Memorandum submitted by London Councils


1. London Councils, as representative of the 33 London local authorities, believes that the planned implementation of the Early Years Single Funding Formula should be retained and that local authorities need to be given more time to be able to develop effective formulae that reflect the local needs and incentivise quality improvement.

2. This submission to the Children, Schools and Families Committee inquiry considers:

the expected impact of the new local funding formulae on providers;

the difficulties being faced by local authorities; and

the context of early years funding in London

Expected impact of new local funding formula on providers

3. London Councils believes that the planned implementation of the Early Years Single Funding Formula (EYSFF) should be retained. Local authorities in London are aware of the potential difficulties faced by many settings - particularly those in the private, voluntary and independent (PVI) sector - in achieving sustainability. The EYSFF will ensure a transparent means for authorities to equitably distribute money to settings across their area, reducing the antipathy from some types of providers who believe they do not receive as much funding as other types.

4. London Councils accepts that there may be difficulties in some areas. However, it is disappointing that the introduction of the EYSFF could not raise the offer to private, voluntary and independent (PVI) providers without reducing the security of funding offered to other high-quality state providers, such as nursery schools.

5. London local authorities recognise that without the equitable redistribution of present Nursery Education Funding (NEF) severe pressures may be placed on providers in the PVI sector, potentially reducing the sustainability of these settings. This could in turn lead to local authorities being unable to meet their local sufficiency targets for childcare - something that would not be good for parents or local authorities.

Difficulties obtaining reliable data

6. One particular issue which some local authorities are encountering is the difficulty of obtaining reliable data from the PVI sectors which are often naturally reluctant to release confidential information about their business to a "competitor" - something which the local authority could justifiably be seen as. This has led to EYSFF in some areas being developed with less data than would be preferred, although some authorities are beginning to find solutions - such as obtaining data via the medium of a consultancy, or through amalgamating information obtained verbally into wider packages which disguise individual figures.

7. London Councils would suggest that local authorities need to be given more time in developing EYSFF in order to 'get it right'. At the very least local authorities should be given the scope to revise their formulae after they have been introduced in 2010 to ensure that they reflect the needs of settings and incentivise quality improvement.

Early years funding in London

8. It is especially important that authorities in London get their formulae right. Research in recent years has shown that childcare costs in London and the South East are substantially higher than in other parts of the country.[1] This is understandable as rents and average wages in the capital and surrounding region are similarly higher. However, studies also identify that NEF in London is not funded at similarly higher rates, leading to problems for settings in delivering the free entitlement - particularly those in the private and voluntary sectors:

"[Pre-school Learning Alliance providers] members in London are significantly more likely to be experiencing problems with the levels of funding they receive from the free entitlement than members in other areas."[2]

9. London Councils would urge that overall funding allocated for NEF within the Dedicated Schools Grant should be weighted to reflect the greater cost of providing services in the capital and the surrounding area.


November 2009