Agenda item

(To receive a report by Mark Popplewell, Head of Finance – Children's Services, which provides the Committee with an opportunity to consider the changes to early years funding)

Consideration was given to a report from Debbie Barnes, Executive Director of Children's Services, which invited the Children and Young People Scrutiny Committee to consider the Early Years National Funding Formula, which was due to be considered by the Executive Councillor responsible for Children's Services on 31 March 2017.  The Committee was advised that its views would be reported to the Executive Councillor as part of her consideration of this item.

Detailed at Appendix 1 was a copy of the Executive Councillor report, which had appended to it at Appendix A, a copy of the report considered by the Lincolnshire Schools Forum at its meeting on 22 February 2017.

In guiding the Committee through the report presented, Michelle Andrews, Children's Services Manager – Early Years and Childcare Support advised that on 11 August 2016, the government had announced a consultation for a national funding formula for early years.  The proposal was for the government to deliver a fair and transparent funding system worked out on a formulaic basis.

The outcome of the above said consultation released in December 2016, advised that implementation of the new funding formula would be April 2017.  It was highlighted that the lateness in the government's announcement had made timescales extremely challenging for Local Authorities. 

The report presented provided an overview to the formulaic approach to funding Local Authorities using early year's factors of 'base rate' and 'additional needs'.  Table 1 on page 12 of the report provided details of the national distribution of funding across the factors including the basic hourly rate (before and after the 'area cost adjustment').  It was highlighted that the 'area cost adjustment' was fundamental in determining the overall level of funding at a Local Authority level. 

It was highlighted that the government in response to consultation had also announced a 'minimum funding rate' per pupil of at least £4.30 per hour.  It was highlighted further that Lincolnshire's rate using the formulaic approach was £4.16 per hour, therefore the 'minimum funding rate' had increased Lincolnshire's rate to £4.30 per hour.  Nationally, Lincolnshire was one of 47 out of 150 Local Authorities to be on this minimum funding rate.

The Committee was advised that Lincolnshire's indicative early years funding for 2017/18 was £25.060m; and that the government would be funding the additional 15 hours for 3 & 4 year old children of eligible families from September 2017.  This would be funded at the same rate of £4.30 per hour to Local Authorities; and that the indicative allocation for this was £4.582m for 2017/18.  It was noted that the decision to have a universal rate would have a significant impact on the financial sustainability of maintained nursery schools. As a result the government would be providing supplementary funding for 2017/18 and 2018/19 to maintain the current rate of funding across Local Authorities for maintained nursery schools, which in essence would protect Lincolnshire's five nursery schools at its current funding rate for the duration of this parliament.

It was reported that the Local Authority had adopted an approach to determine a local universal rate; which was based on a typical cost model approach, based on agreed staff ratios and setting characteristics; and that the cost model considered all activities it takes to provide early years entitlement. 

The Committee noted that the 2017/18 hourly rate from April 2017 for 3 and 4 year old entitlement had been determined at £3.82; and that the hourly rate for eligible 2 year old entitlement had been determined at £4.85.  The Committee noted further that the Schools Forum had been consulted on the 22 February 2017 and support had been given to the Early Years Funding Formula and provider rates for early year's children; and approval was given to the Local Authority's proposals to centrally retained funding. 

During discussion, the Committee raised the following issues:-

·         Concerns were raised about the level of consultation undertaken with early year's providers and whether they had been fully consulted.  It was confirmed that an electronic consultation with the sector had taken place, and the report to Lincolnshire Schools Forum attached at Appendix A incorporated the feedback from the provider survey and this had informed the decisions on the local funding formula.  It was also clarified that there were three early years' providers' representatives at the Lincolnshire Schools Forum meeting on 22 February 2017. However, although the Committee recognised that there had been some consultation with providers, there were still concerns about whether there had been enough undertaken;

·         It was queried what the outcomes had been from the consultation, as the consultation feedback had not been included in the report. It was clarified that as providers were in different locations, then the responses varied, such as in relation to the deprivation factor where those in deprived areas argued for more deprivation funding whereas others argued for less. Overall, there was support for the proposals from the early years providers but there was a need to keep the deprivation factor under review;

·         Concerns were raised about whether early years providers would be able to cope with the potential increased demand when the additional 15 free hours for three and four year olds from eligible working families comes into force in September 2017. It was noted that not all eligible families would necessarily take up the full additional 15 free hours, and that data suggested that about 50% of eligible families currently had children in longer than 15 hours per week in the autumn term and as many as 75% accessed additional hours in the summer term of 2016. It was clarified that demand for places varied over the year, as there was usually a lower take up in the autumn term, but summer was the peak term when there would be more pressure for places, therefore any shortage of capacity may not become evident until summer 2018; and

·         Concerns were raised about whether some early year's providers would close due to the level of funding available for the additional 15 free hours, which for some providers might be less than what they would charge for those extra hours. There were also concerns that some providers might refuse to provide the additional 15 free hours due to the loss in income for them. It was clarified that the only way to increase the hourly rate of £3.82 to providers would be by reducing the level of funding for the deprivation factor, and the inclusion funding to provide additional support for children with moderate Special Educational Needs and Disabilities.

RESOLVED

1.    That the Children and Young People Scrutiny Committee unanimously supported the recommendations as detailed in the report presented.

2.      That the comments as detailed above be passed on to the Executive Councillor responsible for Children's Services in relation to this item.