Agenda item

2022/2023 Early Years Funding Formula

Aileen Chambers and Neil Hardwick to report.


Recommendation:-  To agree:-


·        That the local funding formula is maintained as detailed at point 2.1.

·        That the Inclusion Support Grant budget of £540 is approved from EY Block Reserve (including DAF reserve) and High Needs Block .

·        Temporary increase in capacity in EY&CS to review usage of ISG.

·        Use of EY Block reserves to fund any Golden Ticket families whose eligibility has changed after take-up of a place.

·        Use of EY Block reserves to fund any Special Guardianship children who do not meet DfE eligibility criteria.


Aileen Chambers, Head of Service – Early Years and Childcare, introduced the report which set out the detail of the statutory guidance in place for the allocation of early education funding; the current position and proposals for the 2022/23 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).  Local Authorities could retain 5% of the 3/4 year old early years funding allocation to fund central services.


The Early Years Block funding for 2022/23 was to be allocated initially as an ‘indicative’ allocation in January, 2022.  The usual process was for the ESFA to allocate an indicative funding allocation based on the previous year January Census data with two further adjustments - one during the year (July) based on the January 2022 Census data and further adjusted in July 2023 based on 5/12ths of January 2022 Census and 7/12ths of January 2023 Census.  The process was amended for the 2021/22 budget due to Covid , but this would revert to this formula in 2022/23. 


The rate that the Local Authority received from the DfE was to increase in 2022/23 and it was noted that the funding rate had increased each year from 2020/21.  Prior to that the funding rate had remained static for three years. 


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


Details on the 2021/22 projections were outlined, whilst noting that 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 at a cost of approximately £410k per annum.  


Due to the impact of Covid, the DfE amended the funding allocation formula for 2020/21 and 2021/22 as well as the distribution requirements in 2020/21.  These changes have had a significant impact on the overall budget.  No reserve was generated in 2020/21 and the previous reserves were expected to be fully utilised to cover the Inclusion Support Grant (ISG) in 2020/21 and initially projected ISG allocation in 2021/22. 


The demand for ISG had increased this year due to the impact of Covid on children’s development and the ISG allocation was projected to exceed the identified allocation (£390k) by £150k leading to a total spend of £540k.


The EY Block had a reserve of £430k (includes Disability Access Fund (DAF)) and EY projections would generate a reserve of approximately £223k in year this year which would cover the ISG overspend and leave a reserve of £113k to carry forward. 


It was uncertain whether this demand would reduce in 2022/23.


Further information was provided on maintaining the local funding formula, the Inclusion Support Grant budget being approved from EY Block Reserve (including DAF reserve) and High Needs Block and the temporary increase in capacity in EY&CS to review usage of ISG.


In terms of two year old early education it was noted how the Golden Ticket approach was being trialled in the Central area of the borough to increase take-up by reducing the barrier of carrying out eligibility checks on DfE identified families prior to taking up a place.


In addition, it was also proposed to implement a local criterion to fund Special Guardianship two year olds where they do not meet the DfE criteria. 


Forum Members welcomed the positive report and were pleased to see the uptake within early years education in an area hit hard as a result of the pandemic and the positive use of the “Golden Ticket” for two year olds.


Clarification was sought on the use of thirty hour places on the ISG rate increases.


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


(2)  That the Local Authority centrally retain 5% of 3/4 year old and 30 hour budgets.

Supporting documents: