What is the Transformation Fund?
The Government has allocated 250m to the Transformation Fund to be spent between April 2006 and August 2008 to support the development of quality in early years settings. It is a separate, ring-fenced revenue funding strand within the General Sure Start Grant (GSSG). It is being introduced initially as a two-year investigation into approaches to workforce development in the early years sector and to understand better what works in order to inform future policy. What happens to the Transformation Fund after 2008 will be decided by the 2007 comprehensive spending review.
The fund will be spent on the following priorities:
* Establishing training and accreditation routes towards a new graduate-level Early Years Professional (EYP) and providing financial support for early years staff wanting to achieve this status in 2006-08
* Supporting progress towards the Government's aim that by 2015 all full daycare settings have a graduate with EYP status to lead work with children and parents. The fund will provide recruitment incentives and quality premiums for eligible full daycare providers in the private, voluntary and independent (PVI) sector. Boosting the qualifications of staff in PVI settings will help to create parity between the maintained and PVI sectors
* Training staff in PVI settings to level 3 and above
* Training staff to work with children with disabilities and those with special educational needs (SEN)
* The Children's Workforce Development Council (CWDC) is receiving 51.8m from the Transformation Fund to cover the costs of course development and financial support for EYP students working in full daycare settings, both maintained and non-maintained, and children's centres.
Who gets the recruitment incentive and how much?
* From September 2006 PVI full daycare settings which are employing graduate level (level 5 or 6 foundation degree, qualified teacher status (QTS) or full degree) professionals for the first time will be eligible for the recruitment incentive. Paid by their local authority, it is worth 3,000 in each of the next two years (3,372.30 a year and 3,565.80 for outer and inner London respectively). Settings can only claim one recruitment incentive regardless of the number of graduates they employ. Providers have to show that they continue to employ a graduate with a relevant qualification for at least two years, though this does not have to be the same individual.
The incentive is designed to make it easier for providers in the PVI sectors to recruit graduates with relevant qualifications without risking affordability to parents or sustainability of provision. The incentive - and the quality premium described below - are currently only available to full daycare settings, but the Government is planning pilots involving sessional providers who collaborate to offer full daycare provision.
How the quality premium works
Settings claiming the recruitment incentive are also eligible for the quality premium. It is worth 5,000 in each of the two years (5,620.50 in outer and 5,943 in inner London). The premium will be paid pro rata on a six-month basis to settings claiming less than the full period.
* The Government has not prescribed exactly how the premium should be spent, but at least half is expected to be used to support professional development of staff working with children and families, particularly in preparation for the Foundation Stage, supported by local authority advisers.
The rest (up to 49 per cent) should support improvements in the quality of services to children and families. This could include activities to get parents involved in their children's learning and development; buying in specialist support such as nutritional advice and support for children with additional needs; and enrichment activities such as music, sport or languages.
* Settings receiving the quality premium, but not the recruitment incentive, may use up to 49 per cent of it to boost the wages of existing staff, if they can show that it will help retain staff and provide stability for the children. In judging this, local authorities will take account of turnover rates among the local early years workforce.
* The quality premium must be seen to be clearly additional to professional development and quality improvement already undertaken by the setting and the money available through the Transformation Fund for training staff to level 3 and above.
Ultimately, whether the premium is being used effectively will be determined by better outcomes reflected in the Foundation Stage profile.
However, in the interim, improvements in staff skills may be measured along with the involvement of professional specialists and greater parental satisfaction with children's progress.
The quality premium cannot be used for capital expenditure or administrative processes such as quality assurance schemes.
Other conditions for the award of the quality premium and the recruitment incentive
* Settings must offer group-based care for longer than four hours a day, with a minimum of 20 registered places and a satisfactory or better Ofsted rating.
* To ensure affordability is not compromised, fees paid by parents for a full week should not exceed 175 (205 in London) and should not increase above the level notified to parents for the year ahead. A full week is a minimum of six hours a day, five days a week.
* A member of staff with EYP status should be in place within two years of receiving the premium and, if applicable, the recruitment incentive.
* Settings must agree to report on how the quality premium has been spent; to provide monitoring data; and to participate in DfES evaluation.
Training staff to level 3 and above
This element of the Transformation Fund, launched this month, is for PVI providers only. It is designed to supplement, not replace, provision already made in the GSSG for workforce training and development. It is open to childminders caring for under-fives, providers of sessional daycare, such as playgroups, as well as full daycare settings of any size in the PVI sector.
The funding supports staff seeking to improve their qualifications to a full level 3 and up to level 5 in a relevant subject. From this month, all nurseries offering full daycare are eligible to apply to local authorities for the reimbursement of costs for staff undertaking training to obtain level 3 or higher qualifications. This can include training towards the early years foundation degree or training related to the Foundation Stage.
From September, settings will also be able to apply for reimbursement of eligible costs for their level 5 or 6 leader of professional practice for approved training to level 6 EYP status. Local authorities will decide what training to support, but the DfES expects them to consider supporting early years sector-endorsed foundation degree students because this remains a key entry route to higher-level qualifications for those with a level 3 or 4.
Training staff to work with children with disabilities The Transformation Fund can be used from April 2006 to fund specific training on issues relating to disability and inclusion for all childcare and early years staff in the PVI sectors, whether in full daycare, sessional or childminder settings. From this month, settings can get the cost of training staff to work with disabled children and those with SEN reimbursed.
Role of local authorities
Most of the Transformation Fund will be channelled through local authorities who will contract with early years settings to ensure that it is spent in the way intended and that all conditions are met.
Local authorities will also set strategic priorities for the use of the fund within their areas, consistent with the Transformation Fund guidance, but tailored to meet local needs identified in their Children and Young People's Plan, their workforce strategies, and as a result of input from their early years advisers.
Local authorities will also have to set out clearly their priorities so that settings understand that it may not be possible to meet all requests for funding. The costs of administering the Transformation Fund can be met from the main revenue block of the GSSG. But the Transformation Fund cannot be used for pooling in local area agreements.
Monitoring and evaluation
Monitoring data will be collected from local authorities twice a year, with the first returns due in September 2006. They will influence the allocations for 2007-08. Detailed guidance on monitoring requirements will follow soon.
The national evaluation will involve:
* Assessing how different levels of recruitment incentive, to be trialled in a few local authorities, impact on recruitment, retention, pay levels, qualifications, fees and profits, and outcomes
* Pilot schemes in some local authorities of sessional providers collaborating to offer full daycare so that they may then qualify for the recruitment incentive and the quality premium
* Analysis of annual provider and parent survey results covering a sample of full daycare settings from all local authorities who are receiving the Transformation Fund
* A detailed investigation of a sample of full daycare settings, focusing on the link between the qualifications of professional leaders and staff and outcomes for children at different ages, with different characteristics and in different types of setting.
Further information
* The full guidance to the Transformation Fund can be found at www.everychild matters.gov.uk
