The free entitlement to education for three and our year olds - Public Accounts Committee Contents

1  Understanding the value for money of the entitlement

1.  The Department for Education (the Department) wants all three and four year olds to receive high quality early years education. The primary purpose of this education is to support children's development. All three and four year olds are entitled to 15 hours of free education for 38 weeks per year (the entitlement). The Department funds local authorities, who have a statutory duty to provide sufficient free entitlement places.[2]

2.  The policy of providing free early years provision was first introduced over a decade ago and has been extended and expanded by successive governments. When the free entitlement was first introduced in 1998 it provided all four year olds with five 2½ hour sessions per week for 33 weeks of the year. In 2004 it was expanded to include all three year olds, and in 2006 it was extended to 38 weeks of the year. In September 2010 the entitlement was further extended with an increase in the entitlement to 15 hours per week.[3]

3.  For 2011-12 local authorities spent an estimated £1.9 billion, drawing funding from the Department's Dedicated Schools Grant, to provide three and four year old children with their entitlement. This spend provides over 800,000 three and four year olds with access to free education; an average estimated annual allocation of approximately £2,300 per child. The Department's funding and work over the past decade, alongside that of local authorities and providers, has significantly increased the provision of early years education.[4]

4.  While the Department devolves implementation to local authorities, it is ultimately responsible for the overall value for money from the system.[5] The Department told us that it assessed value for money through a "combination of take-up, quality and outcome".[6] We asked the Department if they had analysed the relationship between take-up levels of the entitlement and outcomes in different local authority areas, to see if there was any correlation. The Department explained that it hadn't yet done this analysis, but that it was working with the Office for National Statistics so that it could publish accurate data on take-up levels in different areas of the country.[7]

5.  The National Audit Office (NAO) reported that, before 2010-11, the Department did not have the data to estimate spending on early years education and that current data is incomplete and contains errors.[8]

6.  If less than the equivalent of 90% of three year olds use the entitlement in a local authority, the Department tops up the funding to encourage take-up and participation to 90%. In 2011-12, 89 local authorities received £69 million of extra funding. The Department intends this funding to be used to help increase take-up and has advised local authorities to focus their resources on disadvantaged three year olds. However, the Department told us that it had not monitored this spending.[9] Between 2008-09 and 2010-11 the Department allocated £642 million of capital funding to increase capacity, primarily in the non­maintained sector. The Department did not require authorities to report on how this funding has been used and has not assessed whether the turnover of providers meant that some of their capital investment was wasted. The Chief Executive of the Pre-school Learning Alliance, which represents non-maintained providers, told us that he himself hadn't witnessed any waste of investment due to churn of providers, however he said that there was a question mark over whether this had been a sound investment.[10]

7.  The NAO report shows that there are wide variations in both the funding and quality of provision in different local authorities. The relationship between funding and quality is not properly analyzed and understood. The Department explained that it could not account for the differences but said that it would now be working to analyse them.[11] The NAO work also showed that local authorities' spend on the entitlement, as a proportion of the Dedicated Schools Grant, varied significantly. The Department said that there would often be good reasons for the variations but acknowledged that it did need to understand whether the differences were justified.[12]

8.  Understanding and learning from the variations between costs and outcomes provides an opportunity to improve value for money. If local authorities can compare their performance with each other they may be able to improve performance. The Department told us that in the past it hadn't made sufficient information available to allow local authorities to benchmark their performance with each other, but that it will be doing this now.[13] Our expert witness from Solihull Council considered that sharing of good practice should be at the Local Government Association and local authority level, and felt that the best way to encourage improvement was through peer-to-peer learning, with providers from different sectors working with each other.[14]

9.  Expert witnesses agreed that the higher the skills and qualifications of the workforce the better the results, although this came at an extra cost.[15] We asked the Department about the tension between cost and performance—for example, qualified staff cost 28% more to employ, and qualified teachers can cost a further 50%. The Department agreed that teachers had an important role to play and noted that they could supervise more children than staff with lower level qualifications. It also believed that staff with the Early Years Professional qualification had been making a significant difference to children.[16]

2   C&AG's Report, para 1&5 Back

3   C&AG's Report, Figure 2 Back

4   Q 42; C&AG's Report, para 1,2&11 Back

5   C&AG's Report, para 6 Back

6   Q 42 Back

7   Q 98 Back

8   Q 60; C&AG's Report, para 18 Back

9   Qq 65, 66  Back

10   Q 38; C&AG's report, para 4.11 Back

11   Q 55; C&AG's report, Figure 8&13 Back

12   Qq 81, 82 Back

13   Qq 61, 88, 108, 111 Back

14   Qq 25-30 Back

15   Qq 2, 23, 24, 39  Back

16   Qq 42-49 Back

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© Parliamentary copyright 2012
Prepared 22 May 2012