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

Letter to the Chairman from the Rt Hon Dawn Primarolo MP, Minister of State for Children, Young People and Families, Department for Children, Schools and Families

  Following my recent appearance at the Children, Schools and Families Committee on the Early Years Single Funding Formula (EYSFF) I am writing to confirm that it is the Government's intention to postpone the formal implementation date for the EYSFF by one year until April 2011. I trust you have seen the Written Ministerial Statement that my office sent to you last week which was laid in Parliament on 10 December.

  It has become increasingly evident that a number of local authorities have been having significant difficulties and challenges with the development of their EYSFF. Further to this, I am also aware of the concerns from providers and parents about the potential disruption an under-developed formula could cause. The Department's recent risk assessment, which gave a snapshot of local authorities' progress on their proposed formulae, highlighted the variability of approach and gives further weight to allowing LAs more time to ensure that they get this process right. I promised to share with the Committee a short note that gives the high level messages from our analysis which I have attached to this letter (Annex A).[9]

  My decision to allow Local Authorities to delay should not detract from the hard work that I know has gone into getting local formulae to this stage. That is why I want to give those Local Authorities, that feel ready, the opportunity to continue to work towards an April 2010 implementation date and become part of a new tranche of pathfinders. My announcement is not intended to halt the momentum of local authorities who are ready to implement successfully—and my officials will be encouraging them to join the pathfinder programme—but it will allow more time for other local authorities to resolve some of the difficult issues I know they are facing locally.

  The Committee expressed concern about the impact of the funding formula on the Dedicated Schools Grant (DSG) and the possible impact on primary schools. As I said to the Committee, the DSG is given to local authorities as a single block to fund provision for 3-16 year olds. We do not separate out the money for the free entitlement for three and four year olds, but leave it to local decision-makers to distribute DSG to meet the needs of children in their area. We know that some local authorities have agreed with their schools forum that additional funding should be made available from the Schools Budget to support delivery of the EYSFF, and this is rightly a matter for them. As I said to the Committee, we are increasing the level of DSG significantly over this period—by on average 13.1% between 2008 and 2011—and local authorities and schools forums are best placed to decide how to distribute their increases locally.

  The EYSFF remains an essential reform if we are to ensure transparency, accuracy and improve the way local authorities distribute early years funding to the benefit of more children and families. I want to thank the Committee for giving me the opportunity to represent the Government on this issue.

December 2009



  The Early Years Single Funding formula (EYSFF) data collection exercise took place in November 2009 and was designed to establish an indicative national picture of progress and the different approaches local authorities (LAs) were taking to formula design—with a view to exploring further the impact of different models over time. The majority of LAs provided this information as a work in progress, subject to consultation, and the analysis below is therefore based on that and likely to change. A report on the results of the EYSFF data collection was sent to Select Committee members following the EYSFF Select Committee hearing[10] and this is an updated version, following further analysis.


  In order to enable a high-level analysis of the approach taken to the EYSFF, formulae were categorised according to the following models:

1Single base rate for all providers
2Two base rates: settings with a graduate leader and settings without a graduate leader
3Multiple rates: sector-specific (eg maintained nursery schools, maintained nursery classes, PVI, childminders)
4Other: included base rates determined by size of provider, flexibility and quality

  The table below shows that the multiple-rate model is the most common, with a significant number of LAs also opting for a single base rate.

  Analysis has shown significant differences in base rates between LAs as the range varies from 0.18p to £8.35 per hour. For all LAs who supplied base rate cost information, the median per hour rate is £3.50. It is important to recognise that seemingly low base rates may form part of a wider formula which includes any number of supplements. Data given in this section should not therefore be used to calculate an actual setting's total budget.

Amount (£) spent per hour

No of







All LAs with a Base Rate106 3.643.508.35 3.880.73
Model description
  1  rate: all providers37 3.143.305.64 0.185.463.15 3.590.44
  2  rates: Graduate leader/non-graduate leader 33.023.14 4.141.862.28 2.393.280.89
  Multiple rates: provider-specific63 3.733.548.35 0.867.493.15 4.000.85
  Other133.83 3.507.600.25 7.353.294.15 0.86

  For most LAs the base rate makes up at least 80% of the total budget, whilst in a number of LAs the base rate proportion is nearer to half of the total budget. It is important to note again that LAs may have built formulae that pay more to providers through supplements (eg deprivation, quality, flexibility and others).

1.2  Base rates for maintained nursery schools

  For those LAs which included a specific rate for maintained nursery schools, the range of rates is £0.86 (an anomaly) to £8.35. The average rate for a maintained nursery school is £4.94.
LAs base rates for
Maintained Nursery
Base rate (£) per hourRange 7.49
First quartile3.75
Third quartile5.83
Interquartile range 2.08


  Local Authorities' deprivation supplements vary from £0.02-£3.07 per hour per child. The average (median) payment per child per hour is £0.20. On average, the proportion of a LA's total budget given to deprivation is 3%, however the range showed a huge variability from 0.1% to 22.1%. For those authorities who provided cost data, the table below shows the range of rates.
Number of Local


Amount (£)Minimum 0.02
per childMaximum3.07
per hourFirst quartile 0.10
Third quartile0.35
Interquartile range 0.25

2.1  Deprivation supplement as a proportion of the total budget

  The table below shows how the anticipated total budget for the deprivation supplement as a proportion of the total early years funding varies across local authorities.

2.2  Examples of deprivation factors

  Deprivation was measured in a variety of ways, with the most common being IDACI and IMD scores. Other deprivation factors included Acorn categories, Free Schools Meals entitlement, targeted ethnic groups, postcode of provider and weighted supplement based on child's postcode.


  Whilst there were 123 LAs who returned data capture forms, three LAs each made two returns, one with a quality supplement and one without, so there were 126 quality supplement returns altogether. Sixty one (48%) of the returns reported no quality supplement. Of the 65 that did report a quality supplement, 40 (62%) did so on a per hour/per child basis. The remaining LAs reported their supplement either per child, per setting, per week or per annum. The range of quality supplement amounts is shown below.
Number of Local


Amount (£)Minimum 0.02
per childMaximum2.49
per hourFirst quartile 0.10
Third quartile0.51
Interquartile range 0.41

3.1  Quality supplement as a proportion of the total budget

  The chart below shows the percentage of the total funding spent on the quality supplement across local authorities, for those LAs who provided cost data.

3.2  Examples of quality factors

  A significant number of local authorities were unable to reach agreement over criteria for the quality supplement but have indicated that they intend to introduce a quality supplement in the future as part of the iterative process of developing their EYSFF. A number of authorities also decided not to include a quality supplement as they considered quality to be built into their system to such a degree that an additional supplement was not necessary.

  For those LAs who did include information on quality, a variety of factors were used, including qualification levels of staff, whether the setting was led by a qualified teacher/Early Years Professional, Ofsted ratings, local quality RAG rating, amount of training and professional development offered to staff and Quality in Action accreditation.


  The table below shows that 30 LAs have considered including a flexibility supplement within their EYSFF. Some LAs may have built a flexibility payment into their base rate and others will be using Standards Fund money to incentivise flexibility as part of the extension of the free entitlement from 12.5 to 15 hours per child.

  The table below shows how the amount spent per child per hour on flexibility varies across local authorities, for those authorities that reported a budget figure for flexibility.
Number of Local


Amount (£)Minimum 0.00
per childMaximum2.50
per hourFirst quartile 0.07
Third quartile0.30
Interquartile range 0.23

4.1  Flexibility supplement as a proportion of the total budget

  The chart below illustrates how the proportion of the total budget spent on flexibility varies across local authorities. Some local authorities provided more than one return, and all of these have been included:

4.2  Examples of flexibility factors

  A significant number of local authorities were unable to reach agreement on a flexibility factor, but indicated a commitment to introduce this at a later date. Others have built flexibility into their base rates so did not consider it necessary to include an additional supplement. Some authorities also decided to wait until after the implementation of the flexible extension to introduce a flexibility supplement.

  For those LAs who did include information on flexibility, a variety of factors were used including session length, opening hours, localised flexibility grading, offering stretched provision or a variety of sessions and offering flexibility around both standard and extended school days.


  Of the 123 LAs that made a return 27 (22%) reported that they had no transitional arrangements, that they are to be confirmed or that they are not applicable. The104 LAs that provided information on transitional arrangements were grouped according to the following transitional models:

1No transitional arrangements
2Transitional arrangements in place for less than 3 years
3Transitional arrangements in place for 3 years or more
4Transitional arrangements will definitely be used, but details had not yet been decided

  The chart below shows the spread of transitional models across those local authorities who included this information.

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