Briefing Paper on the 2 Year Old Expansion Programme
Tri Borough Approach
1. Background
1.1 In December 2011, the DfE reiterated its commitment to the delivery of the
2year old offer and advised that the initial intention to deliver to 20% of all
2yr olds (September 2013) has been increased to 40% of all 2yr olds
(September 2014). Free early education will therefore become a statutory
entitlement for eligible two year olds from 1 September 2013, with each
local authority having a duty to secure provision. Eligibility criteria are set
out in The Local Authority (Duty to Secure Early Years Provision Free of
Charge) Regulations 2012 (SI 2012/2488), made under Section 7 of the
Childcare Act 2006 as amended by Section 1 of the Education Act 2011.
1.2 Some 130,000 children in England, around 20% of two year olds, are
expected to receive free early education from September 2013. The
programme will be extended from September 2014 to include around
260,000 children, some 40% of two year olds.
1.3 The government is investing £525m revenue funding in 2013/14 to meet
the 20% target, along with £100m capital allocation to support the delivery
in 2012/13.
1.4 Access to this targeted support through providers, rated good or
outstanding, will aid children’s school readiness through:
 Increasing learning skills, especially in relation to the three prime areas
of the EYFS – physical development, communication and language
and personal, social and emotional development.
 Early identification of additional needs and access to necessary
support
 Children beginning to understand routines and boundaries
 Consistency of care and learning through qualified practitioners
1.5 From September 2013 eligible children will include:


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Around 20% of two year olds in England
Children whose families meet the earnings and benefit criteria also
used for free school meals
Children who are looked after
Any others, at the discretion of the LA
1.6 The DfE have recently consulted on the new eligibility criteria for the
second phase from September 2014 whereby proposals seek to:



To reach around 40% of two year olds
To include children in the first phase (the 20%)
To retain the primary focus on economic disadvantage
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



Add more low-income working families( earning up to £16,190 per
year)
Add children with high-level special educational needs or disabilities
Add children who have been adopted from care
Retain the discretion of LA’s to include other children
The consultation for the proposed criteria for the 40% target ended on 15
October 2012, and the Government expects to publish an analysis and
conclusion in early 2013.
1.7 From 2013-14 revenue local authority allocations for two year old free
education will, alongside funding for three and four year olds, form part of
the notional Early Years block within the reformed DSG.
2. Current picture and place targets for 13/14
2.1 Across the three boroughs there are currently 435 places available within
the 2 year old programme. Each place delivers between 10-15 hours of
early education per week over a 38 week period, at a rate of £6 per hour
for participating providers. The funding per hour remains at the rate set
by the DfE when the 2 year old pilot was rolled out in November 2009.
2.2 In November 2012 the DfE released both the funding allocations in the
DSG for the 2 year old programme for 13/14 and the estimated number of
eligible families residing in each borough as of January 2013, which are
detailed in Tables 1 and 2.
2.3 It is estimated that there are 1547 eligible families across the three
boroughs but DfE impact assessments estimate that, at a national level,
take up might be up to 80% of eligible children and LAs should use this as
a planning assumption. Therefore it is estimated that, on top of the current
435 places, a further 802 places need to be created by September 13.
Table 1: Eligible 2 year old figures 2013 – 2014
LA
No. of places
available
from January
13
Total no. of
eligible
families
(January 13)
LBHF
RBKC
WCC
TOTAL
108
77
250
435
585
309
653
1547
Total places
required for
September 13
(based on 80%
take up)*
468
247
522
1237
Total
additional
places
required
360
170
272
802
3. Finance
3.1 Table 2 on the following page shows the allocations within the DSG for
13/14. Local authority allocations have been calculated using a formula to
divide the funding available between local authorities, based on an
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estimate of the number of eligible two years olds likely to receive provision
in each local authority.
3.2 The formula estimates the number of eligible children using free school
meal data (from the School Census) for four to six year olds as a proxy,
multiplied against population estimates for the number of two year olds in
each local authority in September 2013. The formula then takes account of
different costs in different local areas by using an area cost adjustment
(ACA).
3.3 The statutory place element will fund the 570 hour entitlement per eligible
child. Although the requirement is not to meet the 20% target until
September 13, the funding is available from April to allow capacity building
where possible. The trajectory building allocation is to allow LAs to start to
build capacity to the 40% target prior to September 14.
Table 2: 2 year old programme allocations within DSG for 13/14
LA
2013/14 Revenue Allocations
Statutory Place
Trajectory
Funding
Building
Allocation
LBHF
£2,027,028
£795,756
RBKC
£1,068,789
£419,578
WCC
£2,262,519
£888,204
TOTAL
£5,358,336
£2,103,538
TOTAL
2012-13
Capital
Allocations
£528,547
£278,687
£589,951
£1,397,185
3.4 Although LAs are advised to plan for up to 80% take up, the allocation is
based on the total eligible families and equates to an hourly rate of £6.07
(nationally this rate averages to £5.09). Moving to participation based
funding for two year olds is not anticipated before 2015.
3.5 Local authorities will be required from April 2013 to fund two year old
places through an Early Years Single Funding Formula (EYSFF). This
requirement will be contained in the Schools and Early Years Finance
Regulations 2013. Local authorities should work with and consult
providers to create their own EYSFF for two year old places, in a similar
way to current arrangements for three and four year olds.
3.6 The National Audit Office report ‘Delivering the free entitlement to
education for three and four year olds’ (February 2012) highlighted the
complexity of some local formulae. Local authorities are, therefore,
strongly encouraged to fund providers on the basis of a flat hourly rate for
two year old places with no additional supplements. Following consultation
the Government has decided against introducing, through the Finance
Regulations, a mandatory quality supplement for providers of two year old
early education.
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3.7 The funding allocated contains sufficient flexibility to provide additional
support for two year olds with additional educational needs and Special
Educational Needs. Funding included in the High Needs Block of the DSG
may also be used to support two year olds with additional needs. Local
authorities are encouraged to be clear with providers on the additional
resource available to meet the needs of these children.
3.8 From 2013-14 local authorities will be required to submit to the Department
details of the funding rates they pay providers for two, three and four year
old places. This information will be collected through the new early years
proforma as part of the Section 251 financial returns. Once collected, this
information will be published on the Department’s website and will enable
providers and parents to compare funding rates in different areas. We will
also update and expand the early years benchmarking information we
publish using the information from the proforma.
4. Local Implementation of the 2 year old programme
4.1 A Tri-Borough Steering Group has been established to oversee the
delivery of the expansion programme and will report to the Tri-Borough
Senior Leadership Team and (for information) Schools Forums. The group
will have oversight of building of capacity, the general demand for places
and waiting lists, referral systems and integrated offer, budget
management and monitoring and impacts and outcomes of the
placements.
4.2 The Schools Forums Regulations (2012) state that one or more persons
must be appointed to represent early years providers. Given the wide
array of PVI providers required to enable each borough to meet the 2 year
old programme expansion, each Schools Forum may wish to review its
PVI representation. Alternatively, each Schools Forum may wish to set up
a 2 year old programme sub-group, opened up to a wider array of PVI
providers to oversee how funding is used or delegate this responsibility to
the Tri-Borough Steering Group who will consult with PVI providers as the
expansion progresses and provide regular updates to each Schools
Forum.
5. Other issues
5.1 There are number of issues that will be specific to the individual boroughs,
especially with regards the historical delivery, procedures and early years
provider market. However, there are also a number of over arching
challenges that will apply to all three boroughs that the steering group will
be addressing in the coming months. Some will impact of DSG funding,
especially for two and three year olds, a list of which follow.
5.2 Hourly rate: A funding rate that matches the importance of the offer and
secures a long-term commitment from the early years providers need to be
agreed. This will need to include a sustainable unit cost and associated
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staffing capacity. Feedback from pilot providers is that many children
present with significant additional problems and a unit cost of £6.07 per
hour is not sufficient to cover the cost of delivery. A recent report by
Daycare Trust, having surveyed 30 London councils, found that higher
levels of poverty, rising birth rates, migration and higher staff and property
costs mean that it is significantly more costly for London providers to
deliver the scheme than elsewhere in the country.
As part of a range of themed support commissioned through the DfE for
the expansion of the two year old programme, LAs will shortly be able to
distribute unit costing templates to participating and future providers to
ascertain the true cost of delivery for two year old places. This will provide
good evidence that the allotted DSG funding may need to be used in a
more flexible way to fund providers at a rate higher than £6.07.
5.3 Additional Costs: Feedback from the pilot revealed that many of the twoyear-olds in the pilot had additional needs, such as complex family
problems, emotional and behavioural issues, and delayed speech and
language. This all impacts on staffing and resources.
5.4 Variation in hourly rate: In some boroughs there are issues with the
transition from the 2 year old programme place to a 3 & 4 year old
entitlement place. Children often need to remain with their 2 year old early
years provider for up to 2 additional terms until they can access a place at
a maintained sector nursery school/class but the hourly funding rates drop
once a child moves from a 2 year old funded place to a 3 year old funded
place. In London, a high proportion of PVI providers in receipt of the 3 & 4
year old offer need to charge parents for additional hours and/or services
(in addition to Early Years Foundation Stage requirements) in order to
remain sustainable.
As all eligible parents must currently be in receipt of benefits to access a 2
year old programme place, they are unlikely to be able to afford to pay the
difference themselves and may withdraw their children from early years
education until they can access a maintained place. If forced to withdraw
their child, the benefits of accessing an early education place for these
children would be diminished and would impact on their school readiness.
Some providers already participating in the 2 year old programme
subsidise these places after a child turns three from other financial sources
to ensure the parent doesn’t have to withdraw their child but this is likely to
be unsustainable once the programme expands.
5.5 Impact of Housing Benefit Changes: From April 2013, the Government
is introducing a cap on the total amount of benefit that working-age people
can receive. The benefit cap will mean that working age people can't
receive more than a set amount in benefits, even if their full entitlement
would otherwise be higher. The cap will be set at the average net earned
income of working households. This is estimated currently to be £350 per
week for a single adult with no children and £500 per week for a couple or
lone parent, regardless of the number of children they have. This is likely
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to result in some eligible families moving out of the boroughs to more
affordable areas and therefore impacts on the projected number of places
we will need to create.
5.6 Reducing Staff ratios: A recent report from Elizabeth Truss, Education
Minister, said staffing ratios in nurseries should be reduced to cut red tape
and costs. Her proposal is being considered by the Childcare
Commission, which has been charged by the government with finding
ways to make childcare more affordable and reduce any unnecessary
regulatory burdens on childcare providers. This could, in effect, reduce the
hourly rate to fund providers but there is concern from early years
professionals and providers that this will impact on the quality of the
provision.
5.7 Schools Delivering the 2 year old programme: Schools may wish to
participate in the programme, especially if the move to part time nursery
places creates capacity to do so. Ofsted have stated that any schools
wishing to register to deliver 2 year old programme places must allow at
least 26 weeks prior to delivering places for the registration process to be
completed, therefore schools would need to start the registration process
by the end of February 13 for places delivered from September 13.
Alternatively, schools may wish to deliver places from September 14
themselves or work in partnership with a voluntary sector provider to
deliver places on school premises.
6. Recommendations
6.1 The indicated level of funding for the 2 Two Year Old Programme
Expansion in Westminster for 13/14 is revenue funding £3,150,723 and
12/13 capital funding of £589,951. Agreement on allocation of funds is
subject to a costed implementation plan to be presented at a future
Schools Forum.
6.2 The Schools Forum reviews its PVI representation.
6.3 The Schools Forum sets up a sub-group to oversee the funding of the Two
Year Old Programme or delegates this responsibility to the Tri-Borough
Steering Group.
Margaret Murphy
Lead Commissioner (Children and Early Years)
Jacqueline Devine
Tri-Borough Two Year Old Programme Manager
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