Agenda item

Following the confirmation of the provisional DSG Early Years’ (EY) Block funding for Brent, this report seeks Schools Forum endorsement of the local EY Funding Formula for 2024/25

Folake Olufeko, Senior Finance Analyst introduced the report, which following the confirmation of the provisional DSG Early Years’ (EY) Block funding for Brent, sought Schools Forum endorsement of the local EY Funding Formula for 2024 - 25. 

The Forum noted the following key points as part of the update provided:

·             The changes introduced by the government in relation to the increase in hourly funding rate for existing childcare entitlements, further investment to enable schools and local providers to set up wraparound childcare provision so that parents of school age children can access childcare in their local area and changes to the Early Years Foundation stage (EYFS) requirements to improve flexibility for providers and workforce support.  Having consulted on the EY Funding Formula the key changes identified (as detailed in section 4 of the report) for 2024-25 had been to introduce a new national funding formula for both the existing 2-year-old entitlement for disadvantaged children and the new working parent entitlements for 2-year-olds and under; to introduce three separate hourly funding rates: 2-year-olds, which would be the same for both the disadvantaged and the working parent entitlements; 9-month-old up to 2-year-olds for the new working parent entitlement; and 3 and 4-year-olds for the universal and additional hours entitlements; and to extend the Early year Pupil Premium (EYPP) and the Disability Access Fund (DAF) to eligible children aged 2 and under in receipt of a free entitlement place from 2024/25.

·             In terms of the implications for Brent arising from these changes, the 2024-25 Brent EY Block funding had increased by £10.6m to £35.2m compared to 2023-24. Of the £10.6m increase, £6.8m had been allocated for free childcare entitlements for working parents with children under the age of 3. There had also been increases to the funding rates allocated to Brent for the existing 2-year-old, and 3 and 4-year-old provisions.

·             The details of the changes in the EY National Funding Formula (EYNFF) funding rates, as detailed within Table 1 of the report.

·             The following elements it was proposed to apply to the Early Years National Funding Formula (EYNFF) and allocations for 2024–25 within Brent in recognition of the wider changes being made to childcare entitlements:

Ø   Funding for 3 – 4 year olds being distributed to providers as a universal base rate plus additional allocations for deprivation and quality supplement, after the 5% reduction for central spend, with the base rate being increased from £4.84 in 2023-24 to £5.39 in 2024-25 on the basis set out in section 6.1 of the report.

Ø   Following the government’s decision to mainstream the teachers’ pay and pensions grant into the 2023-24 EYNFF and additional flexibility in terms of planned funding supplements it was proposed to continue using the quality supplement to apply the additional flexibility to replace the previous teachers’ pay and pensions grant that was paid by the DfE.  The quality supplement of 2% would apply to Brent school-based nurseries and PVIs that met the criteria but not maintained nurseries.

Ø   Continuation of the maximum 10% allowable rate for supplements applied to deprivation for 2024-25.

Ø   The provisional allocation for disadvantaged 2-year-olds in 2024–25 being £4.9m, representing an increase of 44% from the previous financial year based on the base rates detailed within section 7.5 of the report and EYNFF rate for 2-year-old funding being increased from £6.84 per hour in 2023-24 to £9.59 per hour.

Ø   As a result of a review of the existing arrangements for access to 2 year old free entitlement provision, which had been operating in Brent since 2013 and wider changes proposed by the government in terms of working families from April 2024 it was proposed to change the current approach whereby all 2-year-olds, whether applying for the disadvantaged 2-year entitlement or the 2-year entitlement for working families, were able to access their entitlement the term after their 2^nd birthday.  Following consideration of feedback from the EY sub-group the Forum noted it was proposed that this change should take effect from 1 September 2024.

Ø   A base rate of £9.41 for providers of the 2-year-old working parent entitlement.  This included a deduction of 0.5% retained for central services as well as £0.13 that was proposed to go towards the Specialist Nursery Panel budget.

Ø   Given the change (from September 2024) in entitlement for working parents of children aged 9 months up to 2-year-olds in terms of childcare entitlement it was proposed to set the base rate for providers as £13.07 per hour with a 0.5% deduction retained for central services as well as £0.13 for the Specialist Nursery Panel budget.

·             In terms of the retention of funding for central spend the DfE had mandated that local authorities pass through 95% of the EY funding to 3-4 year old entitlements as well as extending this pass-through requirement to the disadvantaged 2-year-old entitlement and the new working parent entitlements with the central spend supporting the services detailed within section 10 of the report.  Members attention was drawn to Table 2 of the report, which detailed the breakdown of the local funding allocation for central expenditure in comparison to the last financial year, with the percentages set in acknowledgment of both the increase in administration of the expanded entitlements as well as the DfE’s plans to increase the pass-through rate to 97% once the new entitlements had been successfully implemented.  The proposed central retention for 2024-25 equated to £1.168m, which was an increase of £0.167m from 2023-24.  The budget requirement for delivery of the current level of central services and the training offer (as detailed within section 10.2 of the report) was £1.058m which the Forum noted had been acknowledged by the Early Years Funding Subgroup as a valued and required service.  The Forum noted the proposed use of the surplus of £0.109m to fund additional resources to facilitate implementation of the expanded entitlements both in terms of administration and working with providers and parents to ensure smooth implementation of services.

·             The continuation of the funding allocation arrangements for the Special Nursery Panel which would include a contribution from the new free entitlements for children of working parents aged 9 months to 3-years-old, at the same rate of £0.13p which equated to £83k.

The Forum was then updated on the following Action points from previous meetings:

Action Point 89:  In relation to the previous request to receive details of Early Years Panel Funding decision making criteria, the Forum noted that this had been set out within Appendix 1 of the report.

Continuing with presentation of the report, the Forum also noted:

·             The total value of the Early Years Inclusion fund from the EY Block for 2024 – 25 as £0.521m along with the details provided within Table 3 of the report relating to the planned spend for the Specialist Nursery Panel budget, which included a £1.09m contribution from the High Needs Block of the DSG.  There was currently an ongoing review of the SENIF panel funding in relation to the contribution from the High Needs Block addressing the need for early intervention to ensure that funding was targeted appropriately and to assess the needs of children at an early stage, on which it was noted a further update would be provided for the Forum at their February 2024 meeting.

·             The Early Years’ budget based on draft allocations from the DfE and the proposals identified for consideration by the Forum, as detailed within Table 4 of the report.

·             In terms of additional funding for Brent maintained nursery schools (MNS) it was confirmed that supplementary funding would continue to be received for 2024-25 with the provisional allocation for Brent being £0.915m which represented an increase of 17.6% from the previous last financial year.  Following changes introduced by the government in 2023–24 the proposal relating to the four MNS in Brent was to distribute this funding based on an hourly rate for 2024-25, in line with the DfE’s requirements, rather than the previous agreed local formula.  As a result, the MNS supplementary hourly rate, inclusive of Teachers’ Pay Additional Grant had increased from £5.47 to £6.27 per hour equating to an increase of 15%.

·             The consultation undertaken with the Early Years Funding Subgroup (as detailed within section 14 of the report) which had included the hourly rates and the central retention from the EY funding allocation, with the Subgroup having agreed with the proposals to retain 5% from the 3 - 4 year allocation and 0.5% from the under-two and two-year allocations for central support services.  The Subgroup had also considered initial findings and draft proposals following the review of Early Years SEND Inclusion funding and had acknowledged the value and quality of specialist nurseries and the important part they played in providing high quality inclusive provision in the borough, with it noted that a further update was due to be provided for the Forum at the February 2024 meeting.  Whilst recognising the rationale of the proposed change in access for two-year-olds eligible for the disadvantaged two-year entitlement from the day after their second birthday (a Brent local decision) to the term after their second birthday, as per the requirements of statutory guidance, the Subgroup had not been supportive of the proposal.  In considering the feedback from the Subgroup and additional modelling undertaken on the potential impact for providers the Forum noted that it had been proposed the change for the next financial year should not commence until 1 September 2024, in order to allow settings a transitional term to prepare.

The Chair thanked officers for the presentation of the proposals and asked the Forum if they had any questions in relation to the information provided, with the following points discussed:

·             Given the pressures being experienced by EY providers, details were sought on whether consideration had been given to the retention of a 3% rather than 5% amount for central services.  Whilst recognising the issues raised, Sasi Srinivasan (Early Years Manager, Brent Council) felt it important to also recognise the extent of the support and training provided through the funding which had also been acknowledged and valued by the EY Subgroup.  Shirley Parks (Director, Education, Partnerships and Strategy, Brent Council) also assured the Forum of the ongoing review of support being provided which would continue as the change in entitlement arrangements were introduced and with the level of funding retained also having been assessed as minimal when compared to those levels within other local authorities.  In recognising the value of the support being provided through the central service support was also expressed, given the extent of the changes proposed, for the use of the surplus identified to assist during the transitional period in terms of implementation of the new entitlement arrangements.

As there were no further issues or comments raised for consideration the Forum RESOLVED to:

(1)    Endorse Brent’s EY Funding Formula for 2024/25, as supported by the EY Funding Subgroup with the following updates applied to the Early Years National Funding Formula (EYNFF):

(a)    a universal base rate for Brent providers for 3 and 4-year-old funding of £5.39 per hour. This represents an 11.4% increase of £0.55p from £4.84 in 2023/24.

(b)    an allocation for deprivation supplement of 10% and quality supplement of 2% for 3 and 4-year-old funding.

(c)    a base rate of £9.54 to pay Brent providers for the disadvantaged 2-year old entitlement.  This represents a 40% increase of £2.70 from £6.84 in 2023/24.

(d)    a base rate of £9.41 to pay Brent providers for the 2-year-old working parent entitlement.

(e)    a base rate of £12.87 to pay Brent providers for children aged 9 months up to 2 years.

(f)     a 5% centrally retained funding by the local authority from the 3 and 4 year-old funding.

(g)    Following the DfE’s extension of the 95% pass-through requirement to the disadvantaged 2-year-old entitlement and the new working parent entitlement from 2024/25, a 0.5% centrally retained funding by the local authority from this cohort.

(h)    Additional funding for some 3 and 4-year-olds, extended to 9 months to 3-year-olds and based on local eligibility, to be allocated to the Under 5s Nursery Panel, and both PVI and maintained providers can apply for this to ensure the funding continues to be targeted at vulnerable children. This follows the DfE’s expectation that local authorities have special educational needs inclusion funds (SENIFs) for all children with special educational needs (SEN) eligible for or taking up the new and existing entitlements, regardless of the number of hours taken.

(i)     In line with the DfE’s proposal to roll the teachers’ pay and pension grant into the EYNFF from 2023/24 and with the increase in the planned value of supplements to no more than 12% (from 10% previously), it is proposed that the additional 2% continues to be used as a quality supplement to the 3 and 4-year-old funding allocated to providers.

(2)    Note the requirement for local authorities to have a disadvantaged 2-year-old rate that is at least equal to the rate for 2-year-old children of working parents.

(3)    To agree a change to the current approach whereby all 2-year-olds, whether applying for the disadvantaged two-year entitlement or the two-year entitlement for working families, access their entitlement the term after their 2nd birthday, in line with the timing of the government’s funding.