Memorandum submitted by Claires Court Schools
Annex to the Independent Schools Council submission
1. I make this submission to the committee on behalf of the Claires Court Schools Group (CCSG). Through two of its heads, CCSG is a member of the Independent Schools Association (ISA) and the Independent Association of Preparatory Schools (IAPS). CCSG is also a member of the Independent Schools' Bursars Association (ISBA). ISA, IAPS and ISBA are three of the 8 professional associations that constitute the Independent Schools Council (ISC), a body which, inter alia, exists to represent the interest of the Independent schools sector with Government. Until last Friday (27 November), ISC, ISA, IAPS and ISBA were unaware of this enquiry. In the time available, they have found it impossible to submit their own evidence, either collaboratively or independently.
2. CCSG is a proprietorial,
all-through, diamond shaped[i]
independent day school based in Maidenhead,
3. The Local Authority (LA) with responsibility for providing Nursery Funding to CCSG is the Royal Borough of Windsor & Maidenhead (RBWM). The key issue arising from the present review of funding arrangements is that 'top-up' will be explicitly forbidden. Top-up is the mechanism by which all private providers of nursery services make good the shortfall between the income required by providers to sustain their businesses and the funding provided on a participation basis (i.e. per capita) by their LA. Top-up is not allowed under the current Code of Practice covering the weekly provision of the 121/2 "free" hours into 5 daily sessions of 21/2 hours. As providers are allowed to set longer sessional boundaries than 21/2 hours, they are therefore in a position to charge a very high marginal rate for the extra time, thus saving face. By and large, LAs have connived at this because without the support of the Independent schools, a large number of high quality nursery places would disappear from wards where there would be no alternative provision. In RBWM, according to their s.52 Budget Statement for 2009-10 which draws on headcount data from the January 2009 Early Years Census, about 3000 3- and 4-year olds access nursery funding. About 1200 of these children have places in Maintained settings and 1800 in participating Private, Voluntary and Independent (PVI) settings - a 40:60 split. Within the PVI total, it is my estimate that about 500 3- and 4-year olds access funding in an Independent school within RBWM. This is 17% of all funded 3- and 4-year olds and 28% of those in the PVI sector. Anecdotally, there are LAs where the proportion is much higher.
4. CCSG understands that the new Code of Practice (concomitant with the new Funding Formula but still to be unveiled) will ban other charges which Independent schools currently require such as a registration fee, an acceptance deposit and the purchase of school uniform where only the 'free' 15 hours entitlement is being taken up. The concept of a School-Parent contract also appears to be unwelcome as it suggests a limit on the ability of parents to pick their participation à volonté.
5. For the current (Autumn 2009) term, there are 107 eligible 3- and 4-year olds within CCSG who are funded by RBWM. 26 of these are pupils within our two Reception Classes. As matters currently stand, parents of children in Reception classes are unable to ask only for the 'free' entitlement nursery education because their children are engaged in a full school day. This arrangement will continue in September 2010 when the entitlement is increased to 15 hours weekly. Consequently, our submission to the Committee focuses on those 3- and 4-year olds who attend our Nursery.
6. In the autumn of 2007, the RBWM Early Years team surveyed the costs of the PVI sector by written questionnaire. A reasonable response was obtained with 56% of all PVI settings responding. In the subsequent report by the RBWM Early Years Business Officer, the Independent sector emerged as having a high cost base averaging £11.57 per 21/2 hour session and in its assessment of the impact of the proposed changes on the Independent sector, the officer noted that "the most likely impact of the flexible offer will be if the rate paid by the LA does not cover the cost of delivery. The evidence of the survey suggests that [Independent schools] have a high cost base so this could be a real issue for some settings." The Summary concluded
7. "The findings demonstrate that cost of delivery varies from provider to provider. This does not fit well with the one-size fits all method of payment. Going forward there will be significant pressures on cost as providers aim to become more flexible and to meet the changing requirements of the Early Years Foundation Stage. They are highly susceptible to external factors such as changes in Govt. employment legislation, increases in property cost, the introduction of the Early Years Professional status etc. The introduction of the flexible offer will place pressures on all types of provider (both maintained and non-maintained). The single funding formula the LA will need to establish what level of service the nursery education funding is expected to finance and how this will be delivered."
8. The RBWM funding formula that has emerged is one that establishes a small number of base rates that will be applied per sector. It might be concluded that in RBWM the Independent sector will have its own base rate recognising its higher costs. Instead the finance officers who developed the modelling spreadsheet chose to ignore these observations and chose to assume that the Independent sector's costs were most akin to those of the Maintained sector's Primary schools which have attached Nursery classes. The funding rates proposed by RBWM are therefore £3.55 per hour or, for comparative purposes, £8.88 per 21/2 session.
9. On closer examination, it was seen that the modelling had not taken into account several important differentials between a Maintained school's costs and those of an Independent school. There was no recognition that Independent schools cannot reclaim VAT, that the valuation (which determines the cost of business rates) of LA educational premises is governed by national agreement does not extend to the Independent sector, that the width and scope of business insurance is far greater (and therefore more expensive) than that of Maintained schools, that the administrative overheads are far greater (preparation of fee invoices and collection and banking of fees, for example), the lack of access to e-Learning credits in the Independent sector, the lack of access to government e-commerce centrally negotiated national contracts... I could go on but any bursar of an Independent school will tell you that it is surely self-evident that the costs of an Independent school are not the same as those of a Maintained one.
10. The final irritation with RBWM was that throughout the EYWG exercise, I was informed that the one element that could not be accounted for was any sort of return to provide for future investment. Thus premises depreciation was ruled out as an allowable cost. Imagine my surprise when, a month after RBWM had wound up its EYWG in June 2009, the DCSF published (in July 2009) in Implementing the Early Years Single Funding Formula : Practice Guidance July 2009 which, at para 7.12, clearly warns:
11. "There may be a temptation for ... LAs to 'disallow' [profit] for the purpose of calculating appropriate funding levels. However, in the context of a mixed market with significant provision from the private sector it is entirely legitimate for providers of all kinds to generate surpluses, either to provide a return on their own investment or for future investment. LAs must take this into account when designing their formulae [DCSF emphasis]."
12. RBWM has ignored this advice and has no intention of reviewing its impact until the six monthly review after the local formula is introduced. At its recent consultation meeting with PVI providers, RBWM adopted a position that it could now only offer a rate that was "affordable", not one that met actual costs.
13. Other local authorities in
Berkshire have recognised the extent of different costs -
14. Within CCSG, we estimate that the loss of income as a result of not being able to recover our costs will be in the region of £80,000 in the next full financial year. This is not sustainable and it appears that a straightforward business decision will now be forced upon us.
15. The Committee may also be interested in data from a survey of ISA member schools which I am privy to and which I attach in pdf form. This shows that 39.5% of respondents expect that the changes to EY funding will have a negative impact on their revenue (7.0% positive, 16.6% neutral and 34.9% not yet established). 53.8% of respondents consider that they may have to withdraw from EY provision and 61.5% consider that the changes will have an impact on staffing levels. While 20% of respondents felt that their LA's conditions sere reasonable and positive, 40% concluded that their LA's conditions were onerous and probably could not be met.
 Not published on the Committee's website.
[i] "Diamond shaped" describes a school which takes in boys and girls but educates them in separate strands.