Agenda item

Claire White presented the report which examined the Early Years Formula for 2016/17.

In setting the 2015/16 early years block budget, it was recognised that the in-year estimate of funding (through the early years Dedicated Schools Grant (DSG)) did not cover the estimated payments through the early years single funding formula (EYSFF) for three and four year olds. In 2015/16 this was being covered by a one off carry forward of unspent two year old funding in 2014/15, as agreed by the Schools’ Forum.

Moving forward, the current formula rates for the EYSFF would not be sustainable if the DSG rate remained the same. The following table demonstrated the net estimated position for 2015/16 (without the carry forward being applied):

If all things remained equal (i.e. DSG funding rates, hours of provision, quality of provision, formula rates) there would be approximately a £500k shortfall in 2016/17, and it was therefore assumed at this stage that this is the level of saving that would need to be found.

The Early Years Steering Group had met twice since April, and considered what options were available in order to bring the cost down by approximately £500k.

Four options had been discussed as follows:

1)    Removing all quality rates and increasing the base rates up to the level of funding available

2)    Reducing all quality rates by the same percentage down to the level of funding available

3)    Replace the current (four) quality rates with two new simplified quality rates, with the total funding being paid through quality rates reduced down to the level of total funding available.

4)    Replace all base and quality rates with just one hourly rate for all providers (as per two year old funding). The rate will be similar to the unit of funding received through the DSG.

The Group had also looked at benchmarking information from the authority’s statistical neighbours and other Berkshire authorities, comparing West Berkshire’s rates and methodologies.

Options 1 and 4 had been ruled out, mainly because through these options there would be some providers that had a rate increase, and it was felt that all providers should take a share of the cut. It was also felt that quality of provision should still feature in the funding rates.

Once the Group had more information regarding the budget forecast for the current year and the Government’s future intentions for funding of early years (probably following the spending review), further work would be carried out on the formula, and a proposal would be brought the Schools’ Forum.

Once a proposal was agreed, providers would be sent this information including an exemplification for their own setting.

Avril Allenby confirmed that no information had been provided by the government in relation to the proposed 30 hours free childcare for some households or the feedback from the pilot.

Brian Jenkins stated that this matter would be a ‘thorny subject’ for Early Years PVI Providers as nurseries tended to be small and there would be a great impact. If the hourly rate charged was above the hourly rate received from the government, the nursery would be making a loss and some small nurseries might go out of business. This would be exacerbated if the number of free hors of childcare was increased to 30 hours. It was a difficult subject and he did not anticipate a high turnout for responses to the pilot.

John Tyzack asked if the timescales were known; Avril Allenby replied that the local authority would have to continue to pursue options to reduce the shortfall and present proposals to the Schools Forum in April 2016. Brian Jenkins advised that ‘an announcement’ was anticipated from the government in the Autumn of 2015.

David Ramsden noted that options 1 and 4 had been ruled out by the Steering Group however explained that this did not mean the Schools Forum could not decide to take one of these options. He supported the next steps as laid out in paragraph 3.1, 3.2 and 3.3 of the report and agreed that the Steering Group be given the opportunity to do what they could to mitigate the impact of the shortfall. David Ramsden felt that Primary and Secondary Schools had been dealing with such a crisis themselves over a number of years and there had been a huge impact on schools and children.

ACTION: the report be noted and a further update to return to the Schools Forum on 7 December 2015.