Analysis: Worries all round with EYSFF system

Time is fast running out to make the figures of the Early Years Single Funding Formula add up in a way that satisfies the whole of the sector.

Since the Government published its Practice Guidance in July, on the back of evidence gathered from local authority pilots, concerns have escalated about its likely impact. While the formula has been designed to create a level playing field between the maintained and PVI sectors, it seems in danger of fuelling an even greater sense of 'us and them'.

Amid these anxieties, the Government has now mounted a select committee inquiry. It is calling for written evidence on how the EYSFF is expected to affect early years education and childcare services, and will examine difficulties that have been encountered in drawing up the new formula. It seeks to establish how local authorities will be dealing with these problems.

The debate has recently gained a high profile, with unions such as the National Union of Teachers and Unison wading in. Early years experts including Helen Penn and Eva Lloyd have had their concerns published in a letter to The Guardian.

The Government inquiry now has only a matter of weeks to gather its evidence before it is due to close at the beginning of December.

Nursery schools in jeopardy

Supporters of nursery school education are the most vociferous campaigners against the proposed system. In October nurseries were urged by Early Education to sign a petition on the Downing Street website against its implementation.

The petition is part of a wider campaign by the organisation, which has also published a support kit to assist nursery schools and settings who believe they may be adversely affected by the changes to the funding. It maintains that nursery schools stand to be a major casualty of the EYSFF. Those that have been offering free, full-time provision will face huge budget cuts and will only be funded to provide the 15-hour free entitlement, in line with other sectors.

Jean Ensing, chair of governors at the Bognor Regis Nursery School and Children's Centre, told MPs that her organisation's budget would be cut by around £99,000 under the EYSFF in the first year alone, leading to staff redundancies and reduced provision. She said a major problem was the end of place funding, meaning that she would no longer be able to keep places open for vulnerable children.

Ms Ensing believes the EYSFF is likely to prove ineffectual for all providers in West Sussex.

'It is a big county, with historically a low level of what used to be called the old county council services,' she said. 'So we only have four nursery schools, which are children's centres, 12 nursery classes and 430 PVI providers -and good relationships with them. But we stand to lose in the maintained county council bit, half a million pounds from our budgets. Averaging out on the 430, they are only going to get £1,100 each. It's taking a lot from relatively few to give little to many.'

Defining quality and flexibility

Local authorities are expected to use the EYSFF to support and promote quality and encourage a culture of continuous improvement in the quality of provision. However, the pilots have demonstrated that designing a quality supplement which is a clear fit with the base rate funding is often complex.

The Practice Guidance says authorities must be clear on whether the supplement is being used to incentivise quality improvement only, or incentivise improvement and reflect some of the costs associated with meeting national standards.

Some believe it could represent a punitive response to raising quality, where poor settings are penalised and are not given the funding they need to improve.

Meanwhile, a flexibility supplement is described as enhanced funding for those who are able to offer flexibility. Again, this could penalise those who cannot be flexible, such as those limited by the nature of their business or premises.

Flexibility is problematic for many on a financial basis. On the Nursery World forum, one poster says, 'Problems will increase enormously when we are required to offer up to ten hours at the funded rate in one day, meaning we will lose the difference against the ten hours in one day when parents will not be attending for enough other sessions for us to claw back the real cost of offering our service.'

At the inquiry meeting Barbara Riddell, freelance consultant, said 'How compatible is flexibility with maintaining really good quality for children? There is concern that families could choose their free entitlement to be used as ten hours in one day and two hours on other days. This will have an effect on the social development of children and threatens the consistency a nursery can offer by organising the curriculum over five days.'

Will it make a difference?

Colin Willman, chair of the Education, Skills and Business Support Policy Unit at the Federation of Small Businesses, told MPs at the meeting the EYSFF was going to be 'the light at the end of the tunnel'.

He said, 'Many who have been informed of the figures do feel that it is going to be useful for small businesses and raise the price above the cost, so they are not going to be operating at a loss in that area, which may change our survey when it is done next year, to show that they are going to stay in the business - currently 18 per cent say they won't be there in 2015.'

The National Day Nurseries Association is also prepared to voice cautious optimism. Membership, Policy and Communications director Claire Schofield told the meeting, 'The EYSFF is not a perfect process, but for our members, we are hopeful it will make a difference. It is a mixed picture across different local authorities, but we would like some progress to be made, because for them that is the best chance of getting improved funding so they can do more to raise quality in their workforce.'

The Nursery World forum reflects the mixed picture. For example, on the subject of charging top-ups for lunches and snacks, varying advice is given. One poster says, 'Once again Government guidelines are being interpreted and rewritten according to where you live. The bottom line is that we will do whatever we need to do to stay financially viable'.

The sector is still grappling with the issues. And while budget-setting has to be done in the next couple of months, most believe adjustments still need to be made.

Achieving a level playing field: North Somerset pilot

According to Government Practice Guidance, this local authority based its EYSFF on a needs-based, activity-led approach. The overall model adopted was calculated to cost 8.5 per cent more than the existing funding for the PVI sector, taking into account the new supplement for social deprivation.

Its impact assessment also demonstrated that the maintained sector nursery classes would lose funding, and this has led to a change in maintained provision:

- The LA removed surplus places in the maintained sector - all of the schools that have nursery classes agreed to reduce the number of places

- All maintained settings are based on the same multiples of places - 26 - rather than the range of different place levels that existed historically

- The practice of lengthy lead-in time for three- and four-year-olds, under which it was common for children not to take up the full entitlement until the second term, has ceased

- The single point of intake to schools in September of each year has been changed so nursery classes now admit three- and four- year-olds each term.