Consultation opens on changes to way LAs fund providers

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Ministers plan to change the way that nurseries and childminders are funded through local authorities, in a move towards developing a new national funding formula for free early education places.


The proposals were revealed in a Department for Education consultation published last week, alongside draft guidance,that sets out changes to how local authorities will be expected to work with early years providers from September.

The Government intends to change the law at the earliest opportunity and bring in revised guidance on local authorities' duties relating to early education from 1 September to supersede existing guidance.

The consultation proposes simplifying the funding system for providers by limiting the number of base rates and supplements from the Early Years Single Funding Formula, which are 'unnecessarily complex'.

This would be based on the approach taken to devise the funding model for places for disadvantaged two-year-olds.

From 2014-15, local authorities will be required to use a flat base rate to fund all two-year-old places.

Childminder Octavia Smith, who is based in Norwich, said there was a need for early years funding reform, to ensure that funding covered providers' costs and to make the system fairer.

She said, 'The Government needs to find out what rate is adequate to cover childcare costs. They need to look at what rate would reflect a professional rate. Childcare needs to be seen as a career, and not just something you do until something better comes along. They need to reward qualifications, otherwise it's a backward step. Where's the incentive?'

She added that the local paper recently advertised a cleaning job in a nursery paying more at £6.60 an hour than a nursery assistant role advertised on the same page at £6.19 an hour.

Ms Smith agreed with the consultation's view that quality supplements were often set too low and said that any change to funding rates should reflect the qualifications of providers and that childminders should be paid the same rate as other early years settings.

Ms Smith, who previously worked as a local authority adviser and a teacher and has run a childminding business for ten years, gained Early Years Professional Status in 2011. She said that while all childminders receive a flat rate from Norfolk County Council of £5.06 for offering the three- and four-year-old places whatever qualifications they hold, early years settings receive an enhanced rate for employing an EYP.

Ms Smith added, 'Funding should be in line with qualifications, if the Government wants early years to be seen as a profession and treated and valued as such. I could have an MA or a PhD and I'd still get £5.06 an hour.'

Norfolk County Council early years funding rates vary from £3.38 an hour per child to £5.87.

The consultation also sets out plans originally revealed in 'More Great Childcare' to cut back on local authority duties and make Ofsted the 'sole arbiter of quality'.

From September, local authorities will no longer be legally required to provide information, advice and training for nurseries and childminders.

The measure is part of a drive to ensure that more of the funding allocated by central government to local authorities reaches providers. Ministers are also intending to stipulate a limit to how much funding from the DSG can be retained.

However, the National Day Nurseries Association said that concerns remain about the implications for support and advice for nurseries, once the local authority duty is removed.

Claire Schofield, director of membership, policy and communications at the NDNA, said that early years settings will need regular support from Ofsted and weaker settings will need intervention that is properly resourced. However, it was not yet clear how this will work in practice.

Feedback from members shows that nurseries want more frequent inspections, she said.

'If there is a reduced level of support, there are issues around safeguarding and welfare for weaker provision, and others want more frequent inspection, for example, every two years.'

'Overall, removing duplication is a good thing, but we need to know how Ofsted will work in future, particularly for quality improvement.'

However, she said nurseries would benefit from the removal of the requirement in local authority contracts, which often contain additional conditions, for example, that nurseries must complete the local authority's quality assurance scheme to qualify for early years funding.

However, she said that some nurseries signing contracts now were still being asked to do this, which didn't make sense, given the Government's plans.

'A lot of changes are going through - the consultation time is short and we don't know the picture from Ofsted yet.'

  • The consultation is on the Department for Education website and closes on 6 May.


The Government is proposing to:

  • guarantee an offer of funding to all providers of a quality assessed by Ofsted, or an inspection body approved by the Secretary of State, as satisfactory, good or outstanding where there is an eligible child wanting to take up an early education place
  • guarantee an offer of funding for new early education providers registered with Ofsted prior to their first Ofsted inspection
  • limit the extra conditions that local authorities can place on PVI providers in order for them to qualify for funding to deliver places
  • remove the existing duty on LAs to secure information, advice and training for childcare providers, but give LAs the power to offer it
  • reform the early education funding system, by encouraging LAs to simplify their funding formulae and to limit the amount they centrally retain.
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