Agenda item

The Forum considered a report (Agenda Item 8) which provided a briefing on the early years funding consultation and outlined implications for West Berkshire providers if the proposals set out in the consultation were implemented.

All local authorities were currently funded at different rates for three and four year olds, ranging from £3,080 per (FTE) child in Solihull to £8,713 per (FTE) child in Camden. West Berkshire received £3,911. The funding received was based on the number of children recorded in the January census week (5/12 from the previous January, 7/12 from the current year January). The final allocation was confirmed and adjustment made in the June following the end of the financial year.

Local authorities (LAs) distributed the funding to providers based on their own local formula, using a wide variety of methodologies. It was largely paid as an hourly rate according to the actual number of hours of provision. Thus the funding received (based on a proxy number in January) did not match the funding distributed and some LAs “profited”, others lost.

The Government proposed that the funding to be allocated to LAs would be based on a new national formula with the Government view that this would be more equitable. There would be a universal base rate plus an additional needs rate which would be added together and multiplied by an area cost adjustment. The methodology used to distribute funding to providers would be prescribed by the Government with little local flexibility.

The funding formula for two year olds would not change, and LAs could continue to use their existing method to allocate to providers. Additional funding would be added and distributed through the existing formula.

The consultation also contained proposals for meeting the needs of disabled children through a disability access fund, and for local authorities to establish an inclusion fund to support children with special educational needs. Early year’s pupil premium grant would continue to be funded separately. 

What the consultation failed to address was that due to the mismatch between funding received (based on children counted in January census week) and the funding distributed (based on actual number of hours of provision), the hourly funding rate paid to providers might be significantly different to the funding rate received, and would fluctuate year on year. It continued to be an unfair system where some LAs could receive significantly more funding than they needed, and others significantly less.

Claire White concluded that the changes were not a good or fair deal for West Berkshire and felt that the data was flawed. The funding rate proposed for West Berkshire was below average, when it should be well above the average. Many providers would see a reduction in their funding, some significantly. In the last few years the funding rate the LA used for providers had been maintained due to using unspent two year old funding; the increase in the LA funding rate proposed would just plug this gap. When the Government stated that most providers would see an increase in the funding they received this was based on comparing proposed LA funding rates to current LA funding rates and not what providers were actually currently receiving.

The formula West Berkshire currently used to distribute funding to providers would need to completely change, using one base rate instead of five, meaning higher cost provision would be funded at the same rate as lower cost providers. Quality rates would also be removed and this would again impact on provision with a likely use of unqualified/lower qualified staff in order to reduce costs.

The Council had responded to the consultation, which closed on 22 September 2016, highlighting concerns and providers had been encouraged to do likewise. Significant issues would be created if the allocation was not increased with a high risk that many providers would be unable to afford to continue to provide the free entitlement, and a risk that there would not be a sufficient number of places, particularly for the 30 hour provision for those families that qualified.

Once the final arrangements were announced by Government, the LA would need to consult with all providers on its proposals for implementing changes. The new formula would need to be implemented within two years.

Suzanne Taylor highlighted the concern that a reduced funding rate would be coupled with a requirement to provide additional free sessions.

Brian Jenkins commented that service improvements could best be achieved by qualified members of staff. This was less so the case with unqualified staff. He added that the potential financial impact (if the allocation was not adjusted) would be dramatic, with the viability of nurseries and provision for children of real concern.

Brian Jenkins queried when it was anticipated that final arrangements would be announced by Government. Claire White responded that the Government had provided no indication of a timeframe. Bruce Steiner was hopeful that the Council’s lobbying would prove effective.

Reverend Mark Bennett queried how the area cost adjustment had been formed. Claire White advised that no explanation had been provided of this.

Reverend Bennett then queried whether statutory duties in terms of providing sufficient places could be adhered to based on current funding information. Annette Yellen explained that local authorities had a statutory duty to provide places, but this would be at risk if the number of providers reduced and it was not possible to provide the additional free hours required. Local factors also needed to be taken into account, these included children/families eligible for free school meals and those in receipt of Disability Living Allowance.

Reverend Bennett asked how places would be covered/funded if sufficient provision was not available. Claire White explained that places would need to be funded from the DSG.

Paul Dick noted that a Government priority was to increase provision and provide extra funding for two year olds and queried efforts made to grow places for this age group. Annette Yellen advised that West Berkshire’s provision for two year olds had increased and was above the national average. This did however remain as a high priority.

Graham Spellman queried how places would be covered if there were an insufficient number of providers/places. Rachael Wardell commented that Central Government would likely characterise this as a market failure. Brian Jenkins responded to that Government view by stating that the market was available and the failure was one of insufficient funding. He continued that provision of early years places was a statutory requirement and if these could not be provided by the private sector then this requirement would have to be fulfilled by schools at a higher cost (due to staffing costs). It was therefore important that private provision was funded appropriately and not reduced. Funding was a major concern moving forward should the proposed rate be confirmed and it was hoped that final arrangements would be confirmed in the near future.

Keith Watts queried whether other local authorities were in a similar position to West Berkshire. Claire White explained that she was unclear on this point at the present time; however she would shortly be attending meetings with her counterparts to better understand this. Keith Watts felt that it would be useful for collaborative lobbying by providers, the Council etc. Keith also felt that it would be helpful if Local Authority Councillors could also raise concerns with Government.

Peter Hudson queried whether the Forum could make a representation on this matter. Claire White advised that the Council had already raised concerns as part of the consultation response. A Forum response could be considered post receipt of the Government’s final allocation.

RESOLVED that the report be noted.