Agenda item

A revised report was circulated at the meeting.  The Strategic Finance Manager explained that the 2017-18 financial year was the first year of the operation of a National Funding Formula for Early Years which introduced a number of changes to Early Years funding.  Similar decisions now need to be made for 2018-19.

The 2018-19 funding arrangement proposals had been presented to the Early Years Reference group on the 28th November, to Early Years managers on 1^st December and circulated to providers for consultation.  A query was raised during the consultation period on funding that did not appear to be accounted for in the figures presented.  The revised proposals showed that the sums required for contingencies were understated.

The funding rates for local authorities for 2018-19 were announced by the Department for Education on the 17^th November 2017.  Havering’s rate would be £5.28 for 3 and 4 year olds and £5.66 for 2 year olds.  The Local Authority must budget for a contingency for funding provision that was not picked up in the census, retain up to 5% for central functions, determine an amount for an inclusion fund, and decide which supplements to use and the basic hourly rate to be passed to providers.  On the basis of current provision and trends, and applying the published hourly rate of £5.28, the Local Authority estimated the total funding to be £14,591,274 for 3 and 4 year olds, and £1,559,688 for 2 year olds. 

It was proposed that:

i)             The Local Authority retains £730,000 (5%) centrally.

ii)    Retain £802,754 contingency for 3 and 4 year olds and £84,982 for 2 year olds provision.

iii)  The amount held in the Inclusion Fund is doubled, increasing the commitment from the Early Years Block from £50,000 to £100,000.

iv)  IDACI hourly rates based on school IDACI rates (subject to approval of the national funding formula for Havering schools), be applied. 

v)    The basic hourly rates of £4.53 for 3 and 4 year olds and £5.35 for 2 years olds, be applied for 2018/19.

It was noted that the proposals above took into account the discrepancies raised during the consultation with the Early Years Reference group.

During discussion, concern was raised that the proposals would have a significant negative impact on nursery providers, who were already running at a financial loss.  Further concern was raised that the consultation responses received did not provide an accurate reflection, as it was felt that there had been an inadequate consultation period.  It was requested that greater transparency be provided on the expenditure of the Inclusion Fund, targeted funding, and the effectiveness of funding. 

Concern was noted that the contingency figure presented to the Early Years Provider Reference group and that presented at this meeting differed.  The Local Authority agreed that allocations would be available on their website and updated monthly.  It was requested that communication with providers be improved, that providers be given the opportunity to question funding, that information on Havering’s strategy on expenditure be provided to the Early Years Provider Reference Group and that information is disseminated in a timely manner to allow sufficient consultation.  It was agreed that a breakdown of the £730,000 expenditure for the Local Authority statutory and quality assurance functions, would be provided to the Early Years Provider Reference Group and that there would be scope to reassess.

In response to questioning, it was explained that the Early Years regulations states that 93% of total funding be passed through to providers.  Next year, this percentage would rise to 95%, with the Local Authority retaining 5% of central services.  Many LAs had planned significant savings to keep costs within the 5%.  It was the perspective of some attendees that schools were paying for duplicate services.

A summary of responses from early years providers was tabled as follows:

The Forum agreed the proposals as follows:

i)          To increase the basic hourly rate to providers to £4.53 (from £4.39) for 3 and 4 year olds.

ii)         To have Deprivation as the only supplement to the basic rate.

iii)       To bring the hourly IDACI rates in line with those used for the schools national funding formula (subject to approval of the NFF).

iv)       To increase the basic hourly rate to providers to £5.35 (from 5.28) for 2 year olds.

v)        To retain contingencies of £802,754 and £84,982 for 3 & 4 and 2 year olds respectively to fund in-year provision.

vi)       To retain £730k (5%) for LA statutory and quality assurance functions.

vii)      To increase the Inclusion Fund to £200k (from £100k) to be funded 50/50 from the DSG early years and high needs blocks.