Agenda item

Report ED17024

The Head of Schools’ Finance Support introduced the report explaining that in August 2016 the DfE had launched a consultation on the new Early Years National Funding Formula. In September the Schools Forum agreed the LAs response to the consultation. The final outcome of the consultation was yet to be published however, the Early Years working group had continued to meet to consider what changes may needed to the Bromley formula to meet the new guidelines.  As part of the consultation process, the DfE published indicative funding guidelines for 2017/18 which indicated that the funding for the Early Years Block for Bromley was likely to increase and all modelling was therefore undertaken on that basis. The current funding was based on an hourly rate of £4.19 which provided overall annual funding of £13,095,000.  Based on the projections this could increase to £4.91 per hour giving overall funding of £15,298,067.  This represented a significant increase for Bromley settings.

The Head of Schools’ Finance Support reported that the only supplements that were available for Local Authorities to use were (i) Deprivation which was mandatory; Rurality/sparsity which was optional; Flexibility which was optional; Efficiency which was optional; and Delivery of the additional 15 hours free childcare which was optional.

The Working Group .felt that the optional supplements either did not reflect Bromley’s demographics or that the supplements would be very difficult to measure and to administer  The proposal was therefore that Bromley would only use the mandatory deprivation supplement. The current formula also included supplements for quality (based on OFSTED judgements) and SEN (based on actual need of children in each setting).  Around 97% of settings received the quality supplement therefore if this funding was absorbed into the base rate there should be little impact on the majority of settings.  The SEN supplement was currently only paid to ten settings.  It was anticipated that these settings would lose funding overall under the new formula but that the impact would not be significant. However, there was no way of mitigating the impact if the supplement was no longer allowed.

Bromley currently used IDACI as the indicator for deprivation for Early Years funding (in the absence of any free school meal data). This appeared to be the measure of deprivation that was used by the majority of Local Authorities. However, settings also received Early Years Pupil Premium (EYPP) which was based on the individual earnings of parents, in the same way as free schools meals entitlement, and was perhaps a more accurate indication of circumstances. The Working Group therefore proposed that both measures of deprivation should be used to allocate funding to ensure that the additional funding was reaching the most deprived pupils.  The maximum amount that Local Authorities could distribute through the supplements was 10%. The Working Group discussed this at length at were of the opinion that 10% seemed very high if only one supplement was being used. The Group looked at three sets of modelling data with the deprivation element being 3%, 4% or 5% with the group agreeing unanimously in favour of the 96% : 4% split.

Under the new proposals, based on anticipated figures outlined in the DfE consultation (which were subject to change),  the base rate was calculated at £4.70 with deprivation funding based on IDACI to be paid at 30p for every pupil in the setting where the IDACI data was above an agreed threshold, and deprivation based on EYPP data to be paid at £1.47 for those eligible pupils only (to supplement the EYPP payment of 0.53p).

The current rates are as follows:

Base rate £3.90

Quality 40p or 50p

Deprivation ranging from 0.06p to 0.56p

SEN 0.42p

The modelling data demonstrated that the majority of settings would receive more funding under the new formula, due to the increased level of funding. There were a very small number of settings that lose funding – these were the settings that previously received the SEN supplement. A small element had been built in for growth, however all proposed funding levels were indicative and were dependent on the final funding settlement.

If the Schools Forum was in support of these proposals it was suggested that a consultation document be sent to all stakeholders at the beginning of December consulting on the underlying principles of the new formula but not including details on a setting by setting basis. Settings would be given two weeks to respond to the proposals.

The Early Years Working Group also discussed the DfE proposals for disabled children and children with special educational needs. The DfE were proposing a Disability Access Fund would be established to support children in receipt of the Disability Access Fund however Local Authorities would be able to pool funds from the Early Years and High Needs Blocks to provide an Inclusion Fund for children with SEN. The Working Group were of the view that the Bromley base rate had included an element of inclusion funding for a number of years and that it would be a retrograde step to strip this out and hold it centrally in the future. It was also felt that in view of the pressures on the High Needs Block it was unlikely that there would be any contribution to be made from there.

Finally, the Working Group discussed the time frame for the introduction of the additional 15 hours childcare to be introduced from September 2017. The DfE had published indicative funding to support this.  The assumption was based on the idea that only 80% of eligible children would take up 80% of their entitlement.  Bromley would receive £2.6m in 2017/18.  Officers had not yet done any work to establish the likely take up in Bromley.

Following a provider meeting the previous meeting, Mrs Regester sought clarification as to whether the funding level would be fixed for the next 4 years.  In response, Officers confirmed that it was their understanding that the funding was for one year only however this would be checked and reported back to the next meeting of the Schools’ Forum.

In response to a question surrounding how the Schools’ Forum could be asked to agree something that was subject to change, the Vice-Chairman explained that there would be a number of decisions that needed to be taken in January 2017 and the Schools’ Forum was being asked to consider this issue now in order to ease the burden in January.  Any agreement was subject to the funding settlement being as indicated by the DfE and if this were to change the decision would need to be reconsidered.

In response to a question surrounding the different types of modelling that could have been undertaken, the Head of Schools’ Finance reported that there was an element of flexibility within the system and that IDACI had been working.  It was hoped that the process developed would also be beneficial to both primary and secondary schools in the long run.  The Vice-Chairman also noted that there were advantages to having a more simple formula that every provider could understand.

The Director of Education reported that the Local Authority did not currently have a specialist Head of Service for Early Years.  Bromley was unique in terms of the number of Early Years providers within the Borough and as a result of cost pressures the Local Authority had necessarily had to be reactive rather than pro-active in supporting providers.  In light of this, the Director of Education proposed that funding for current central spend be increased by £66,000 from £134,000 to £200,000 to enable the Local Authority to provide the required support to providers to help them manage and navigate the changing landscape.  There was a need for providers to feel confident however, the Local Authority was anticipating that there would be significant pressure in the high needs block and Officers viewed this proposal as providing an element of protection to Early Years providers.

In response to a question surrounding SIPS (Supporting Inclusion in Pre Schools), the Director of Education reported that SIPS was preventative, not statutory and funding was targeted at children with the most severe and complex needs.

Following discussion it was

RESOLVED: that

1. The proposed formula elements to be used in 2017/18 be agreed, on the basis that this is dependent on the final regulations to be received from the DfE and on the understanding that the actual funding levels may vary depending on the final funding allocations and on the outcome of the consultation.

2. That a proportion of expenditure relating to social inclusion support in pre-schools move across from the High Needs Block to the Early Years Block in line with the High Needs savings proposals.

3. That the Local Authority central spend be increase by £66,000 from £134,000 to £200,000 to enable increased capacity for training and support.