Memorandum submitted by Bob Thompson, Early Years and Extended Services Consultant

 

Executive Summary

 

1. Work was undertaken to support the development of the EYSFF in both Bedford Borough and Central Bedfordshire. This included:

Private, voluntary and independent (PVI) sector cost analysis

Comparison of costs across PVI and maintained sector

Ongoing work on construction of Typical Cost Models (TCM) across providers

Initial Consultation on issues and factors to inform construction of EYSFF

Consultation on 4 formulae in each authority (see below).

 

2. The main negative impact of the introduction of the EYSFF will be experienced by nursery schools. A significant proportion of this negative impact is the result of the change in counting methodology from full-time places to hourly uptake. Where LAs had previously changed to a funding methodology on uptake the impact does not appear so great. Where there is significant impact directly from the application of the formulae this is the result of the removal of a "cliff edge" in the change in methodology of calculating the social deprivation element or due to specific additional elements of a school's funding being changed.

 

3. The negative impact on nursery schools could be lessened by further increasing the nursery school lump sum. It is recognised that there are higher fix costs which nursery schools experience and PVI settings do not but to increase the lump sum further without an injection of further funding by the LAs would be to the detriment of the PVI sector.

 

4. Most of the nursery schools provide full-time places for reception year children. In order to provide equity with lower schools it seems reasonable to fund these places, however, the funding for this can only come from growth or the wider Direct Schools Grant (DSG). The same is true of the potential funding of additional full-time places for children with special or additional needs.

 

5. It is clear that the implementation of Options C or D would have a dramatic effect on the nursery schools possibly leading to reorganisation and / or federation with each other or with nearby lower schools. The implications of Options A or B are less but still may lead to some nurseries reducing their size or reorganising internally. The quality of the nursery schools in both authorities as graded by OFSTED is at least good. It is recognised that the resulting high quality of these settings is a direct result of the level of resources they have. Many of the nursery schools either directly or in partnership provide wider services to their children and parents including childcare and children's centre services. Furthermore the loss of nursery schools places would have an impact on sufficiency and choice. Clearly it would be to the detriment of those families who need these services most to lose the nursery school provision.

 

Introduction

 

6. The information contained in this submission is provided by me as an Independent Early Years and Extended Services Consultant working with the Early Years and Schools Finance Teams of the newly created unitary local authorities of Bedford Borough and Central Bedfordshire in undertaking work to support the development of the EYSFF. Previous I was Head of Early Years and Extended Services for Bedfordshire.

 

Work undertaken

 

7. The production of a balanced EYSFF has been difficult to achieve in both local authorities (LAs). A cost analysis of the private, voluntary and independent sector and comparison with unit costs in the maintained sector was undertaken for the whole of Bedfordshire in the autumn of 2007. The response to the request for information was disappointing with a low response rate and some providers finding it difficult to disaggregate their costs in the manner requested, meaning it was difficult to compare like with like and draw definite conclusions, particularly in relation to the voluntary sector. However, the broad conclusions of this work indicated that it is at least twice as expensive to educate a three or four year old in a LA nursery school than a voluntary pre-school and one and half times more expensive when comparing nursery schools and private daycare provision. Work on the construction of Typical Cost Models is ongoing in both authorities and will be completed within the timescales outlined in the DCSF EYSFF Guidance.

 

8. The cost analysis work was followed by initial consultations in both LAs on the EYSFF in the summer 2009. The purpose of these consultations was to provide information to schools and settings on the issues and factors involved in the EYSFF and to inform its construction. Although the response to this consultation was better from the private and voluntary sector, the response from lower schools apart from nursery schools was poor.

 

9. In constructing the EYSFF both LAs have adopted a similar approach. The consultation period on the 4 options concluded yesterday. As yet an analysis of the outcomes has not been completed. The three main factors which guided construction of the EYSFF are:

The broad outcomes of the cost survey in PVI settings and a cost comparison across PVI and maintained settings

The need to meet statutory requirements to maintain sufficient places for 3 and 4 year olds across the PVI and maintained sectors thus ensuring that parents have sufficient choice

The views of providers regarding base rates and funding factors expressed in the initial consultations.

 

Outcomes and Impact

 

10. The 4 formula options are:

Option A - a common base rate of 3.60 per hour uptake:

o plus a social deprivation element at three levels (20p per hour uptake for 30% most disadvantaged, 10p per hour uptake for 31-60% and 0p per hour for 61-100% levels of disadvantage based on the Index of Multiple Deprivation (IMD)

o plus a lump sum for nursery schools (42,000 for Bedford Borough and 65,000 for Central Bedfordshire)

o plus interim protection for schools at the level of the Schools' Minimum Funding Guarantee (MFG) - 100% for 2010-11, 67% for 2011-12, 33% for 2012-13 and no protection for 2013-14.

Option B - a common base rate of 3.30 per hour uptake:

o plus social deprivation element as Option A

o plus nursery school lump sum as Option A

o plus PVI 100 lump sum for administration and 10p per hour uptake

o plus PVI rent and rates 10p per hour uptake

o plus PVI and nursery school utility costs 10p per hour uptake

Option C - as Option A without the nursery school lump sum

Option D - as Option B without the nursery school lump sum

In addition a further consultation is proposed during 2010-11 on the possible inclusion of a quality factor in 2011-12.

 

11. Each formula option sees funding transferring from the maintained sector to the PVI sector. Option A has the least impact and Option D the greatest in this respect. The main negative impact is on nursery schools both from the perspective of the formula and in moving from predominantly full-time place led funding towards one based on the uptake of hours. In LAs which had changed previously to a funding methodology based on uptake the impact does not appear so great. Some lower schools with nursery aged children also suffer a negative impact but not as great as the nursery schools.

 

12. The impact on the 7 nursery schools in both authorities is demonstrated with full transitional protection in the first year (2010-11) for Option A varying from 14.7% to 34.6% of the 2009-10 budget and for Option D from 34% to 53.2%. The option which possibly provides the most balanced approach to the funding needs of all schools and settings is Option B. The transitional protection for this option varies from 17.9% to 37.3% across all schools. However, a better comparison may be provided by comparing the 2010-11 indicative budgets and these budgets recalculated using the uptake of hours methodology.

 

13. If Option B was to be implemented in relation to the four Central Bedfordshire nursery schools the total negative impact on the recalculated indicative budget varies from 14% to 40%. When considering the change from full-time places to occupancy based on uptake, the occupancy of these schools varies from 56% to 76%. This equates to between 11.8% and 73.6% of the total budget reduction. 40% of the total budget shortfall of the school experiencing the least impact from counting method change results from the exclusion of funding supporting a wider range of services for children 0-5 years.

 

14. A similar picture arises in Bedford Borough with a similarly significant proportion of the deficit relating to the change from full-time places to hourly uptake. The exception to this being one nursery school adversely affected by a change from the nursery schools delegated budget to the EYSFF. A "cliff edge" exists in the current social deprivation funding based on Acorn levels 4 and 5 to the advantage of this school but this is lost in the move to the new methodology in the EYSFF based on the IMD.

 

15. The negative impact on nursery schools could be lessened by further increasing the nursery school lump sum. I am aware that some LAs have used larger nursery school lump sums than those suggested above. The lump sum in Central Bedfordshire has already been increased from 42K to 65K. The level of 65K was used in Central Bedfordshire as this represented the average costs of employing a headteacher in this LA. It is recognised that there are higher fix costs which nursery schools experience and PVI settings do not but to increase the lump sum further without an injection of further funding by the LAs would be to the detriment of the PVI sector.

 

16. Most of the nursery schools provide full-time places for some or all reception year aged children. In order to provide equity with lower schools it seems reasonable to fund these places, however, the funding for this can only come from growth or the wider Direct Schools Grant (DSG) which would require LAs already grappling with the budgetary issues of disaggregation to inject new monies and / or the approval of the Schools Forums. The same is true of the potential funding of additional full-time places for children with special or additional needs. Something which traditionally the nursery schools have provided to the benefit of children and their families.

 

Conclusion

 

17. It is clear that the implementation of Options C or D would have a dramatic effect on the nursery schools possibly leading to reorganisation and / or federation with each other or with nearby lower schools. The implications of Options A or B are less but still may lead to some nurseries reducing their size or reorganising internally. The quality of the nursery schools in both authorities as graded by OFSTED is at least good. Most of the nursery schools either directly or in partnership provide wider services to their children and parents including childcare and children's centre services. Furthermore the loss of nursery schools places would have an impact on sufficiency and choice. Clearly it would be to the detriment of those families who need these services most to lose the nursery school provision. The nursery schools serve some of our most disadvantaged children and families.

 

 

December 2009