Memorandum submitted by the National Association of Head Teachers
Introduction and background
1. The National Association of Head Teachers is pleased to be able to submit this statement to the Children, Schools and Families Select Committee. This is an important subject which is having an adverse impact on a number of our members. The Association is a professional association which represents more than 28,000 members serving in educational establishments across the whole spectrum of educational provision, both maintained and independent. It has in membership leaders in all forms of early years providers.
2. In terms of the Single Funding Formula for early years, local authorities (LAs) are required to design and implement a single funding formula to fund the free entitlement to early years provision for 3 and 4 yr olds across all providers, maintained and private/voluntary/independent providers (PVIs). The formula is intended to ensure that the same principles are used to fund maintained and PVI settings. It is intended that this formula will be in place and effectively implemented by April 2010.
3. 11 authorities were used to pilot these arrangements and the results of the pilot have been used in the DCSF guidance to exemplify ways that the funding formula can be put in place. This DCSF guidance was issued in the summer of 2009. A number of issues are arising as a consequence of LAs attempting to put the formula in place.
Issues and consequences
4. In some authorities, PVIs are reluctant to present full cost information as they consider this commercially sensitive information. It is essential that a full cost analysis is carried out before arriving at a single formula to ensure that the cost models of the different sectors are fully understood.
· Lack of information from some PVIs means that any formula is based on incomplete information that disadvantages providers;
· Schools do not have the option NOT to provide the information as it is sited with the local authority.
5. Local Authorities are adopting a simple but not necessarily helpful approach to the principles. Rather than look at funding requirements which mean differentiated base levels to manage legitimate cost differences, for example, they are maintaining a single level which does not meet the needs of providers;
· Cost levels for maintained nursery schools and, to a lesser extent, nursery classes are invariably higher than PVIs. This is because of several, unavoidable and legitimate elements, such as statutory pupil/teacher ratios, salary levels and rating cost differentials. This is not being taken account of in a number of authorities' funding formulae which will result, at best, in significant turbulence in the system.
· There is still an issue of PVIs charging top-up fees; where this is happening, in the main it is a result of billing software that has been in place for some time. However, this needs correcting.
6. The guidance specifies, among other things, that there must be a deprivation factor and that funding must be participation- rather than place-led. It also includes as one of the principles that the formula must take account of 'the legitimate need for PVI providers to generate some profit'.
· The effect of participation-led funding was always going to mean a shift in funding from maintained to PVI providers. This was recognised and it was anticipated that, where this was a legitimate concern in a particular authority regarding sustainability of maintained provision, this would be accounted for within the formula;
· The deprivation factor adopted by some local authorities is seen as not sufficiently sensitive and, because the majority of maintained settings are the ones dealing with children from deprived backgrounds, this is having an unequal impact. This is further complicated by PVIs not being required to collect free school meal data which impacts on the deprivation determinator;
· There continues to be concern over the issue of maintained provision losing funding to provide profit for PVIs.
7. Historically, for some years some local authorities have funded full time places in maintained nurseries, rather than just the part time provision that was catered for nationally. These were, in the main, in areas of significant disadvantage and served socially deprived families;
· Because of the need to 'redistribute' the early years funding, local authorities which historically have funded full time places are now choosing to cease to fund these. It appears not to be a conscious policy decision, just an unforeseen consequence of the single funding formula. If it IS a conscious policy decision, then there does not appear to have been formal consultation on this on the part of the authorities; rather, it seems to be happening 'through the back door'.
8. Maintained nursery schools, in particular, are tied into the authority's admission process. This means in some instances that the nurseries are admitting their new pupils at either 2 or 3 points in the year but losing their older pupils to statutory schooling at 1 point in the year;
· Where maintained schools were funded on a place-led basis, this admission arrangement did not have an impact on the funding. Now, with participation-led funding, it will do. As with many other areas, maintained settings are tied to authority and statutory procedures which do not affect PVIs, resulting in inequalities that have significant impact on the budgets for maintained settings.
9. Schools are unable to charge for additional childcare provision that PVIs are legitimately able to include. This is because of a delay in the necessary legislation. This means that schools are at a disadvantage.
· Schools do not operate under the same legislation as PVIs yet are to be funded using the same formula. Even the inspection regime, intended to be under the same framework, differs markedly for PVIs and maintained settings, with maintained settings facing a rigorous Ofsted inspection not necessarily encountered in the private settings.
10. There are many changes happening almost simultaneously and this is adding to the confusion over provision: 12.5 hours of free entitlement moving to 15 hours; 'stretching' the free entitlement provision beyond the 38 weeks to cover the whole year; provision for disadvantaged 2 year olds on top of the move to a single funding formula;
· Where schools are not open during holiday periods currently, the stretching provision will impact disproportionately on them. They will need to pay additional staffing costs, additional utilities costs etc which are paid at a national level, rather than individual settings. These are non-negotiable.
· Too many changes happening at the same time add to the general confusion within the system as a whole.
11. Nursery school budgets are being significantly reduced and this WILL RESULT IN CLOSURES of maintained settings. It is generally recognised that these settings provide outstanding early years provision and this will be lost.
12. Children's Centres will also be affected and this WILL RESULT IN CLOSURES of these settings.
13. Full time places will no longer be funded by local authorities and this WILL RESULT IN THE MOST DEPRIVED PUPILS BEING DENIED OUTSTANDING PROVISION. This is an unintended/unforeseen outcome but one which is very real.
14. Where a school has a maintained nursery class, there WILL BE AN ADVERSE EFFECT ON THE SCHOOL'S BUDGET.
15. Maintained provision WILL NOT BE SUSTAINABLE in the long term.
16. There has been a PRESUMPTION AGAINST CLOSURE of nursery schools because it is recognised that, although generally more expensive, it is excellent provision and therefore delivers VALUE FOR MONEY.
17. The Minister, Dawn Primarolo, recently sent a letter to all local authorities, together with supplementary guidance. It is essential that local authorities take note of this guidance and review their formulae with particular regard to the impact on maintained provision. They need to be made aware of the actual practicalities of arriving at a single funding formula and implementing it. This could well entail direct review and comment (by the DCSF) on a specific local authority's formula with a potential for requesting a reworking of the formula.
18. The Association believes that the deadline for implementing the single funding formula needs to be extended by at least a year to allow authorities to model and refine their formulae. This would then allow for submission and reworking to be carried out within a reasonable timescale and with full information and guidance available.
19. Local authorities should be required to indicate how and to what extent they have involved ALL providers, including the maintained providers, in the development of the formula and any consequent policy changes.
20. Any local authority that has ceased to provide full time places solely on the basis of the introduction of the single funding formula should be required to reverse its decision and go through a formal consultation process, assessing the impact on pupils from deprived backgrounds.