The Early Years Single Funding Formula - Children, Schools and Families Committee Contents

Examination of Witnesses (Questions 104-138)



  Chairman: I welcome the Minister of State for Children, Young People and Families, Dawn Primarolo, and Ann Gross, who is the Director of Early Years, Extended Schools and Special Needs Group at the Department for Children, Schools and Families. Dawn, this is your first meeting with the Committee, isn't it?

  Dawn Primarolo: It is indeed, and much I am looking forward to it.

  Q104  Chairman: And we have been looking forward to meeting you. You know what this session is about. We have been looking at the single funding formula for early years. We have taken some very interesting evidence so far, but we always give Ministers when they come in front of the Committee the chance to make an opening statement, so over to you.

  Dawn Primarolo: Thank you very much, Barry. I want to say how much I welcome your inquiry into the single funding formula. It is important that we get it right. I wish to make a couple of points in opening this session. First, I know that you would expect the Government to be strongly of the view that our role is to ensure that all children, irrespective of the type of settings they attend, get high-quality, free early years entitlement from the age of three. I want to make it absolutely clear that there is no reduction in Government funding for the free offer. In fact, more funding is being made available for the free entitlement as it increases from 12 and a half hours to 15. Since 1997, the Government have invested a huge amount in the early years—£25 billion in total—and, on an annual spend this year, there is something like £4 billion a year by local authorities topped up by another billion, which is within Sure Start, and ring-fenced on quality and capital spend. I have looked carefully at the evidence that you have already taken and, of course, representations and views were being expressed to the Department from the early autumn period. I want to say at the beginning that I am minded to postpone under certain circumstances, with certain conditions, the implementation of the single formula. I am delaying it from implementation in April 2010 to 2011.There are conditions that I would need satisfied. We would have to make sure that we were learning from what is still coming back from our pilots and what local authorities are saying to us. I would want to be sure that we were proceeding on a very firm footing. I do not want to abuse my opening remarks to the Committee, Barry, but I would be more than happy to outline quickly—if you thought it was helpful at this stage—why I am considering that view. Obviously, I need to go through certain steps in notifying Parliament, but I would be grateful if you could give me through the course of the evidence this morning your initial reaction to some of the proposals that I should like to put forward.

  Chairman: Thank you for that, Minister. Let us get into questions. I think that a lot of things may emerge from that process.

  Q105  Mr Stuart: I would be very happy, Minister, for you to take us through that. Obviously, with any change like this, you are listening to those local authorities which have responded strongly. You will either be seen as chaotic and failing in delivering through on your intent, or as listening and sensitive to the complexities of the results. Perhaps you could tell us a little more about your thinking.

  Dawn Primarolo: Thank you for giving me the opportunity to do that, Graham. An intention to introduce the single local early years funding formula was announced in 2007. The purpose was to bring transparency and accountability to the system, and to ensure in particular that the focus of the funding was clear on the principles of targeting deprivation, and improving quality and flexibility for providers. That received support on both sides of the House—there was no dissent. We all recognise, however, that 2007 was a different time economically. A lot has happened since then and local authorities have been very busy on a range of issues. I must acknowledge that the recession has brought a number of other challenges to local authorities on issues that they would also have been busy with. It was always intended that the implementation would take place in 2010. Over the late summer and early autumn, we began to receive feedback that some local authorities were struggling with the development of their formula, and that providers and parents were becoming increasingly concerned about the impact that would have on them. That noise—that challenge—has continued. I will explain what we are trying to do. We have a historical system of funding from pre-'97 in relation to the maintained nurseries, which are very patchwork and are not across all local authorities. As a Government, we have placed the increase of free entitlement to 15 hours into that. It is a complex terrain for early years with all of the providers. Flexibility is fantastic for parents, but it brings with it complexities. We recognise that. Bringing those two alongside each other and trying to make sense of the principles is obviously complicated. We were receiving views from local authorities, providers and parents who did not all agree and who all gave us a different reality, so I asked my officials to get permission for us to undertake an additional data collection from local authorities. We collected that information—on the development of the formulas and how ready local authorities thought they were—during November. We added risk assessments to that about what the challenges were. Unfortunately, despite the very hard work of local authorities and the PVI sector, we found huge variability of approach and practice. When we added to that the regional and national feedback that we received, it was clear that there was quite a high risk in the area of not being ready by April 2010. In other words, perhaps only around a third of all local authorities may be in a secure enough position to proceed. Barry, I would be happy to prepare a paper summarising that information for the Committee.[6] Unfortunately, I wasn't able to get it ready for today, but you will understand that I am going through this as rapidly as I can alongside the work that you are doing. I think that we all agree on trying to move towards a single formula and on the basic principles, and we all recognise that it is complex and that we need to get it right. I am minded—I need to formally notify Parliament about this and will do so in a written statement—to say to local authorities that first, we are going to delay implementation to 2011. But there are some local authorities that are telling us they are clearly ready to go, and we would invite local authorities to apply to join pathfinders for us. We would add that to the pilots we already have and that we are monitoring. We will obviously look very carefully at the deliberations of this Committee and its recommendations, and at what we already know about some of the key issues. We will seek in the intervening period—the delay of a year—to get ourselves to a sensible position, working with local authorities and the PVI sector to have an implementation for everyone that will work. We will then bring the final local authorities into the single formula. What I need to consider is how we will give that support, in particular how we can use the pathfinders as good practice and spread the how-to-do message among the other local authorities. I am not blaming local authorities or the PVI sector here, but am saying that this is a big challenge and that we have to get it right. That is my thinking, Graham, on how we would proceed.

  Q106  Mr Stuart: On the subject of pathfinders, the thinking is developing and you are consulting and so on. You said that a third of local authorities are on for the original timetable. Do you imagine that anything like a third will be involved in pathfinding?

  Dawn Primarolo: We would need to invite them to put themselves forward. Even among that third, it is very difficult for us to tell exactly what is going on. The way that funding decisions are taken in the early years is quite rightly a decision for local authorities with local accountability, outside the free entitlement. I think that all of us would acknowledge that in undertaking this exercise a great deal has been revealed that perhaps was not obvious or transparent.

  Q107  Mr Stuart: May I press you. Do you think it will be a large number? There was a tiny number of pilots.

  Dawn Primarolo: Yes, nine.

  Mr Stuart: Are we talking about a similarly tiny number of pathfinders, or are we talking on a much bigger scale? Just give us some sense of that.

  Dawn Primarolo: No, if local authorities want to be pathfinders and apply, I want to make sure that those that are in the pilot give us a spread of all the different circumstances, to see the difference between rural provision and central city conurbations, for example. I do not have a view about the maximum number that will be in the pathfinders. If you have a view and think a certain number is manageable, I will of course listen to what you say. Of course, I need to have discussions with others, such as the LGA and local authorities themselves, about what is sensible. We need a large enough number as a minimum—if that is not a contradiction—so that we can learn and progress this from the good practice that is going on.

  Q108  Mr Stuart: In one submission to us, Jean Ensing of Bognor Regis nursery school—a splendid institution I am sure—described the combination of policy initiatives such as the single funding formula, the extension of entitlement to 15 hours and the extension of the scheme to two-year-olds as "like being in a box and all the sides are coming in". I suppose people who feel like that will welcome today's idea of delay. Can you talk us through how you see these different pieces coming together so that the various players can get some idea of how they will be able to get through this?

  Dawn Primarolo: The Bognor Regis example is interesting. You clearly took representation from the nursery itself, yet the local authority disputes the number of places there and how high its vacancy rates are. I do not want to adjudicate between the setting and the local authority, as I am sure you do not. What I would say to begin with is that the introduction of the formula alongside the increase to 15 hours and the introduction of flexibility and consultation on it, was, I have to admit, always going to be challenging.

  Q109  Mr Stuart: Will it be easier now?

  Dawn Primarolo: I think that what we have learned about is the complexities around having that, and that will certainly be one of the issues we will have to address. I am not trying to be unhelpful, Graham, in fact I am trying to be helpful to the Committee in responding to the situation that has emerged, without having a complete answer on every point. All of the feedback that we are getting, as I have already said, is that the idea of having a single formula is the right thing, and the basic principles are the right thing. Some local authorities have absolutely managed it, and are ready to go and can be seen as areas of good practice. Others are struggling. We need to get it right. Let's home in—whether it's our guidance, whether it's coping with the information, whether the consultation has been thorough enough, or whatever the circumstances—and make sure that in those 12 months we are in a better position.

  Q110  Mr Stuart: In your opening remarks you mentioned economic circumstances more than once. You are suggesting that you are minded towards a delay in the single funding formula. Are the Government still set on their commitment to the 15 hours and the extension to two-year-olds—universal two-year-old provision?

  Dawn Primarolo: Absolutely.

  Q111  Mr Stuart: Why did you mention economic circumstances so repeatedly? It wasn't obvious why. You're telling us that you're delaying the formula because of organisational issues and different people coming back to you, and yet you repeatedly mentioned economic circumstances. Can you just tell us what is lurking beneath that concern?

  Dawn Primarolo: Yes, of course. I am sorry, Graham, I didn't mean to mislead the Committee at all. I was trying to be friendly to local authorities, in recognising that over the past 12 to 18 months they have had significant challenges in their localities as a result of the economic circumstances, whether it be recession planning or whatever. It is nothing at all to do with the guaranteed funding that is available through the dedicated schools grant. That has gone up something like 75% in real terms since 1997, and in the 2008-11 period it will rise by an average of 13.1% per pupil. There is no question of money from central Government being a challenge. My comments were really that I want to be fair and reflect that all the local authorities have worked very hard on this, and for a whole set of reasons some are ready and some are not. They have had lots of other demands on them outside of this and, because I consider it so important that we get this right, I am trying to hold everybody together—the PVI sector, local authorities and the Government's objectives. We all claim we are heading the same way. That is why I was giving a nod of respect in the direction of local authorities and their hard work. I wasn't implying anything else.

  Q112  Annette Brooke: Far be it from me to suggest that we should have more central direction, but having looked at some of the consultations, it became apparent to me that some of them went out with different options, which is not always the case. I am always very wary of consultations that don't have just a single option, because you think it's all stitched up. You said that you wanted to make sure that the consultation processes have been sound. Is this anything that you have actually received representations about, and is it something you would give some consideration to?

  Dawn Primarolo: In terms of how the consultation was conducted? I think, Annette, that the challenge for me as a Minister for central Government is to be there to offer help and help spread best practice, but it is not my role in these circumstances to instruct local authorities how to respond to the very different needs that each of them faces. At the present time, I am trying to work through the really critical points—the important points—in supporting them through preparation of the single formula. What really is noise in the system—where people are just generally unhappy—is that any change produces people who are unhappy. We try in the guidance to give a balance between what we thought were the statutory obligations—the must-dos—and trying to build in the principles around the flexibility of local need. We would want to see how the good authorities have managed to deal with it, how we can spread that to other authorities, and whether we as a Department need to do any more. It is a very difficult line for me to walk, given my passion to protect high quality early years and bring all the other early years to that very high quality.

  Q113  Annette Brooke: I think you have led into my next question. I am very anxious that, if you do move along the route you have suggested, the good practice should be disseminated widely. That was going to be my follow-up question, which I think you probably answered. It is important that everyone can learn from where it has worked well.

  Dawn Primarolo: I agree and that is why I thought of using "if I am minded to do this". I have to keep saying that, because my obligation is to notify Parliament formally as well. I hope you will excuse my using that particular phrase.

  Chairman: We understand that you are only "minded".

  Dawn Primarolo: Thank you. So I don't need to say it any more. What I felt that the pathfinders would be able to give us is exactly that vehicle. We need to look at how we would support the spreading of the good practice, and learning more as the pathfinders proceed, as well as the pilots we already have, about the crunchy and difficult issues, and then whether we might need to give more help and support on that basis. But I think we are trying to facilitate local authorities, again on the basis that they are all in different positions, and the early years provision is very complicated. As we step into that, we need to make sure that we don't put any of it at risk. That is not our intention, hence the very clear guidance I gave on maintained state nursery schools.

  Q114  Mr Pelling: I think, Chair, that the points that the Minister has made show the very high quality, emollient approach that she takes towards her task. Can I put it to her, nevertheless, that the reference to the economic circumstances will perhaps reflect some of the problems in terms of introducing the formula? We heard from witnesses to the Committee that they felt it was typical for local authorities to introduce the single funding formula without increasing part of the dedicated schools grant allocated to early years—taking it away from primary and secondary. Is the Minister saying that the pace has rightly slowed because in difficult economic circumstances it is difficult for local authorities to be able to meet the implication of the formula? Obviously, you are under some pressure, I guess, in terms of what the experience has been, and how there may be difficulties—perhaps closing individual, dedicated nursery schools.

  Dawn Primarolo: I do not accept the issues with regard to the finance that the Government provide for the free entitlement. My point about the historic position pre-'97 was that only about £1 billion was being spent in this sector by local authorities, and their provision was decided locally. So the main finance that went in came either from parents themselves paying for private facilities, or from those local authorities that took the decision locally to put more money in because that is what their local communities expected, and they funded nursery schools, for example. So the issue of the single formula is not whether there is enough money available for the guarantee. It seems to me that local authorities might be asking a different question that is nothing to do with the single formula, but about how much they think they should pay over and above what is the guaranteed funding from central Government. That is a perfectly reasonable view for a local authority to take and to be accountable for. I would have very strong views about saying, "Well, local authorities should step up to the plate, just as central Government is, and make their contribution". But that isn't a matter for the single formula; that is a matter for the decisions that are taken locally about how they spend the money. I now regret having tried to acknowledge the local authorities' position in some respects, because what I was saying was that this process is a complicated process and there were other complicated processes going on, as local authorities tried to respond with their services to a changing environment for their council tax payers and residents. I was trying to say, very gently, that perhaps the local authorities had not been able to give as much attention to this area as they might have wished to, because of other demands on their analytical time. That is all I was saying.

  Q115  Mr Pelling: We had a witness from Southampton city council, which I think is one of the pilot programme authorities, and I think the witness was trying to say that they were very happy with the proposals and saw the positive nature of what was being done, but they wanted to protect maintained nursery schools. There is an automatic effect—isn't there?—of the formula, in terms of compromising that more expensive provision. Therefore, it is inevitable that local authorities who may take a very great pride in those nursery schools wanted to protect them. So they ended up being faced with the prospect of transferring from other parts of the Dedicated Schools Grant, and it is difficult to do that in these difficult economic times when there are other pressures and demands on local authorities. Is that a motivation for delay?

  Dawn Primarolo: I still think that is an entirely different point, because the funding for the free entitlement from 12 and a half rising to 15 is absolutely guaranteed in the money that moves from central to local government. Decisions are rightly a matter for accountability on whatever a local authority spends its money on. What the single formula around the principles was designed to achieve is to make that transparent, but there can be no question that they do not have enough money to pay for the free entitlement. The single funding formula was about transparency and accountability around certain principles, so that it could be seen why a local authority was taking the decisions that it was taking. If it chose to maintain a particular provision over and above the free entitlement, that is absolutely up to the local authority, as long as it's accountable.

  Q116  Chairman: One of the most reasonable people who has appeared in front of this Committee for a very long time is Lesley Adams from Birmingham, who is the head of integrated children's services there. She is just worried that, however complicated or simple the formula is, what will end up happening in Birmingham is an undermining of the high-quality provision that Birmingham has invested in over 50 or 60 years, which is a type of gold standard of good pre-school nursery provision. Yes, it is in the maintained sector, which often has more expensive buildings, floor space and all that. I think she represents quite a lot of people who we in the Committee have contacted. The end result might be an undermining of not just the gold standard, because it is old or historical, but the maintenance of high standards and the permeating of those standards to the rest of the sector. This is what she is genuinely worried about.

  Dawn Primarolo: Absolutely. I can understand that concern. I think it is a very important point to make about the high quality of our maintained nursery schools and how they can work with the rest of the sector in terms of excellence and quality. As this began to emerge as one of the concerns, I made it clear when I wrote to all the directors of children's services. I reminded them that the formula does not prescribe one type of provision over another—it is a mechanism for showing how the money is spent—and made absolutely clear the importance of the maintained nursery sector. The presumption against closure is within the guidance. I have circulated copies of this to the Committee.[7] I pointed out that where an unjustified reduction is being made, meaning that that was not because there was a huge number of vacant places and no attempt had been made to close them, I would take it seriously and consider what I could do in those circumstances, so I have made the position absolutely clear. In acknowledging the concerns of representatives from Birmingham, for instance—although not only there—that would be awful, and it is not the objective of the formula to undermine the excellence in centres. It is actually to make sure that we understand how that happens, and we are moving everything else to be as good.

  Q117  Chairman: There are unintended consequences that you certainly don't want, but we all know that that is one of the frailties of public policy making. You can start off with a very well intended policy, but you could end up producing something you really didn't want. To give another example, evidence given to the Committee suggests that the new funding formula treats pre-schools more like schools, so the bums have to be on the seats on a regular basis at the beginning of term. However, nurseries are not like that, and we must consider the situation if they do not have spare capacity for children who are ready for nursery at a different stage. Children aren't all ready to go to nursery in September—they are ready month by month, as you know from your own experience, and I know from mine. Isn't this sort of making little school systems out of a system that shouldn't be school-based?

  Dawn Primarolo: The first point that you make is very important, which is why I am trying to consider the options, and looking at whether there might be unintended consequences in the implementation of what appears to be a good idea that has everyone's support. Given all the information that is coming in, my approach is to say that while everyone is still saying that we should have a single formula and that the principles outlined in the formula are correct, the difficulty is in the implementation, given the complexity of the area, and further work is needed. Let us take the vacant places. I think it is a straight proposition, and we would all agree that we would not want to see a facility funded that was only half full. I am using this as an extreme example; I am not saying that I can think one like it. Let's say that no effort was being made to do outreach and fill the places. Under those circumstances, would we want the money spent in that way? No. But, would we say that there would never be a vacancy rate for the reasons that you've described? Of course we wouldn't. If we looked at rural areas, it would be even more complicated in terms of what vacancy rate would be counted as being in excess of being reasonable. The basic principle that people accept is that obviously participation is important, but it was not meant to be an absolute. That is part of the discussion. Some authorities have settled that and worked their way through it—apparently to a conclusion that is acceptable—and others are still struggling. Those are precisely the issues that we need to flush out. The other example would be that there are different settings, even within a local authority, and the formula would give a different reaction to those different settings. That is right.

  Q118  Chairman: You have got a sophisticated and articulate group spouting opinions out there, as you know. We have found during all these inquiries that there are so many diverse, very good people out there that you are not going to be short of opinions and good information on this.

   Dawn Primarolo: As you know, we are never short of opinions and, most of the time, we are never short of very good evidence and expert advice. As a precautionary principle, what I am basically saying is that this is really complicated, everybody has signed up to it, and it is proving more difficult to implement than anybody appreciated. Some have managed it; some have not. Let us look at a slower speed, if that is possible, to get us to the same point.

  Q119  Chairman: Minister, we are all in favour of that, but let me give you an example that is rather different. Everyone is in favour of flexibility. A parent could use their entitlement in a way that suited them, which sounds to me like a marvellous way of providing pre-school opportunities. The Government's record is excellent on this—I am not going to deny that. I heard Professor Kathy Sylva say to a seminar only yesterday, however, that one of the unintended consequences is that some parents use almost all the entitlement in one day—10 hours in a day—or they use it in a way that is very upsetting for a child and does very little for that child's pre-school education. It is very wrong, according to Professor Sylva and others, to put a child in a nursery setting one day a week, or one morning and one afternoon. If you want to give the real benefits of pre-school education, there should be a rhythm and a system to it—the best would be for the child to go every morning for five mornings. So, flexibility might have the unintended consequence of actually being quite damaging to a child, rather than helpful.

  Dawn Primarolo: Yes, that is a potential, if it is not mediated by other principles. I am just responding to a question that was put to me that I was not expecting.

  Chairman: That is what these sessions are about.

  Dawn Primarolo: Yes, but it is rather dangerous for Ministers to think aloud—you know that, Barry. The question is quality and our objectives. Of course, we are looking at the quality of the provision for the child. That is our main objective so, of course, we are considering flexibility and what fits with the family and the parents' relationship. But it seems to me that what you are flagging up here—as you are saying Kathy is—is that we need to look very carefully at the quality mechanism within the formula and how that cuts across with flexibility. That simply reinforces my view that it is very complex. Somebody said that I should have a T-shirt that says "It's very complex", and that I should just sit here saying that it is very complex. In a way, I feel like I am saying that all the time, but it is complex, and there are lots of demands and aspirations. We have to balance all those in making sure that the provision is high quality. It is about the outcome for the child as well, and ensuring that it fits with families. That is why we are now consulting on the extent and what we mean by flexibility, and what would be suitable in bringing those balances together.

  Q120  Chairman: But I could have a T-shirt that says "It's very simple really", because if you talk to Professor Sylva, she would say that actually the rules in pre-school are the same as in any other bit of education. What is important is the quality of the trained professionals who are engaged. She would say that if that mother or father takes a child and asks for inappropriate timings for that child, it is very different if the person who responds and says, "Actually, this isn't very good for your child," is well trained and has a fair degree of education and knowledge of pre-school and how children develop. Things are very different, as Kathy Sylva said yesterday, if the person the parents are talking to in a PVI—I shall say a PVI, just to be controversial—was turned down for a hairdressing apprenticeship and this was the next job she could get. Now, that is to quote Professor Sylva from Oxford University. You said it is about quality, but that is not complex. All the time that I have been Chair of this Committee, we have found time and again that with pre-school—and there is a reason we have supported the early years foundation stage—it should be about not child minding, but high-class early years stimulation by professionals. That is what this Committee has always been after.

  Dawn Primarolo: Absolutely. I agree with that. It is not that we ignore the other issues that are associated with the family, such as work, which is important because of the implications for a family of being in poverty. I absolutely agree on the question of quality and proper advice. When there are demands around flexibility, which there are, it is right for us to explore through consultation how that might be checked, in terms of the central goal, which is what is best for the child in these circumstances. We do that in other areas of policy. If we look at what our children centres do, particularly those that have lots of other services connected to them, whether advice on parenting, the health visitor running the mother and baby course—

  Chairman: We will be seeing your child centres shortly, Minister.

  Dawn Primarolo: And you will have a lovely time—because I always do.

  Chairman: I am hogging the questions. Helen.

  Q121  Helen Southworth: In the guidance attached to your letter of 28 October, you suggest that where it makes sense to look at structural solutions, that should be given consideration. Is it your intention actively to encourage the federation of maintained nursery schools and what effect do you think that would have?

  Dawn Primarolo: I am certainly exploring how we can develop the role of maintained nursery schools with regard to our children centres and child care facilities, whether that be supporting child care networks or training staff. I think you had evidence from one of our children centres, which I have visited recently, in Corby—Pen Green. I always want to call it Pen Park, because there is a children centre near that road, near my constituency. At Pen Green you can see the integration and the benefits of using as the hub the maintained nursery school. What I want to explore—we have some work in the Department at the moment—is whether it has further reach out into other centres, because in that particular example and many others, the maintained nursery is physically in the children centre. We need to consider that actively—as a new Minister I say that, because I have been in my brief relatively recently—for exactly the reasons that Barry was touching on about practice, quality, support and finding ways to use the very important, high-class expertise that we have in our children centres as we develop them in our maintained nurseries throughout the sector. We have a capacity issue with regard to the very highest qualified and skilled—we know that and are developing new skills now. But I see the role of the maintained nurseries as crucial in that. Clusters work well in other circumstances. Some are already clustered—we may be able to build on that.

  Q122  Helen Southworth: We all understand that it is essential for children's welfare that we get continuity of support from early years through into primary education. We have received significant evidence that demonstrates concerns about the impact of the new formula on the provision of services for children in primary schools. Quite a number of people have expressed concern about the impact of the funding formula on the Dedicated Schools Grant and the possible impact on primary schools. How are you going to make sure during your considerations that that is not going to have a negative impact?

  Dawn Primarolo: I have to be honest, Helen, and say that I do not fully understand why they believe it would, given how we allocate our dedicated schools budget and grant and the decisions that are taken locally. Given that we are moving into a period where we can take up all these criticisms following a postponement of a year, I would want to be reassured that there was not detriment. There is nothing that should disturb the free entitlement to early years which the Government are paying for. I would be happy to reflect a bit more on your point. If it would help, I could perhaps do a very quick note and have it to you by Monday.[8] I have seen the criticism, but we need to dig down to find out what is really driving it and whether it is other things.

  Q123  Helen Southworth: We have had some really good evidence—and I think we are probably all aware of it from our constituencies, too—about the significant effect that early intervention can have on vulnerable children. Some concerns have been expressed that places need to be available throughout the year for sudden impact issues—bereavement, a parent with mental health problems, a parent going to prison or social isolation—which mean that some intervention needs to happen quickly. How are you going to ensure that every authority area has access to those sort of places? Will you have a focus on those during this consideration?

  Dawn Primarolo: This was one of the issues that came out of our consultation as well. You are rightly reflecting back to me the breadth, differences and complexity of access to early years. Forgive me, but given that local authorities are managing that and providing that, I do not necessarily think it is unreasonable for us to have thought that they would take those points on board. They are clearly important in the way that you have identified. It has not necessarily always happened. It comes back to this vacancy: place versus participation as if they are absolutes in terms of the smooth running of facilities. I suppose it is a different form of flexibility. It is still flexibility around the needs of the parent as well. But that is one of the issues that we need to look at very closely. We do not want to squeeze the capacity out of the system which enables it to respond to those very important differences. We see that working really well in lots of settings, particularly children's centres for obvious reasons.

  Chairman: We have a rule in here that we never let someone sit in front of the Committee and never say a word. I see that Ann Gross has just had a note passed to her. Perhaps you would like to come in on this, Ann, just to get your name on the record. We know how much expertise you have in this.

Ann Gross: Thank you. As the Minister said, the issue of how we make sure that we have places for children with a range of additional needs was one of the things that came up when we were consulting on the draft regulations for the single funding formula. Local authorities' practice on this varies considerably. Some have a very strong record; others have found it more difficult for a variety of reasons. It is, absolutely, one of the issues that we will want local authorities to focus on, and we will work with the pathfinders over the next year so that we can disseminate effective ways of making sure that you can protect some places for children in need.

  Q124  Helen Southworth: So you will be looking closely at making sure that there are not perverse incentives, so that authorities that are not providing that sort of flexibility do not benefit, but authorities that are providing that sort of flexibility get recognition of that?

  Ann Gross: It is always about striking a balance, isn't it. We have got to take into account a number of factors, but one of the issues we will want to look at is how effective local authorities are in making sure that there is proper provision for children in need.

  Q125  Helen Southworth: In fact, using the opportunity as a driver to ensure every authority does have that as a performance standard.

  Ann Gross: Yes.

  Dawn Primarolo: And using the good practice. There is some very good practice out there, so if one local authority can do it the clear question is why can't all do it?

  Q126  Chairman: We continually ask that question. There are only 150 local authorities. Why can't they all be wonderful?

  Dawn Primarolo: They all tell me that they aspire to be wonderful when I see them on safeguarding.

  Chairman: They become less confident when you ask them about child protection, but that is another matter. David.

  Q127  Mr Chaytor: Minister, at the end of the day, when the dust settles on all of this, who are going to be the winners and losers?

  Dawn Primarolo: I do not understand why there should be any losers. The formula is not a prescription for what must be done, it is a tool to aid and reveal—for reasons of accountability—the decisions that have been taken locally about the provision. The formula is about driving quality and availability of places, and the transparency underpins that. I am at a bit of a loss to think why—on that drive for quality, transparency and the sensitivities we talked about in the formula, if they are used in a sensitive fashion—they would produce anything but us all continuing to drive quality and access locally and nationally.

  Q128  Mr Chaytor: So if there are no losers, is it simply a question of the scale of increased funding that all providers will achieve out of that?

  Dawn Primarolo: Can you repeat that question, please?

  Mr Chaytor: You are saying that there are no losers. Is that the case? That is what you are saying, isn't it?

  Dawn Primarolo: I am saying that I do not see why there should be any losers from the introduction of the formula because, even with the formula, local authorities will decide and be accountable for the decisions they take about how they fund each of the settings that provides their early years provision. There is always, in that sense, a priority.

  Q129  Mr Chaytor: So the answer to the question is that there are no losers, on condition that local authorities compensate for any possible losses that an individual provider may have. You are assuming that the local authority would have to step in if, when its formula was finally agreed, there happened to be—

  Dawn Primarolo: No, I'm assuming that the local authority will justify what it is doing publicly to its electorate and those to whom it is accountable. I do not make any assumptions beyond that about how local authorities, for the reasons that Annette gave, choose to direct their funding. I can absolutely try to—will—protect the free entitlement because there is no reason why that should be interfered with. The money is there. Over and above that, that is a discussion every year for a local authority—how it decides to use its resources—and the formula is about making some of those decisions a little clearer, while driving quality. I think that people are trying to attribute to the formula more than it is seeking to do. It is not seeking to direct local authorities; they simply have to explain why they do what they do, which they do all the time.

  Q130  Mr Chaytor: Of the original motivations for introducing the new formula, which is the most important?

  Dawn Primarolo: Quality, that the transparency and the principles around, for instance, deprivation and provision drive that quality, and access. On the point that I started with, it is about the entitlement to early years and particularly to the provisions that we are expanding with regard to the free entitlement. So, quality, but transparency supports that quality.

  Q131  Mr Chaytor: In terms of the typical improvement in funding that will come about to drive quality, what would be your ballpark figure? What is your assumption about the amount of money that a typical provider could expect to receive to improve quality?

  Dawn Primarolo: If you are asking me about what assumptions we make about how much it would actually cost, we do not undertake those exercises. We allocate the money using the dedicated schools grant and we give it as a block to three to 16. That money is made available and the rest has always been done at the local authority level. Clearly, by using that dedicated budget, we are using quite a high bar in terms of how much we are giving.

  Q132  Mr Chaytor: One of the difficulties is that feedback from the work done so far shows that the PVI sector, where maybe there have been some concerns about quality in some areas, is saying that the formula is actually not going to generate a significant uplift to their funding that would really impact on quality. If my difference in funding at the end of the day is going to be so marginal, how can it make a noticeable impact on quality?

  Dawn Primarolo: The increase per pupil that the Government are providing over the spending period 2008-11 is very significant. As I said at the beginning, it is 13% per pupil in that period on top of what has already been a huge increase since 1997. Again, we have to be very clear about the purpose of the formula, which was, by agreement, to reveal the decisions that were taken as an aid to drive quality through transparency. How that tool is then used as the single formula is a matter of local accountability, not a matter of the Government saying that x is going to be transferred to the PVI sector from, for want of a better argument, the maintained nursery sector. I think that there continues to be agreement around the principles but a lack of clarity about why we are doing it in the first place, as people bring, quite rightly, important and other issues to the table, but they are not a matter, in my view, for the principles around the single formula. They may be revealing other things that have been hidden before but that is about what you do next local authority-wise.

  Q133  Mr Chaytor: Do you have any regrets about starting this exercise?

  Dawn Primarolo: This is very challenging and, as a new Minister, I recognise how challenging it is. The Department always recognised how challenging it would be for local authorities but we have to get it right. I think that trying to achieve the principles is important but we should not rush it if is not ready, and that is the position that I am tucking myself into now. I would rather have it right than done in February 2010 when it is not right—that is my aspiration.

  Q134  Chairman: Minister, we like to get things right as well. Can I just pick you up on something you said about the increase in the percentage—13.5%, I think you said? Is that an increase or is that to take account of the move from 12 and a half hours' to 15 hours' entitlement?

  Dawn Primarolo: I believe that's an actual increase.

  Ann Gross: I believe—I think this is correct—that that uplift applies to the whole funding through the Dedicated Schools Grant, so it's not a percentage that simply relates to three and four-year-olds: it's the overall increase for the Dedicated Schools Grant as a whole.

  Q135  Chairman: You've got to remember that, when we interviewed the Secretary of State and the Permanent Secretary, they had to put their hands up and say, "We can tell you a lot about school funding. Most of our other responsibilities in respect of children and families we are not even able to account for." I think that's a fair summary of what they said.

  Dawn Primarolo: I was stepping round that by saying that it's a matter for local authorities when you give it in the grant.

  Q136  Chairman: Rounding up, there's just one thing I want to say. Some people out there—cynics—might say, "Look, in this single funding formula you're just responding to the clamour that came from the independent and voluntary sector—perhaps the independent sector—for a better deal. Historically, they felt that they were underfunded compared with the maintained sector and they don't like that: 40% or 43% have said they can't make any money out of the amount that you provide for the 12 and a half—now 15—hours. Indeed, isn't there a threat that, at some time, the PVI sector might stop taking such children? Putting all your eggs in that basket could be rather damaging. The third bit is this: why should people out there make money out of children? This may sound terribly old Labour, coming from me, but shouldn't the state sector provide this? There shouldn't be people making a profit out of children.

  Dawn Primarolo: I'd never dream of accusing you of being old Labour, although I don't think that's a term of abuse anyway. But on the first point about whether the formula was designed simply to transfer to PVI, absolutely not. I tried to explain at the beginning, having looked back at the record and at everything that has been said in Parliament when this has been debated, since 2005-06, that part of continuing to invest and develop in the early years—we had the pre-1997 and post-'97 investment—is how you continue to bring that together, driven by quality and a transparency that was necessary. I don't think it was just a question of the Government saying, "We want to do this because we think it's a good idea." There was wide agreement that that was the right way to go forward. On provision and making a profit, my view is that all the costs associated—return on investment and salaries—are legitimate in terms of considering the overall level at which we would support the PVI sector, whether they are providing for the 15 hours' entitlement, when it comes within free entitlement. Over and above that, that's not a matter of whether the providers can make a profit for their business. Clearly, the guaranteed funding stream to provide that free entitlement will help underpin their business, but we are not providing the money for people to make profits: we are providing the money to give access to high quality early years free entitlement. The PVI providers can do other things to generate their money as well. That is as delicately as I can put it.

  Q137  Annette Brooke: I think the Minister's probably answered my question. I was a little concerned about the predictions from the PVI sector that it would be going out of business. With the suggestion that there might be a delay in moving to the formula in some authorities, are you concerned that you may be losing some of the current supply?

  Dawn Primarolo: I am not concerned because it is still the role of local authorities to make sure of the provision that they are funding, in whatever setting. Whether the formula is there or not, they are supposed to be securing the free entitlement and making sure that it is of a high quality. They can choose whether they use the PVI sector or the maintained nursery sector. Nothing changes, whether or not they have the single formula. The issue is highlighted by the discussions about the formula, but it is not the formula that is driving those considerations. I have seen the evidence and some of the views on whether it is economic for them to continue to provide it—they could be loss making. We will have to wait and see whether that transpires. I do not have that concern because I have faith that local authorities protect the free entitlement.

  Q138  Mr Timpson: I know obviously that we don't have to wait for confirmation of your mindset on this and that implementation is delayed until 2011. But bearing in mind the issues and concerns that have been raised with you and that you have taken on board in coming to a preliminary view on how this should play out for all nurseries, why are you confident that a year will be sufficient to iron out all the problems? It is a figure that is often used when delays are required. Are you confident that in April 2011, we will have resolved the myriad issues that have been raised with this Committee and yourself?

  Dawn Primarolo: I have to be confident that that can be achieved, given that a reasonable number of local authorities appear to be in the position where they could implement without all the issues that have been highlighted in your hearings and to the Department being settled. I think it would be foolish to put it off indefinitely or for a longer period, given the complete unanimity, even in the evidence to your Committee from those who are very concerned, that having a single formula is right and that the principles contained in it are right. I have not heard, as yet, any disagreement on that. It is all about process. Given the commitment that it is the right way to develop the future of the sector, a year is reasonable. If you asked me to put my hand on my heart and say whether further complications might be revealed in that year, I could not honestly tell you. There are constraints. Parliament has agreed that it is the right way to proceed in principle over several discussions on different Bills, including very recently the Apprenticeships, Skills, Children and Learning Bill. However, it will require good will and co-operation from everybody who claims that they support it in principle.

  Chairman: Minister, that is a good note on which to finish the session. Thank you for your patience. We have kept you for quite a long time. It has been a very good first session and we look forward to seeing you again shortly.

  Dawn Primarolo: I will table a written ministerial statement tomorrow. I did not want to do it today because it is a very busy day and I thought that it might be lost in all the other news. If the Committee has any further views that it wants me to take on board, I would be more than happy to receive interim views on how I might proceed when you have seen the statement, if you think it appropriate.

  Chairman: Minister, that is a very good offer. We will cogitate. Thank you.

  Dawn Primarolo: Thank you very much for your time.

6   See Ev 49 Back

7   Not printed. Back

8   See Ev 49 Back

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