ITEM NO
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REPORT FROM THE HEAD OF SERVICE FOR STARTING LIFE WELL
___________________________________________________________________
TO THE STRATEGIC DIRECTOR FOR CHILDREN’S SERVICES
___________________________________________________________________
TITLE:
FUTURE FUNDING ARRANGEMENTS TO SUPPORT THE DELIVERY OF
THE FREE ENTITLEMENT FOR
3 AND 4 YEAR OLDS IN SALFORD.
___________________________________________________________________
RECOMMENDATION:
The introduction of the Schools Funding Reform makes it necessary for us to review
the funding arrangements for the delivery of the free entitlement for 3 and 4 year
olds.
Salford is unique in choosing to fund full time provision within our nursery school
settings, exceeding the legal entitlement of 15 hours. To sustain the current level of
provision the DfE have advised that Schools Forum needs to agree a policy that sets
out the criteria for this arrangement.
Schools Forum are asked to consider the contents of this report and confirm the
future funding arrangements for the delivery of free entitlement for 3 and 4 year olds
in all early years settings by 21 November 2012.
Schools Forum are asked to confirm their preferred option for future funding
arrangements in nursery school settings from the following:
.
1.1 Schools Forum are asked to provide a view on the future funding for 3 and 4
years olds.
Option 1
Sustain full time provision in nursery schools at a revised hourly rate that
covers cost of delivery for 3 and 4 year olds. This equates to 25 hours
exceeding the national legal entitlement of 15 hours. In this option the revised
hourly rate will be applied over the entire 25 hours.
Option 2
To introduce a targeted approach that covers cost of delivery for 3 and 4 year
olds where pupils eligible for free school meals or for children attending schools
located in high levels of deprivation are prioritised for full time provision in
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nursery schools settings. In this option all children will receive 15 hours and
some children prioritised for 25 hours.
1.2 Schools Forum are also asked for their views on:25 hours of provision continuing to extend to non Salford residents.
Nursery school places be limited to current nursery Pupil Admission Number
The revised Early Years Single Funding Formula which impacts on all settings
___________________________________________________________________
EXECUTIVE SUMMARY:
This report follows on from a report submitted to Schools Forum on 26th September
2012 that set out the current funding arrangements for the universal entitlement for 3
and 4 year olds.
The purpose of the previous report was to highlight pressures on the current budget
commitments and considers the implications of the School Funding Reform. These
are detailed within School Funding Reform: Next steps towards a fairer system
published by the Department for Education in March 2012.
Following this 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.
Consultation has also taken place on a targeted approach which would be in line
with current budget commitments
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..
___________________________________________________________________
BACKGROUND DOCUMENTS:
 Code of Practice for Local Authorities on the Delivery of Free Early Years
Provision for 3 and 4 Year Olds (Department for Education, Sept 2010)
 Online free entitlement support pack
http://www.dcsf.gov.uk/everychildmatters/earlyyears/localauthorities/lapractice/e
ntitlement/flexibleresources
 Statutory Guidance for Local Authorities on the Delivery of Free Early Education
for Three and Four Year Olds and Securing Sufficient Childcare (September
2012)
http://media.education.gov.uk/assets/files/pdf/s/statutory%20guidance.pdf
 Childcare Act 2006
 School Admissions Code of Practice School funding reform: next steps towards
a fairer system
 https://www.education.gov.uk/publications/standard/publicationDetail/Page1/DFE
-00029-2012
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___________________________________________________________________
KEY DECISION:
YES
___________________________________________________________________
1.
Background
1.1 The 3 and 4 year old entitlement was introduced in 2004 making it a legal
entitlement for all 3 and 4 year olds across the Country to be able to access up
to 12.5 hours of early learning/childcare a week.
1.2 In April 2010, the free entitlement for 3 and 4 year olds was extended nationally
from 12.5 hours a week to 15 hours, making it a legal requirement for all Local
Authorities to offer 15 hours of free early learning to all 3 and 4 year olds.
1.3 The free entitlement was introduced following a National report into the
Effective Provision of Pre School Education commissioned by the Government
in 2004 that made clear links between the quality of early learning experiences
on long term outcomes for children, particularly vulnerable children.
1.4 The lack of affordable childcare is recognised as one of the barriers to reducing
worklessness and the Government’s ambition to end child poverty. Investing in
the quality provision of childcare has been one of the National drivers for
achieving this ambition for the present and previous Government.
1.5 The principle objectives of the free entitlement for 3 and 4 year olds is to
support better outcomes for children, by providing the best start in life through
the delivery of quality childcare provision, and to enable parents and carers to
return to work and training.
1.6 The Childcare Sufficiency Act 2006 placed a statutory duty on all Local
Authorities to provide sufficient childcare to meet the needs of working parents,
the free entitlement for 3 and 4 year olds is one of the ways this statutory duty
is met.
1.7 Nationally all 3 and 4 year olds are entitled to up to 15 hours of free early
learning/childcare a week which can be accessed in either a maintained school
nursery or in a Private, Voluntary or Independent setting to support parental
choice.
1.8 The Statutory Guidance for Local Authorities on the Delivery of Free Early
Education for Three and Four Year Olds and Securing Sufficient Childcare
(Department of Education, Sept 2012) sets out the mandatory requirements
that all childcare providers, including schools, private, voluntary and
independent settings must meet in order to deliver the free entitlement.
1.9 The objective of the Code of Practice for Local Authorities on the Delivery of
Free Early Years Provision for 3 and 4 Year Olds, is to ensure that the free
entitlement is delivered in childcare settings of a quality standard, and states
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that childcare providers must have been assessed as at least ‘satisfactory’ by
Ofsted.
2.
Delivery of the free entitlement for 3 and 4 year olds in Salford
2.1 The uptake of the free entitlement for eligible 3 and 4 year olds in Salford is
96% and this is in line with the level of uptake across the Country.
2.2 100% of 4 year olds take up the free entitlement compared with a lower rate of
92% of eligible 3 year olds.
2.3
In 2011/2012, Salford had 4,198 children take up the offer of 3 and 4 year old
funding. 2,506 children were placed in maintained school nurseries and 1,692
children were placed in Private, Voluntary and Independent settings.
2.4 In private, voluntary and independent settings, the free entitlement is available
for the legal entitlement of 15 hours, whereas nursery settings at schools are
able to offer full time provision amounting to 25 hours.
2.5 The Early Years Single Funding Formula is applied to the 15 hours delivered at
nursery school settings, and the additional 10 hours is currently paid at a lower
hourly rate through the existing schools funding formula.
2.6 The Early Years Single Funding Formula is applied to the 15 hours delivered at
private, voluntary and independent settings.
3.
Financial Considerations
3.1 The funding to support the delivery of the free entitlement for 3 and 4 year olds
comes from the Dedicated Schools Grant.
3.2 The funding to support the delivery of the free entitlement for 3 and 4 year olds
at nursery settings in schools is made up of two separate amounts.
3.3 The Early Years Single Funding Formula is currently applied to the 15 hours,
but the additional 10 hours is paid at a lower rate from another element of the
Dedicated Schools Grant, this is our top up in Salford.
3.4 However, the implications of the Schools Funding Reform will mean that then
the Early Years Single Funding Formula will need to be applied to the entire 25
hours. This would put increased pressure on an already over committed budget
using the current rate.
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Projected Population Change, Greater Manchester Districts
120
100
80
2020-30
60
2015-20
40
2010-15
20
Wigan
Trafford
Tameside
Stockport
Salford
Rochdale
Oldham
Manchester
Bury
0
Bolton
Projected Population Change
(000s)
Source: ONS 2010 based sub national population projections.
District
3.6
4.
Budget based on January 2012 data
EYSFF 2012/2013 Budget
£11,708,791
Maintained School Nursery Classes
£8,105,760
Private, Voluntary & Independent settings
£3,455,823
Provision for in year changes in numbers
£147,208
The Early Years Single Funding Formula
4.1 From September 2010, the funding to support the delivery of the 3 and 4 Year
Old free entitlement was calculated using an Early Years Single Funding
Formula.
4.2 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.
4.3 It became statutory for all Local Authorities to have developed and applied an
Early Years Single Funding Formula in September 2010.
4.4 The current rates for the Early Years Single Funding Formula have not been
reviewed since September 2009 so the consultation that has taken place is
timely
4.5
The current Early Years Single Funding Formula includes an hourly rate to
cover the cost of delivery plus enhancements to support quality, deprivation
and flexibility. It is mandatory for all Local Authorities to apply a enhancement in
additional to the base rate to support quality provision vulnerable children living
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in areas of deprivation. Local Authorities were then able to apply local
enhancements to support the quality of provision within early years settings.
4.6 The consultation process 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.
4.7 With the introduction of the Schools Funding Reform the Early Years Single
Funding Formula would need to be applied across the full 25 hours and
approved by Schools Forum if the current level of provision is to be sustained.
5.
Review Process
5.1 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.
5.2 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).
5.3 Comparisons have been made with our statistical neighbours and neighbouring
authorities in order to review the base rates for the different sectors and to
review the supplements to determine the relevance.
5.4 As a result of the consultation we have arrived at an hourly rates that cover the
cost of delivery. We have also removed the flexibility enhancement and
reviewed the quality enhancement. The flexibility enhancement is currently paid
according to settings opening hours, by applying the enhancement in this way
we are not supporting the intended DfE outcome of flexible delivery to support
needs of children and parents, therefore a flexibility enhancement is not
needed.
5.5 The consultation process undertaken with nursery school settings arrived at the
figures set out below
Option
1.
(a)
Full time (25 hours) across all maintained
nursery classes with an hourly cost that
covers the cost of delivery for 3&4 year
old
Base rate - £3.27
Quality Supplement - £0.15
IDACI - £0.22 max
(dependent on children’s postcodes)
(Appendix 1)
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Estimated
Cost
2013/2014
£8,092,003
Funding
Available
2012/2013
£8,105,760
Difference
-£13,758
less
1.
(b)
Full time (25 hours) across all maintained
nursery classes with a reduce hourly cost
should the DfE not give an exemption to
the Minimum Funding Guarantee
£8,344,287
£8,105,760
£238,527
more
£6,195,017
£8,105,760
-£1,910,743
less
£8,105,760
-£610,601
less
Base rate - £3.38
Quality Supplement - £0.15
IDACI - £0.22 max
(dependent on children’s postcodes)
2.
(Appendix 2)
Targeted approach using % of eligible
Free School Meals pupils for the
additional 10 hours
Base rate - £3.27
Quality Supplement - £0.15
IDACI - £0.22 max
(dependent on children’s postcodes)
2.
(Appendix 3)
Targeted approach using IDACI by school £7,495,160
postcode for the additional 10 hours for
all children
This provides 25 hours of provision for
the schools in the most deprived areas of
Salford
Base rate - £3.27
Quality Supplement - £0.15
IDACI - £0.22 max
(dependent on children’s postcodes)
(Appendix 4)
5.6 Using the map belowall pupils living in the shaded areas live in a postcode which
is in the 60% most deprived in the country. This home post code will
automatically lead to pupils being eligible for additional 10 hours of provision.
Pupils living in the areas shaded white could be eligible if they are eligible for
Free School Meals.
Schools who have a catchment area where some/majority of pupils will only be
eligible for 15 hours of provision could introduce a charging policy of around
£40 per week
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5.7 Option 1 budget calculations are dependent on schools not increasing their
current nursery school places beyond their pupil admission number for nursery
provision.number. It is proposed that if schools increase their nursery provision
in the future the extra places should only receive 15 hours per pupil unless
Schools Forum agree otherwise.
5.8
Option 1 would also result in a difference of more than 1.5% decrease on all
school base rates and this would trigger the Minimum Funding Guarantee
(MFG). We have applied for an exemption from the Department for Education,
however if the exemption is declined the base rate would have to be raised to
£3.38. (Appendix 2).
5.9 Additional savings of £164,962 could potentially achieved if Salford only
offered the additional 10 hours of provision to Salford children, as is the case in
a neighbouring Local Authority. However savings are unlikely to be realised as
due to the rising pupil numbers in Salford these places are likely to be filled with
Salford pupils.
5.10 The consultation process undertaken with the Private, Voluntary and
Independent settings arrived at the figures set out below
Option
Part time (15 hours)
Estimated
Cost
2013/2014
£3,388,148
Funding
Available
Difference
£3,455,823
-£67,675
less
Base rate – sector specific
(Appendix 5)
Quality Supplement - £0.15
IDACI - £0.22
(Appendix 6)
6.
Consultation Process
6.1 School Nursery Classes



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26th September 2012 - Report presented to Schools Forum to consider
funding arrangements for 3 and 4 year olds, 3 options were put forward
for consideration.
17th October 2012 – Consultation report presented at Primary
Headteachers Forum.
17th October 2012 – Proposed options and consultation document
(Appendix 7) sent out to all Primary Headteachers and Chairs of
Governors

23rd October 2012 – Costings presented at Primary Headteachers
meeting and sent to all Primary Headteachers and Chairs of Governors
23rd and 24th October 2012 – Consultation briefings, presented costings
for proposed options
Consultation period ended 5th November 2012.


6.2
Private, Voluntary and Independent settings





7.
2nd August 2012 – Cost analysis sent out to Private Day Nurseries,
Pre-School/Playgroups, Independent Schools and Childminders to
consult on the base rate within the Early Years Single Funded Formula.
10th September 2012 – Collated information received for the cost
analysis.
31st October 2012 – Consultation document sent out to all Private,
Voluntary and Independent settings to consult on the Early Years
Single Funded Formula
Consultation period ended until 9th November 2012.
31st October 2012 – 9th November 2012 – costings to be presented to
individual Private, Voluntary and Independent settings on proposed
changes to the Early Years Single Funded Formula.
Consultation Key Messages
7.1 24 Primary Schools have taken part in the consultation on the proposed
changes to Nursery Class provision
7.2 91.7% of schools support option 1 to sustain full time (25 hours) in schools with
a reviewed hourly rate
7.3 Only 43.5% of schools are supportive of applying a targeted approach
7.4 13 Private, Voluntary and Independent settings took part in the consultation on
the Early Years Single Funding Formula review.
7.5 76.9% of the Private, Voluntary and Independent settings agree that an
increase in the base rate would be a better option to the flexibility supplement
within the current Early Years Single Funding Formula.
7.6 100% of the Private, Voluntary and Independent settings agree that a quality
supplement should be part of the Early Years Single Funding Formula.
7.7 92.3% of the Private, Voluntary and Independent settings think that the Early
Years Single Funding Formula should support vulnerable children and include
an IDACI supplement based on children’s postcodes.
8. Recommendations:8.1 Schools Forum are asked to provide a view on the future funding for 3 and 4
years olds.
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Option 1
Sustain full time provision in nursery schools at a revised hourly rate that
covers cost of delivery for 3 and 4 year olds. This equates to 25 hours
exceeding the national legal entitlement of 15 hours. In this option the revised
hourly rate will be applied over the entire 25 hours.
Option 2
To introduce a targeted approach that covers cost of delivery for 3 and 4 year
olds where pupils eligible for free school meals or for children attending schools
located in high levels of deprivation are prioritised for full time provision in
nursery schools settings. In this option all children will receive 15 hours and
some children prioritised for 25 hours.
8.2 Schools Forum are also asked for their views on:25 hours of provision continuing to extend to non Salford residents.
Nursery school places be limited to current nursery Pupil Admission Number
The revised Early Years Single Funding Formula which impacts on all settings
KEY COUNCIL POLICIES:
Family Poverty Strategy-Better Off in Salford
Early Intervention and Prevention Strategy
Starting Life Well Strategy
___________________________________________________________________
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.
___________________________________________________________________
EQUALITY IMPACT ASSESSMENT AND IMPLICATIONS: Once the options have
been considered a detailed analysis of Schools Forum decision will be developed,
this will include evidence from the JSNA (Joint Strategic Needs Assessment).
_______________________________________________________________________
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.
___________________________________________________________________
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: The legal entitlement for 3 and 4 year olds is 15 hours.
___________________________________________________________________
FINANCIAL IMPLICATIONS: Supplied by Paula Summersfield - Principal Group
Accountant. Funding for 3 and 4 year olds is contained within the Dedicated Schools
Grant (DSG). The cost of the current proposals has been able to be contained within
the early years funding available in the early years block for 2013-14. This is
possible due to the fact that the current places within the primary school sector are
potentially full. Should schools look to introduce additional places the costs will
exceed the current provision and result in more funding being required for the
provision of early years. It is for this reason that the Local Authority are proposing to
limit the funding of 25 hour places to the current established early years admission
numbers.
_____________________________________________ ______________________
OTHER DIRECTORATES CONSULTED:
Customer and Support Services
Directorate
___________________________________________________________________
CONTACT OFFICER: Head of Starting Life Well Service - Sarah Callaghan. Tel:
0161 778 0184.
___________________________________________________________________
WARD(S) TO WHICH REPORT RELATE(S): All
___________________________________________________________________
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