Agenda item

Report by Aileen Chambers and Neil Hardwick.

Recommendation:-  To note the content of this report and approve the 5% central retention of the Early Years Block to cover Early Years and Childcare Service delivery costs.

Consideration was given to the report, presented by Aileen Chambers, Head of Service – Early Years and Childcare, which detailed the statutory guidance in place for the allocation of early education funding; the current position and proposals for the 2021/22 allocation.

Following the outcome of the Department for Education’s (DfE) Early Years national funding formula consultation in 2016 a national single funding formula was introduced by the DfE in 2017/18 for the allocation of the Dedicated Schools Grant Early Years Block early education funding to all schools and providers.  Local Authorities (LAs) were required to allocate the funding to early education providers based on a local funding formula made up of a single base rate and a mandatory deprivation supplement (for 3/4 year old early education).  LAs can retain 5% of the 3/4 year old early years funding allocation to fund central services.

The rate that the Local Authority received from the DfE would increase in 2021/22 from £4.38 per hour to £4.44 for 3/4 year olds and from £5.28 per hour to £5.36 for 2 year olds.  Prior to an increase in 2020/21, the funding rate had remained static for 3 years. 

The current local formula was consulted on prior to introduction in 2017/18 and the deprivation supplement was reviewed again in January 2018. 

Further information was provided on the2020/21 Budget Projections and how the Early Years block typically generated a reserve due to the way in which the funding was calculated and distributed.  The reserve amount had been used since 2018/19 to fund the Inclusion Support Grant and prior to Covid, it was projected that the EY Block would generate a reserve in 2020/21.

This year the DfE amended the funding allocation and distribution requirements due to the pandemic.  The annual funding would be based on 9/12^th’s of January 2020 census and 3/12ths of January 2021 census. Local authorities were also required to fund all early education providers in the Autumn term 2020 at Autumn 2019 take-up levels as a minimum.  This requirement had had a significant impact on the overall budget. 

Due to changes in take-up patterns, whilst a number of providers received top-up funding to last year’s levels, a significant number of providers had higher take-up levels than last year and received an increased level of funding.  This resulted in an increased cost of delivery for Autumn 2020 and it was projected that there would be no contribution to reserves from this year’s funding allocation.  Depending on January 2021 take-up levels there could be an in-year deficit budget of £50/£100k. This could be offset by utilising the reserve. The DfE have confirmed that funding should be distributed to providers in January 2021 at actual take up levels. 

The Disability Access Fund (DAF) had a reserve of £67k carried forward from 2019/20 into 2020/2, which is anticipated to increase in 2020/21 to £98k.

The Early Years block (excluding DAF) has a reserve of £705k carried forward from 2019/20 into 2020/21 it is anticipated that this reserve will reduce to £360k in 2020/21.

The report, as submitted, also detailed the Disability Access Fund and Inclusion Support Grant and how they were funded and made specific reference to the proposal to retain the current local funding formula in 2021/22 as follows:-

Schools Forum Members were requested to give consideration to the report and recommendation for 5% central retention of the Early Years Block to cover Early Years and Childcare Service delivery costs.

Forum Members welcomed the report, but asked about the rationale when the uptake for disability benefits was low and whether this was more to do with parents not wishing to share their financial details.

The pressure on the sector and the reliance on funding was high. The Department for Education had confirmed the maintained nursery school supplementary funding allocations for April – August 2021, but had highlighted that September 2021 to March 2022 allocations were conditional and they may be subject to change.  Confirmation has been received that the Government’s commitment to the long-term funding of maintained nursery schools was unchanged and that further information would be available in early 2021.

Forum Members noted the 2021/22 increases in hourly rate for early education providers would only be the second increase they have received in 4 years.  This increase was essential for ongoing sustainability as the cost of delivery had increased significantly over the last four years with increases in minimum wage, business rates and running costs. In addition, the increases in delivery costs and reduced take-up due to Covid have had a significant impact on sustainability of the childcare sector.

There was an anticipated DAF reserve of £98k by the end of this year so it was proposed to cease the 2 year old DAF award and allocate the surplus to the Inclusion Support Grant budget in 2021/22.

It was proposed to maintain the current Inclusion Support Grant formula 2021/22 .  The Inclusion support grant currently topped up the hourly rate paid to £9.23.  Due to planned increase in the early education funding hourly rate from April 2021, it was proposed that from April 2021 the inclusion support grant tops up the hourly rate paid to £9.29 per hour.  This was an increase of 6p/hour; the hourly rate for two year olds is being increased by 8p/hour, therefore, Inclusion Support contributions for two year olds would reduce by 2p/hour to maintain the same top up rate  across both age ranges.  The budget was needs led, but was anticipated that spend would remain consistent at £410k.

Should there be a shortfall of carry forward funding/in year EY Block to cover ISG spend it was proposed to carry deficit forward to EY Block in 2022/23.

Agreed:-  (1)  That the report be received and the contents noted.

(2)  That the 5% central retention of the Early Years Block to cover Early Years and Childcare Service delivery costs be approved.