Consultation: Early Years National Funding Formula and changes to the way the 3 and 4 year old entitlements to childcare are funded September 2016 Early Years Funding Policy Team Department for Education 1
Thank you! We’ve received over 750 responses to our online survey so far 2
Each local authority receives an hourly funding rate from DfE through the Dedicated Schools Grant Local authorities (retain some funding for central services) Local authorities distribute funding to providers according to each local authority’s ‘Early Years Single Funding Formula ’ 3
The national funding system Each local authority receives an hourly funding rate from DfE through the Dedicated Schools Grant Local authorities (retain some funding for central services) Local authorities distribute funding to providers according to each local authority’s ‘Early Years Single Funding Formula ’ 4
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The local funding system: central spend Each local authority receives an hourly funding rate from DfE through the Dedicated Schools Grant Local authorities (retain some funding for central services) Local authorities distribute funding to providers according to each local authority’s ‘Early Years Single Funding Formula ’ 6
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The local funding system: provider rates Each local authority receives an hourly funding rate from DfE through the Dedicated Schools Grant Local authorities retain some funding for central services Local authorities distribute funding to providers according to each local authority’s ‘Early Years Single Funding Formula’ 8
Schools in some areas are funded significantly more per hour than private and voluntary providers. Private and voluntary providers in some areas are funded significantly more per hour than schools. 9
Principles 10
Underpinning Principles 1. Maximise funding to the front line 2. Allocate funding fairly to local authorities and to different types of provider 3. Distribute funding efficiently and effectively 4. Allocate funding transparently 5. Target effectively additional funding to those children who need it 6. Avoid excessive turbulence 11
National funding reform 12
The early years national funding formula 13
Each factor of the national funding formula Base Rate Additional needs Area Cost based on the core metric based on: Adjustment costs of childcare based on the FSM eligibility provision which general labour English as an do not vary market measure, additional by local area adjusted for language (EAL) premises costs. Disability Living Allowance (DLA) for 0-5 year olds 14
Impact and transition The vast majority of local authorities (75%) see increases in their hourly funding rate. No local authority will see reductions of more than 10% overall (funding floor) and no more than 5% each year. Indicatively – and depending on local authority funding decisions – private & voluntary providers gain in nearly 90% of areas, schools in nearly 80% of areas. Indicative average increase of 16% for private and voluntary providers and 14% for schools. 15
Local funding reform 16
Maximising funding to providers All local authorities will be required to pass through at least 95% of their Government funding to providers. Transitions: Going straight to 95% could be disruptive for some areas. So the policy would start at 93% in 2017-18 and move to 95% by 2018-19. 17
Levelling the playing field between different providers All local authorities will be required to use a universal base rate of funding for all providers. Transitions: We would allow local authorities until 2019-20 to implement a universal base rate. We’d push for this to happen sooner if possible and we plan to monitor progress here. 18
A focused use of supplements A focused use of local authority supplements will mean that providers can understand how their funding rates have been worked out. Propose supplements that reflect key cost drivers: - Deprivation (required) - Rural or sparse populations And to provide incentives for providers going the extra mile with: - Flexibility - Additional 15 hours of free childcare - Operating efficiently We propose 10% cap on the amount of money that local authorities can channel through supplements. 19
Reforming funding for disabled children We recognise the current funding system does not serve the needs of children with special educational needs and disabilities (SEND) consistently well. We therefore propose targeted disability access funding . £12.5m available. Providers will automatically receive additional funding for every child in their setting in receipt of disability living allowance. 20
Reforming funding for children with special educational needs (SEN) Meeting the needs of children with SEN costs more than standard per-child funding. There has often been a lack of clarity about who covers this cost. We propose that local authorities should pool funding from early years and / or high needs DSG to create local SEN Inclusion Funds. This is not a new funding stream but puts in place a new structure in local funding systems. 21
An overview of funding consultation proposals Department for Education would use an Early Years National Funding Formula to allocate funding to 151 local authorities using… Area Cost Additional needs factor based on three metrics: Base rate Adjustment FSM DLA EAL Early Years Disability …each local authority would use their reformed Pupil Access Early Years Single Funding Formula to allocate funding to their local providers… Premium Funding Limited Local area funding supplements central spend Universal base rate Rural areas Deprivation Efficiency Flexibility 30 hours SEN delivery Inclusion Fund SEND Top-ups …so around 35,000 providers deliver the free entitlements. 22 22
Consultation: Early years funding Changes to funding for 3 and 4 year olds Take part in our consultation by reading our proposals and visiting the survey site between Thursday 11 th August and Thursday 22 nd September. We ask your views on changes to the way funding works for both for the existing free entitlement for 3 and 4 year olds and the extended 30 hour entitlement for working parents. This factsheet gives a summary of our key proposals. We look forward to hearing your views. What are we proposing? What does it mean for the early years sector? Fairer fundi ding ng for Local Autho horities Introducing a national funding formula to allocate a record level of investment, A record £3.9bn funding per year from £3.9bn including an additional £1billion by 2019-20, 2019-20 to ensure we can expand the free fairly and transparently. early years entitlements from 15 to 30 hours a week. 95% Maximum fundi ding ng to provide ders £4.88 All local authorities to pass on the vast Government fulfils its promise of a higher majority (95%) of funding direct to childcare national average hourly funding rate, providers. increasing from £4.56 to £4.88. Fairer fundi ding ng for provi vide ders The vast majority of local authorities and Childcare providers in each local authority y providers to see increases in their area area to receive the same basic rate of funding average hourly funding rates. for every hour of the free entitlements. A more level playing field for different Greater transpa sparenc ncy y for provi vide ders types of provider, which is more More targeted use of local author ority y transparent and easier to understand. funding supplements to incentivise providers to meet the needs of parents. A new approach for disabled Addition onal funding ng for children n with SEND children and children with special Targeted additional funding for providers to educational needs with extra support disabled children and a new local funding to help them access and authority approach to supporting children benefit from the free entitlements. with special educational needs.
We want providers to be confident delivering 30 hours of free childcare Local authority LAs confirm final DfE funding funding rates to consultation consultations providers Closes 22 September Winter Early spring Autumn: Government response Indicative average Local authority and provider rates for providers in each discussions local authority Certainty in advance of announced Increasing certainty on financial year 2017-18 local approach and final Make planning assumptions provider rates 24
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