre-School/Playgroups, Childminders,
Independent Schools, and Local Authority Nurseries).
4.3 The aim of the Cost Analysis exercise was to establish whether current levels of funding provided through the EYSFF are sufficient to meet the overall costs incurred by providers to deliver the Free Entitlement for 3 and 4 year olds. Early
Years providers were asked to voluntary complete an online questionnaire.
4.4 An analysis of Consistent Financial Reporting (CFR) data has taken place to look at the running costs of early year’s provision in individual schools.
4.5 Comparisons have been made with our Greater Manchester neighbouring authorities in order to review the base rates for the different sectors and to review the supplements to determine the relevance.
4.6 The analysis process undertaken arrived at the following models set out below
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4.7 Out of the 9 Greater Manchester Local Authorities only two authority offer a different rate for Pre-School/Playgroups, so therefore we have proposed to have one base rate for PVI’s excluding Childminders.
4.8 Out of the 9 Greater Manchester Local Authorities only 2 have supplements for qualifications and therefore to bring Salford EYFSS in line with GM we have proposed to remove this supplement in the Early Years Single Funding
Formula.
5. Future Financial Context
Model A
Model B
Model C
2014/15 Cost 2015/16 Cost Difference
£9,406,211 £10,459,009 £1,052,798
Comments
Not financially viable
£9,406,211
£9,406,211
£11,231,966
£9,857,162
£1,825,755
Not financially viable
£450,950 Financially viable
5.1 It was recommended that we carry out a consultation implementation of Model
C EYSFF at a total cost of £450,950
6. Consultation Process
6.1 We commenced an online consultation with all Early Years provision in the maintained and private sector on 16 th January 2015 until the 30 th January
2015 on the recommended model for the EYSFF implementation in April
2015.
6.2 The consultation process included;
School Nursery Classes

Survey monkey

Email with Consultation Report Summary
Private, Voluntary and Independent settings

Survey monkey

Email with Consultation Report Summary
6.3 Private Voluntary and Independent Engagement
14 th October 2014 - A cost analysis survey was sent out to Private Day
Nurseries, Pre-School/Playgroups, Independent Schools and Childminders to look at the cost of delivery for 3 and 4 year olds.
24 th October 2014 – Collated information received from the cost analysis exercise.
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16 th January 2015 - Consultation email with EYSFFF report summary and link to the on-line consultation survey was sent out to all Private, Voluntary and Independent settings to consult on the proposed Early Years Single
Funded Formula model.
30 th January 2015
– Consultation closed
6.4 School Engagement
21 st November 2015
– An analysis of Consistent Financial Reporting (CFR) data took place to look at the running costs of early years provision in individual schools.
21 st November 2014
– Collated information received from the CFR
16 th January 2015 - Consultation email with EYSFFF report summary and link to the on-line consultation survey was sent out to all maintained Primary
Schools.
30 th January 2015
– Consultation closed
7. Key Messages from the Consultation
7.1 87 responses have been received from the on-line consultation for the
EYSFF.
7.2 21 Primary Schools have taken part in the consultation on the proposed changes to the EYSFF.
7.3 66 early years settings from the private, voluntary and independent sector have taken part in the consultation on the proposed changes to the EYSFF.
7.4 58.6% of respondents agree that Early Years settings, childminders and schools should receive different base rates.
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7.5 55.2% of the respondents agree that the Graduate Leader supplement should be removed from the Early Years Single Funded Formula.
7.6 63.2% agree that an increase in the base rate would be a better option to the
Graduate Leader supplement.
7.7 90.8% of the respondents agree that Quality should be awarded, however the majority of respondents believe this should not solely
7.8 All consultation feedback can be found in Appendix 1 of this report
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8. Recommendations
8.1 Schools Forum are asked to note that the quality supplement not solely be judged on Ofsted grade but include quality improvement, such as, SLW
Quality Improvement and SPA Quality Improvement for those settings who are judged as requires improvement by Ofsted.
8.2 Schools Forum are asked to note that the EYSFF Delivery Model C can be implemented from April 2015 for the delivery of the 3 and 4 Year Old
Funding.
8.3 Model C
Early Years Provision
Early Settings
Childminders
Maintained Schools
Base Rate
£3.38
£3.15
£3.55
Supplements
Quality – Ofsted Inspection OR Engaged in a Quality Improvement
Plan/Framework
£0.10
Deprivation £0.10 - £0.22
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KEY COUNCIL POLICIES:
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ASSESSMENT OF RISK: MEDIUM
The Early Years Single Funding Formula was introduced to ensure that there was a fair and transparent process for determining the hourly rate paid to childcare providers to deliver the free entitlement for 3 and 4 year olds. The risk of not reviewing the Early Years Single Funding Formula is that the current base rate does not meet the costs of delivery and this result in insufficient childcare to meet the needs of working parents.
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COMMUNITY IMPACT ASSESSMENT : The delivery of the 3 and 4 year old entitlement supports all children to start life well regardless of their circumstances.
Access to quality childcare is one of the key routes out of poverty. Any changes to the current levels of funding need to take into account the impact on vulnerable children so that resources can be targeted appropriately to support better life chances.
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___________________________________________________________________
SOURCE OF FUNDING: The funding to support the delivery of the free entitlement for 3 and 4 Year olds comes from the Dedicated Schools Grand (DSG).
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LEGAL IMPLICATIONS:
Supplied by: Nicky Smith, Solicitor – tel. 219 6315
Local authorities are required by statute to fund early education places in all sectors using a locally-determined, transparent formula, known as the early years single funding formula. This should be made up of a single base rate for all providers or a number of base rates differentiated by type of provider. The formula must include a deprivation supplement and can include a supplement to support quality of provision.
The proposed formula includes a supplement based on the Ofsted grade, as required by the DfE guidance, as well as an acknowledgment of those settings which have engaged in a quality improvement plan.
The School and Early Years Finance (England) Regulations 2012 require authorities to consult their schools forum, school maintained by them, and relevant early years providers in relation to the factors and criteria taken into account, and the methods and rules adopted.
The Council has carried out a costs analysis through completion of an online questionnaire with all private, voluntary and independent funding providers to gather information on the cost of delivery for 3 and 4 year olds. It has also carried out an analysis to look at the running costs of early years provision in individual schools.
This has been followed by a consultation process which has been undertaken with all early years settings, including all maintained primary schools.
It is important that proper consultation is carried out before a decision is made to ch ange the formula. There must be a “fair” consultation exercise – it must take place when the proposal is still at a formative stage; sufficient reasons for the proposal must be put forward to allow for intelligent consideration and response; adequate time must be given for that consideration and response; and responses must be conscientiously taken into account. In this case the consultation led to 87 responses, which have been summarised in the report. This, together with the costs analysis prior to the consultation, would seem to suggest that sufficient consultation and consideration of the responses has been carried out by the Council, although there is obviously always a risk of challenge to consultation, particularly where, as in this case, there is no prescribed consultation period.
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___________________________________________________________________
FINANCIAL IMPLICATIONS: Alex Archer, Finance Officer - 0161 778 0498
Of the three models proposed, ‘Model C’ was the only one that was financially viable, with a projected future cost of £450,950. This will be funded by the additional funding received in 2014/15 due to increased pupil numbers.
The estimates for the cost of each model in this report have been based on 2014/15 pupil numbers. Should there be any increase in pupil numbers, the change will not impact on the cost of the model, as additional funding will be awarded by the DfE.
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OTHER DIRECTORATES CONSULTED: Customer and Support Services
Directorate
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CONTACT OFFICER: Head of Starting Life Well Service – Rebecca Bibby 0161 778
0318
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WARD(S) TO WHICH REPORT RELATE(S): All
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Appendices
Appendix 1
– Consultation Results
EYSFF Consultation results on Model C - Jan 15.xls
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