Early Years Funding Formula Consultation

Overview

In England, Ofsted-registered early years providers are able to offer free early years education and childcare for children aged 3-4 and, in some instances, aged 2.

All parents can claim 15 hours per week now, and from September 2017 eligible working parents of 3- and 4-year-olds will be able to claim up to 30 hours per week. These entitlements are for 38 weeks per year.

Providers are paid directly for these hours by the Local Authority. From April 2017, the hourly rates paid will be worked out according to the Early Years National Funding Formula (EYNFF).

Although the new funding formula comes into effect from April 2017  LAs will be allowed some transition time to make the required changes to their local formulas and, as a result, have until 2019/20 to be fully compliant. This timeline is intended to support LAs who have significant changes to make although the DfE are encouraging all LAs to implement sooner if possible.

Why your views matter

In response to the recent Government consultation on the Early Years National Funding Formula, all Local Authorities are required to consult on how funding is distributed through the local formula for 3 and 4 years old children. These changes affect base rates and supplements for all early years providers – schools with nursery classes, maintained nursery schools, childminders and the private, voluntary and independent sector.

The full consultation on the Early Years National Funding Formula can be found by following the link below. This National Consultation has now closed but you can read the Government’s response by following this link.The outcome of our local consultation will affect your funding rates from April 2017 onwards and therefore it is important that you share your views on these proposals via our short online consultation questionnaire.

Background

In August 2016, the Department for Education (DfE) consulted on proposals to change the way they fund free childcare and early years education. The proposals included

• introducing a new early years national funding formula for 2, 3 and 4 year olds,
• changing the way local authorities fund the early years providers in their area; and
• making sure that children with special educational needs or disabilities attract the extra funding.

The DfE’s response to the EYNFF consultation was published on 1 December 2016 alongside operational guidance for the new early years national funding formula for 2, 3 and 4 year olds. Links to the relevant documents are provided below.

The confirmed hourly rates for settings will be dependent on the outcome of this consultation, and the final budget available as agreed by Schools Forum.

Key Changes

From April 2017 there are a number of new requirements on how local authorities are required to allocate funding to providers.

The main changes are:

• A minimum amount of funding to be passed through to providers – 93% in 2017/18, rising to 95% by 2019/20.
• A local universal base rate which will apply to all types of provider, to be set by local authorities by 2019/20 at the latest – but authorities are encouraged to move to these rates sooner (This means that every provider will be paid exactly the same hourly rate)
• Reforms to mandatory and discretionary supplements local authorities are able to use.
• Supplementary funding for maintained nursery schools, for the duration of this Parliament
• The introduction of a Disability Access Fun
• A requirement for authorities to establish a special educational needs inclusion fund – a SEND Inclusion fund is already well established in Warwickshire.

Implications for Warwickshire

High pass through

The new requirements mean all local authorities must pass through at least 93% of 3 and 4 year old funding received by the government to providers in 2017/18.  This will be increased to 95% from 2018/19. The retained element is to fund central services as well as to support early years sufficiency, improvement in early years and administration.

Universal base rate

All Local Authorities must ensure at least 90% of the funding passed to providers is allocated through the universal base rate. This means that a child in a PVI setting (e.g. child-minder or private or voluntary nursery or pre-school) will receive the same base rate as a child in a nursery class in a primary school when fully implemented.

Funding supplements

There will be a number of additional supplements that will be allowable and local authorities will need to decide at a local level whether they wish to include these in their formulas (based on the need and issues facing providers in their local area).

Local authorities will be able to add to the base rate with funding supplements, although these will be capped to 10% of the hourly rate and strictly limited to five areas:

• Deprivation – this is currently mandatory, and it will remain so, with local authorities still able to use their own choice of measure for allocating funding;

• Rurality/sparsity – this will give local authorities the discretion to use funding to help rural childcare settings remain sustainable;

• Flexibility – this will give local authorities the discretion to use funding to promote different types of flexibility, including growing the child-minder segment of their local childcare market or supporting the 30 Hours offer
• Quality; A quality supplement is permitted. This may be used to recognise workforce qualifications, and support system leadership (supporting high quality providers leading other providers in the local area).

Warwickshire is also proposing the adoption of a quality kite mark accreditation system to recognise good practice in SEN provision.

• English as additional language – this will give local authorities the discretion to use funding to recognise the extra cost of caring for a child with English as an additional language.

Authorities have until 2019/20 to move fully onto the new formula. However, it is expected that local authorities will be making progress well ahead of then.

Maintained nursery schools

The move to a standard hourly funding rate for providers will particularly impact maintained nursery schools. The Government has agreed to provide supplementary funding to local authorities for maintained nursery schools until the end of this Parliament (ie until the next general election), to keep their funding stable during the implementation of the EYNFF.  The DfE has provided local authorities with additional funding to ensure that funding for maintained nursery schools is kept at current levels. This funding will continue for the next 3 years.

Disability access funding

The DfE has provided additional funding of £615 per child in receipt of Disability Living Allowance (DLA). The allocation arrangements will remain broadly similar to the Early Years Pupil Premium (EYPP).

Inclusion funding

The DfE have stated that local authorities must establish inclusion funds in order to support those children with additional needs. The inclusion fund can be funded from the high needs block, early years or a combination of them both. Warwickshire already has an inclusion fund set up and is funded from the High Needs Block, not the Early Years Block.  The criteria is attached in Appendix A.

Funding Implications for Warwickshire

The Government’s indicative modelling suggests early years setting in Warwickshire will have less funding to allocate in future than currently.

We are one of the 20% of local authority areas that will see their funding rate decrease as a result of the introduction of the EYNFF. The indicative funding levels are shown in the table below. The hourly rate shows the funding given to the LA, not the rate individual providers receive.

The Government has agreed to provide supplementary funding to local authorities for maintained nursery schools until the end of this Parliament, to keep their funding stable during the implementation of the EYNFF. Indicative allocations published for the Department for Education estimate this to be £812,000 for Warwickshire. The position of maintained nursery schools beyond 2019/20 will be a decision for the new Government and is currently not known.

What happens next

This consultation has now closed.

Thank you to everyone who took the time to give us their views.