The Government says it is committed to a more equitable and transparent system for funding the free early years entitlement. A table on the DCSF website powerfully illustrates the case for levelling the playing field between the private, voluntary and independent (PVI) and the maintained sectors.
But the table, which shows that most PVI providers receive much less per pupil, reveals such a yawning gap in some councils that it is bound to fuel scepticism over whether a single formula covering all sectors can be reached by 2010-2011.
Purnima Tanuku, chief executive of the National Day Nurseries Association, says, 'The table shows the disparity not just between the PVI and maintained sectors, but across local authorities. It is almost a postcode lottery, depending on where you live.'
Westminster City Council has the largest difference between the sectors. According to the local authority benchmarking tables for 2006-07, it pays PVI providers £1,625 per year per child, while the maintained sector receives £4,322.
The council's director of children's commissioning Mike Potter acknowledges the 'wide variation in funding' and says it is partly historical and due to the way the maintained nurseries are formula-funded as part of schools.
He adds that part-time places in the maintained sector are funded at 75 per cent, even if a child only attends for 50 per cent of the time, and schools are funded for places regardless of whether they are actually taken up.
The accuracy of the DCSF statistics must also be questioned. Darrell King, who chairs the Kent PVI providers association and has been a leading campaigner for a better deal for the sector, was surprised to see that the table showed the county's PVI providers better off, at £1,562 a year per child, than the maintained sector, which allegedly receives just £1,307.
Last year Ms King was informed by a leading council official that, in fact, the PVI sector received £3.44 an hour per child - £1 less than the maintained sector - and that to bridge the gap would cost the county £7.8m.
Directorate finance manager at Kent Count Council, Richard Hallett, confirms this and concedes, 'Unfortunately the figures on the website are misleading.'
He says that a recent survey of the county's 740 PVI providers as part of a cost analysis process brought responses from more than 400 of them and that after 'whittling them down' to around 200, which the council felt 'represented the average', the county concluded that costs in the voluntary sector were £3.48 an hour and £3.06 in the private sector. But Mr Hallett says this does not take into account a provider's need to make a profit.
He argues that the disparity with the maintained sector is understandable because it has certain unavoidable costs, including local government superannuation and the employment of a qualified teacher.
The relatively large volume of replies from providers in Kent contrasts with what Purnima Tanuku says has been 'a very low response' in most areas, largely due to the complexity of the cost analysis form, 'which some providers said they needed an accountant to unravel'.
Counting costs
The NDNA is currently working with some local authorities and providers to develop a costing template so that nursery owners and managers do not have the daunting task of filling in a complicated form.
In East Sussex, Jane Spice, senior early years education entitlement officer, says the authority is pleased with 'the exceptional piece of work' by many in the PVI sector in participating in the cost analysis. But she too believes that it is hard, particularly for voluntary sector providers, to pick out the right data. The council is working with an IT consultant to develop a CD-Rom to assist them.
Midlands nursery owner Tricia Wellings has facilities in four local authorities, each paying different levels of nursery education funding. She has taken part in the cost analysis process and says it has been difficult to establish how she could include head office costs which she incurs.
In Wiltshire, forums attracted more than 100 PVI providers to discuss issues around the cost of delivery. Childcare manager Sarah Clover says that initial analysis showed the cost to the PVI sector of delivering the free entitlement was £3.33 per hour, while providers received £3.27. A similar cost analysis will soon be undertaken in the maintained sector.
Ms Clover says, 'Recommendations from the new early years reference group included further analysis of the data with comparisons, and then to determine a way forward for the whole sector. Providers commented on higher costs, including wage rises over the last few years. From the analysis it was evident that fluctuations in occupancy also significantly affect the cost of delivery.'
Having done a cost analysis, the next stage involves authorities and providers working towards the introduction of a common, single pupil count by 2009-2010 before the development of a single formula. Currently, most PVI providers are paid according to the number of children attending free nursery sessions, while in most authorities the maintained sector gets block funding for a year regardless of whether a place is filled.
Single formula
Mike Potter says that ensuring proper PVI representation on school forums - the bodies that distribute the funding - is an important step on the road to a single formula. But he warns, 'We need to move towards a single formula in a phased way, because if we are going to move from a position of significant difference to a common formula across sectors, then the last thing we want to do is jeopardise existing provision.'
Richard Hallett says that in Kent a sub-group of the school's forum will look at ways of developing a single formula - a task he admits will be 'quite challenging'.
Hampshire nursery owner Shaunagh de Boinville says the Government will not achieve a workable and fair single formula and argues that the cost analysis, which she took part in, is flawed, as it does not include 'a single question about quality'.
She receives £4 an hour, 60p of it for her participation in a pathfinder pilot for extending the entitlement to 15 hours a week. But she says that the nursery education funding covers just half the cost of providing the sessions. 'My parents are prepared to pay the shortfall, which the Government is not prepared to pay, but the Government won't let them,' she adds.
Her Children's House nursery at the Grantham Farm Montessori school is located in a converted barn, with high heating and general running costs.
'I am not prepared to compromise on quality,' she says, insisting that this would be the implication of the Government's call for providers to revisit their business plans and find savings.
She argues that the Government's approach will mean providers like her, who care for some children from deprived backgrounds, will not be able to accommodate them in future and will only be able to afford to take children with rich parents. 'At least 30 per cent or more of my clients would not be able to afford to come here,' she adds.
Exasperated by the Govermment's stance on funding, Ms de Boinville decided to follow the lead of Kent providers and was instrumental in setting up the Association of PVI Providers in Hampshire and is now its joint chair. She says her association is seriously considering opting out of providing free nursery education.
It is clear that while there may be a consensus among providers and local authorities about the need to reach a fair mechanism for the distribution of early years funding, the road towards a single formula covering all sectors is going to be rocky.
MORE INFORMATION
The table showing what the PVI and maintained sectors receive for early years funding can be found at: http://www.dfes.gov.uk/localauthorities/section52/subPage.cfm?action=sec tion52.default&ID=87.
