Memorandum submitted by Unison


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


1. Throughout the consultation process and implementation of the new funding formulae UNISON has been principally concerned about maintaining the funding for institutions with high quality standards, as recognised by both Ofsted and parents.


2. Maintained nursery schools, in particular, achieve excellent results but have higher costs than average provision in the private, voluntary and independent sector. This is because they have excellent facilities and the staff are higher paid and have better conditions of service than in the private and voluntary sector.


3. This contrasts with the levels of pay in the private and voluntary sector, where the Low Pay Commission in 2007 found that in the childcare sector: 10% of jobs were paid at National Minimum Wage rates and nearly 20% were paid below this level; 17% of private sector providers were not paying at National Minimum Wage levels and the average wage for staff was below 6 per hour.


4. The staff in maintained settings tend to be more experienced, better qualified and have lower rates of staff turnover. They are accountable to school head teachers and the local authority in performing to meet set national, local and school standards.


5. Although the intention of the EYSFF is to capture the costs of existing provision and to fund accordingly, we believe its introduction will have a disproportionately negative impact on maintained nurseries, school nurseries and Sure Start Children's Centres, whilst at the same time having failing to address many of the problems of funding, low wages and higher staff turnover in the private and voluntary sector.


6. The result of this levelling down will have limited impact on private and voluntary settings but threatens to undermine the whole existence of the maintained sector.


7. Many private and voluntary settings will still shun offering free places because they do not believe the EYSFF will match the costs to them and allow for sufficient profit or return.


8. These schools are reporting uncertainty in finding out what there allocations are for April 2010 under the new formula and some are already experiencing cuts and closure threats in 2010. For example in South Gloucestershire it has already been reported that five out of the eight maintained nurseries will close as a result of the funding changes.


9. Most maintained nurseries report that they will see a drop in funding following the introduction of the new formula and have reported doubts about their ability to retain standards under the new funding regime.


10. We agree that the new formula delivers challenges to the maintained sector and there are areas in which they may need to adapt. The greater degree of flexibility required and rewarded under the new formula could encourage maintained settings to expand their offer to parents and be more flexible and receptive to the needs of parents, particularly over hours of opening. This in turn would offer them the opportunity to extend and expand their services to more children.


11. The initial impact on nurseries seems to be around the loss of funding of places rather than of children. Maintained nurseries have historically been able to phase the introduction of children to a setting throughout the academic year for sound educational reasons. This will end with the introduction of EYSFF to everyone's detriment as EYSFF forces nurseries to start all children in September of each year, whether parents believe them ready or not.


12. It will also diminish their ability to take children at short notice. Nurseries have often been the provider of last resort for families that require childcare at short notice. This is especially true of children's centres that have specific obligations to offer support to children from deprived backgrounds.


13. Maintained nurseries often act as beacons of excellence in early education, providing support, advice and training for other settings. This is not recognised within the EYSFF and again is in danger of being lost in a race to the bottom.


14. International and domestic evidence, that formed the basis of the Sure Start programme, shows that it is only quality in early childhood care and education that can make a real difference in addressing the educational inequality and cycles of deprivation so prevalent in the UK.


15. Although there is a presumption against closure of nurseries, the DCSF's own impact assessment of the EYSFF identifies that funding will be re-directed away from maintained settings and that in the long term this is bound to make their future untenable.


16. The introduction of the EYSFF could significantly reduce the number of those settings that are able to offer the highest quality in the early years. This will damage the education of many children as well as impacting on the pay and conditions of employment of a notoriously underpaid workforce.


17. The early years sector is chronically under-funded to deliver the quality provision that is expected of it. The only means by which it has been able to deliver as much as it has is through the poverty pay offered to the majority of low paid female staff in the sector. The EYSFF tinkers at the edge of this issue but a sea change in early years funding is required if we are really going to be able to achieve the aim of quality provision for all.



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



18. There appears to be significant confusion over the introduction of the EYSFF. Many local authorities seemed unprepared to introduce the changes due to the multiple demands that they already face.


19. Many view the revised funding formula with suspicion and can be over-complicated. Local Authorities have particularly struggled with the cost analysis required, in engaging with all providers and in determining the amount and criteria for payment of the additional supplements.


20. Despite the vast majority of maintained settings consistently being rated as excellent, only about one third of those surveyed by the Early Education charity in September 2009 believed that they would qualify for a "quality" financial supplement from their local authority.


21. What is striking is the number of authorities that are unwilling to use OFSTED ratings in developing their quality supplements. Many authorities appeared to have developed their own quality benchmarks rather than use OFSTED ratings.


22. At the moment it appears that most authorities are still in the development stage of their final formulae and it is difficult to establish as yet how these problems have been resolved.




December 2009