Battle for a fair funding regime


 The Foundation or Early Years stage is seeing many significant changes.

 Since September 2008, all nurseries, playgroups and childminders in England were forced to follow the Early Years Foundation Stage (EYFS). It sets out a series of 69 education targets for children to hit before their fifth birthday to ensure all young people – including those from poor backgrounds – have the “same opportunities”. The move split early year’s experts.

 The Government says that providers can apply for exemptions from and modifications of the EYFS learning and development requirements where they can show that their setting is governed by principles relating to the development of young children, which cannot be reconciled with the EYFS.

 So a Steiner school has just been granted an exemption. But seeking exemption is surrounded by red tape.

 All three and four-year-olds are currently entitled to 12.5 hours of early education a week, but this is due to be extended to 15 hours a week from September 2010. As a result, all local authorities will implement a single local funding formula from April 2010 aimed at addressing any inconsistencies in funding that may exist and to ensure that the funding for all providers is based on the same principles. (which implies that to date this hasn’t been happening). The Government claims that Local authorities have a range of tools they can use to support nurseries and other early years providers to ensure their sustainability. For the funding period 2008-11, the Department has allocated £378 million of revenue funding and £642 million of capital funding to local authorities to support the sufficiency of and access to child care, part of the Sure Start early years and child care grant.

However, according to the Tories between 2003 and 2006, the proportion of privately-owned nurseries declined from 78 per cent to 65 per cent. The number of childminders has also decreased by nearly 40 per cent since 1997.

They allege that Nursery closures arise as the Government have reduced funding to PVI nurseries. While maintained nurseries receive £3,800 per pupil per year, the PVI sector receives just £1,800 per pupil per year. The UK’s 15,000-plus PVI day nurseries are a key delivery partners on the extended, flexible free entitlement and the Childcare Act. The vast majority of PVI day nurseries support the principle of a universal free entitlement for three- and four-year-olds. But many report that the hourly rate they receive from the local authority for delivering a child’s free entitlement is less than the cost they incur in providing early years care and education, so creating an unfunded black-hole in settings’ finances. Given fees represent the overwhelming majority of providers’ income — combined with increasing hours of free entitlement — it is critical that providers receive payment in proportion to their costs.

This gap between the money nurseries receive from Government and the actual cost of providing the nursery place, was covered by so a ‘top-up’ fee charged to cover the difference, but this will no longer be allowed. If they are required to stay open for 38 weeks a year without significantly more funding it is hard to see many surviving in a sector where the margins are already tight. They will need to pay better qualified staff to work longer, and their rent will be more expensive. A survey by the Federation of Small Businesses earlier this year showed that 40 per cent of private day nurseries had considered closing down or selling up. Self-evidently less private and not for profit involvement in the market will undermine childcare’s mixed economy of provision, a crucial factor in maintaining genuine choice for parents and promoting quality, innovation and diversity in early years provision for children. Private provider’s morale is pretty low at the moment. The Government says that it is up to local authorities to allocate funding and add that there is no clear evidence, despite Tory claims, that private providers are exiting the market because of increased risks and inadequate funding. But suppliers say this is nonsense.

A well meaning policy ie increased entitlement is having dire consequences and will probably mean over the longer term that early years provision becomes the exclusive preserve of the public sector, which can’t be good for the choice agenda.

 Conspiracy theorists say this is what was always intended. I suspect not but the Government at the very least must ensure that local authorities abide by guidance and that the single funding formula ensures equitable treatment between the public and PVI sectors. Some suppliers say that local authorities are currently not allocating funding equitably and are discriminating against PVI providers.


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