Providers left in the dark over funding rates

• Settings unsure how much of 8p rise will go to them
• Consultations not held, too short or delayed by LAs

Providers across the country say they are unable to budget for the year ahead as many local authorities have yet to consult on 2020/21 funding rates, which will be effective from April.

The Education & Skills Funding Agency (ESFA) requires local authorities to consult childcare providers on annual changes to their local funding formula. Schools forums must also be consulted on changes.

However, Essex County Council, Kent County Council (KCC) and Bolton Council told Nursery World they do not need to consult with providers as they plan to pass on the full funding increase to settings. The DfE said local authorities should seek their own legal advice.

In October, the Government announced all local authorities would receive an additional 8p per hour, per child for two-year-old places for the next financial year, and a maximum of 8p per hour more for three- and four-year-olds.

Bolton Council said, ‘We have consulted with the early years sub-group of the schools forum. We have not done a wider consultation because we are not changing the funding formula.

‘We are proposing to pass the full increase from the Government to providers. This has been agreed by our schools forum and will be considered by the executive member for approval in February.’

Matt Dunkley, KCC’s corporate director for Children, Young People and Education, said, ‘A letter is due to be sent to providers very soon setting out this intention. The Schools Funding Forum was also informed of this plan in November. A consultation has not been planned for this rate increase as there is no change to the methodology of calculating the local formula for providers: there are no changes to the supplementary rates or how they are calculated. It was not felt a consultation was necessary as the full rate increase was to be passported directly to all providers through an increase in the base rate.’

According to providers in Norfolk and Lincolnshire, both local authorities promised a funding consultation before Christmas; however, these have still not materialised.

A spokesperson for Norfolk County Council said, ‘The consultation was held [back] due to purdah, as per Government advice, and we anticipate it will be launched later this month.

‘We follow statutory guidance and would not make any changes without consulting providers.’

Lincolnshire County Council said it would be discussing its proposals for early years funding with the local schools forum.

Michelle Andrews, head of early years at Lincolnshire County Council, said, ‘This year, we’re proposing to retain a smaller percentage of the funding centrally, which will mean more money being distributed to the sector. This, along with the additional 8p per hour provided by the Government, will result in an 11p per hour increase for three- and four-year-olds and a 10p per hour increase for eligible two-year-olds from April 2020.

‘In addition, following an underspend last year, we will be providing around £1 million of extra, one-off funding in 20/21, helping to improve performance and ensure children are able to realise their full potential.’

According to research published last week by the National Day Nurseries Association (NDNA), Lincolnshire County Council is one of 95 local education authorities (LEAs) that reported an underspend for 2018/19.

Ms Andrews added, ‘As there are no fundamental changes to the formula this year, there are no plans for an in-depth consultation, but we will be engaging with the sector.’

Some local authorities have launched consultations with very short deadlines.

A snap poll on Twitter by the Early Years Alliance revealed the majority of those that voted were experiencing issues with short-notice funding consultations.

BCP COUNCIL

This has been an issue for those operating within Bournemouth, Christchurch and Poole (BCP) as the council launched its four-week consultation just before Christmas, while consultation events were held the same week the consultation closed.

Childcare providers within the local authority feel the timing of the consultation was inconvenient given that it was launched at one of the busiest times of year and that they were not given adequate time to consider the options put forward and respond.

When Nursery Worldcontacted the council, it blamed the ‘demands of the General Election’ for the delay in launching its consultation.

Councillor Sandra Moore, BCP’s cabinet member for children and families, said, ‘Acknowledging there were additional pressures on the Government, the consultation process was impacted by the demands of the General Election, which delayed confirmation of the funding rates. BCP Council has since endeavoured to ensure there is every opportunity for comment, offering three consultation events and providing additional information as a result of feedback. Through the consultation, providers were able to comment on any aspect of the funding formula and all feedback will be presented to the Schools Forum.’

The Early Years Alliance stressed that the lack of information on new funding rates is making the challenge of balancing the books harder for providers.

Chief executive Neil Leitch said, ‘It is simply not possible for childcare business owners to plan or budget without knowing how much of that 8p increase is actually going to reach them, and so we are deeply concerned that this seems to be the case in so many areas. Our members have also reported to us instances of local funding consultations being delayed without explanation or being so short in length that providers simply don’t have time to respond.

‘We of course recognise the challenges that local authorities are facing – they too are also having to make difficult decisions on short timescales. However, it’s absolutely vital that frontline providers are able to give their views on upcoming funding decisions and that they are given the information they need to make important business decisions in good time.’

CASE STUDIES

Norfolk

The Heathers Nursery is a term-time, charity-run setting, caring for 50 children from the age of two-and-a-half to four.

Lacey Douglass, administration manager at The Heathers Nursery in Norwich, told Nursery World, ‘The council told us they were going to launch a consultation before Christmas, but that did not happen.

‘The council budget has now gone before the panel and they are due to make final decisions on 17 February. However, there is still no sign of a consultation on early years funding.

‘I’ve heard that the base rate is going to go up, but without knowing the new funding rate, we don’t know what we will be paid from April.’

Ms Douglass said not knowing the new funding rate makes it very difficult to plan particularly as the setting cares for a lot of funded-only children and does not charge for extras as a lot of families are from very deprived areas. Also, it is unable to charge for lunch or consumables as parents bring in a packed lunch for their child as well as nappies and wipes if needed.

Bournemouth

Sue Johnson, owner of Jack-in-the-Box Pre-school – a 30-place pack-away, term-time-only setting run from a church hall – is a member of the early years sub-group which meets with representatives from BCP Council. She says the local authority sent out its funding consultation at the busiest time of year – just before Christmas – which gave providers little time to respond. The consultation closed on Friday, 10 January.

‘The funding consultation went live on Friday, 13 December and a link to the portal was sent to providers the following Monday, the week before Christmas, when some settings would already have closed or be closing for the holidays’, she explained. ‘It all felt very rushed.

‘We were originally promised a consultation [to finish] before Christmas, but the council said that wouldn’t be possible due to the General Election and purdah. However, I don’t see that a funding consultation would be political.’

Ms Johnson said she was disappointed the council had not given any consideration to the sub-group of early years providers’ suggestion that funding supplements for deprivation and SEND be reduced to increase the base rates.

The pre-school owner currently receives £4 an hour, per child to deliver the three- and four-year-old funded places, which falls short of the actual cost of delivery. The true cost to parents of a session, five-and-a-half hours or six-and-a-half hours, is £30. To make up some of the shortfall, Ms Johnson makes an additional services charge of £5.50, which covers 30 minutes of childcare and a cold lunch. The setting offers a limited number of totally free places.

‘Since the 30 hours came in, I’ve had to reduce staff numbers, cut back on training and wage differentials to make ends meet. There has also been a dip in the birth rate in Bournemouth. I now employ just three staff.

‘As staff accrue holiday pay, it actually works out that I receive less than the £4 per hour, per child base rate.’

• For more on the NDNA research, see ‘Millions of pounds of unspent early years funding’