Memorandum submitted by Andy Collishaw, Departmental Finance Manager - Children Services, Darlington Borough Council


I write in response to your inquiry regarding the Early Years Single Funding Formula and I would like to respond direct to the to the two specific questions. 


A) * The expected impact of new local funding formulae on providers of early years education and childcare services. 


1. The impact of the new local funding formulae is creating some parity in the distribution of funding across early years education providers.  However clearly with the introduction of any new formula there are winners and losers.  The introduction of deprivation into the formula especially for some Private, Voluntary and Independent Nurseries, is causing concern as they could be faced with providing the same services for less money.  Clearly there is only the same amount of funding to distribute, and if a deprivation factor is included this in theory will take funding away from the post codes of the more affluent children and moved to the more deprived children.  However this is causing a problem to PVI settings in the more affluent areas of Darlington


2. With regard to Maintained settings, it brings much more uncertainty into their budgets.  Assistance will be provided to the maintained settings who have bought into the Schools Finance Support Service.  Darlington currently funds on 50% planned and 50% actual places based on January School Census data.  Therefore effectively are funding for some ghost places, the cessation of this will lead to some schools with reduced levels of funding.  Additionally in the maintained sector funding on the number of children at each headcount reduces the stability in schools budgets.  However it is a proposal that there is dampening brought in to cushion the blow for some Maintained settings.  Whilst this creates stability, it does reduce the effectiveness of funding following children. 


3. Darlington has two stand alone nurseries and the costing exercise identified that the cost of running their services are significantly higher than other settings.  It is proposed that a large lump sum is given to both of these settings to ensure stability. 


B) * Difficulties which have been encountered in drawing up new funding formulae, and how they are being overcome.


4. As detailed above a large lump sum is being proposed for the stand alone maintained nurseries.  This has caused some very difficult and probing questions especially from PVI settings who have argued that they should also receive a similar lump sum as they are effectively undertaking the same service, providing the same outcomes, they acknowledge the cost of a manager is less than the cost of a head teacher, but also recognise that they have lower ratios than schools. 


5. Another difficulty was the recent publication from the DCSF which seems to be back tracking on the ethos of the Early Years Single Funding Formula.  It appears that the DCSF initially wanted a single rate across all settings to ensure parity in funding.  However the recent publications makes suggestions that funding should not be reducing Maintained Settings budgets.  It is almost impossible to ensure that Maintained settings do not get a reduction in funding, introduce parity in the funding of all settings, introduce a deprivation factor, all within existing resources.  


November 2009