Chairman’s blog 8 December 2016

Last week saw a flurry of government publications about the 30 hours’ ‘free’ place funding due to be introduced from next September across England. There was also new research published by the Institute for Fiscal Studies and the University of Essex which reinforces that published in May and undertaken by some of the same Essex academics along with colleagues from the University of Surrey and the Institute for Social and Economic Research, arguing that the 30 hours’ funding has ‘no effect (on) the work patterns of mothers with younger children or those of fathers’. I’ll look at the research in a bit more detail later.

But first, DfE has produced a series of papers on EY business sustainability (case studies),; Extra Sources of Income for EY providers; inspection outcomes for childcare providers; the government response to the consultation on EY national funding formula and an equality assessment for the way the 3 and 4 year old entitlement is to be funded; and a guide to the EY national funding formula along with a spreadsheet detailing the level of grant, and hence place funding, for each local authority (LA).

Probably the two most significant points of the documents are that they view EY provision from a business viewpoint, aiming to meet the needs of working parents, rather than children’s needs. They also tacitly acknowledge that the level of funding requires providers to be much more pro-active in reviewing their operational practices to be more flexible and to offer additional service, such as staying open much later and Saturday working.

The consultation response (www.gov.uk/government/consultations ‘Early Years Funding: changes to funding for three- and four-year olds: Government consultation response) sets out the basis for the funding formula, with an average increase in hourly rates from £4.56 to £4.94 for 3 and 4 year olds and from £5.09 to £5.39 for 2 year olds. Most of the changes were set out in the consultation document to which MSA responded, and so do not provide surprises. The formula will be used to allocate funding for the current 15 hours as well as the additional 15 hours, consisting of a base rate with additional sums for additional needs, derived from measures of free school meals in the area, Disability Living Allowance, and EFL. There will also be some cost adjustment for variations in local costs to reflect staff and premises costs.

80% of LAs will see increases in their funding and no authority will have a reduction of more than 10% by 2019-20, with any annual reduction being set at no more than 5%. LAs must pass on 93% of the money they receive in 2017-18 and 95% in 2018-19. This is a welcome tightening up of previous arrangements whereby many LAs could not say how they spent all of the funding, or even if it went on early years. The funding rate in each LA will be a universal base rate for each hour of the free entitlement to equalise funding between different types of provider – obviously this is to be welcomed by the PVI sector, although for the rest of the current parliament £55m a year of funding will be used to sustain maintained nursery schools. LAs will also be able to use up to 10% of their funding to provide supplementary grants for deprivation, rurality and sparsity of provision/ population, flexibility, workforce quality and for EAL. The EY pupil premium will continue. The funding formula is set out in more detail in it operational guide, and in the Equality Assessment which forms part of the government response to the consultation. I have commented on the formula in previous blogs, but the outcome does go some way towards creating a much more level playing field across sectors. In my view there remains too much power in the hands of LAs when determining what each setting might receive, although they will be much more constrained than in the past. Also the actual level of funding remains below the actual cost of places.

By implication, this is recognised in a series of short guidance and briefing papers also produced by DfE which includes ‘Extra sources of income for early years’ providers’ (www.gov.uk/government/publications/early-years-business-sustainability-guides-for-providers). This notes what we already know – that consumables, such as drinks, meals, nappies, and additional services, such as baby yoga, music lessons and school trips, can be charged for over and above the ‘free’ funding, but cannot be made compulsory for all parents to pay for. Another business sustainability briefing paper comments on ‘Business insights from successful early years providers’. Much of this reads like teaching grandmothers to suck eggs –you should ‘understand the local market’, ‘understand and manage your occupancy rate’ by tracking and recording expected and actual occupancy rates across weeks, months and the year, you should ‘understand your costs’, ‘be clear about your charging policy and the funding you can access’, ‘get the right support for your business’ from the L.A, specialist consultants or software tools, and ‘plan for the future’. Whilst this is fairly obvious, there are some useful links to other websites and information. It does show the paucity of government thinking about how small businesses can be expected to survive when financially controlled and constrained by government policy. I do not think that a government department is really qualified to manage small businesses.

Underlying the thinking is a view that EY provision is about business management and not about provision for children. This reflects the development of the sector from small one-off settings to business chains and groups. It is reinforced by a policy paper ‘Supporting early years providers to run sustainable businesses: summary’. The government has appointed Childcare Works to support LAs in establishing sufficient 30 hours childcare places to meet parental demand. Childcare Works is a consortium of Mott MacDonald, Hempsalls – two consultancies – and Action for Children. They will work to collect and share good practice, training providers in business planning and remodelling and run progress reviews for LAs. Whilst there is no significant evidence yet of LAs pressurising providers to offer the 30 hours – many seem, rightly, to fear settings closing rather than run a business model that may be at best marginally profitable, it is again clear that many of the business models – including those cited in a case study paper by DfE – require setting managers to add new tasks to their existing jobs. These tasks include using social media to advertise short term vacancies, such as where some days are quieter, establishing an on-line booking system, extending the age range to accommodate younger children, for example, with ‘constant reviews of the use of accommodation to satisfy demand, extending sessions to 6.30pm, running Saturday sessions, linking with other providers, and using Facebook and Twitter saving on an advertising budget. Ideas such as the benefit of consistent peer group helping children to develop confidence and social skills are not considered at all.

Alongside these papers, the key inspection findings as at 31 August 2016 are positive, although they note that childminder places have fallen by 9% since August 2012, whilst non-domestic providers’ places have remained stable. The key inspection findings for the overall effectiveness of all registered providers are best summed up as:

 

% outstanding

% good

% requires improvement

%inadequate

31 August 2016

15

76

8

3

31 August 2012

12

62

25

1

 

Thus the number of ‘outstanding’ or ‘good’ providers has risen from 74% to 91%. It will be interesting to see what Ofsted makes of this and whether it seeks to create greater differentiation in inspection outcomes in these categories.

Turning to the Institute for Fiscal Studies briefing note ‘Does free childcare help parents work?’; the answer to the question in the report’s title is ‘no’, although there was some evidence that mothers whose youngest child became eligible for free childcare did go back to work. This effect was equivalent to about 12,000 more mothers in work each year. Amongst the constraining factors affecting parents accessing employment are seen as the 30 hours being slightly less than the number of hours children spend in school (if this is seen as a day from, say 8.45am to 3.15pm), and more mothers are now in work already. Those mothers currently not in work might well be those who have strong preferences for not working whilst they have pre-school children. Of course the 30 hours’ funding will mean a reduction in the amount parents need to spend from their income on existing childcare if they are eligible for the additional 30 hours, but evidence strongly suggests that using informal care for which they do not have to pay will remain more attractive. The overall funding scheme will cost £1billion, but the saving for individual parents is estimated at about £410 an year.

The statistics for informal care show that between the ages of 0 and 5 between 30% and just over 40% of children use informal care and that this is not overtaken by formal subsidised care until the children are aged 2, with formal care being for more prevalent for over 3s. Some of the take-up of formal care will no doubt be due to 15 hours funded places for 3 year olds, but it also reflects nursery class provision in many areas. Even the relative flexibility introduced by the government – such as spreading the funded 30 hours over more than 38 weeks, or across fewer than 5 days a week – has limited impact. Again it is important to remember that 30 hours a week is not equivalent to full time parental employment hours, especially when travel to work time is included. The overall impact of providing free childcare is not to increase hours worked, but to reduce the hours paid for – the overall take up of childcare hours remains fairly stable.

The research shows that when 3 year olds become entitled to 570 hours a year of free care, on average they only spend an additional 54 hours in childcare outside the immediate family. When the free care becomes an additional 600 to 795 hours a year in school, children spend just 76 hours a year extra in childcare. In other words entitlement to free part time childcare is likely to have little or no impact on mothers’ employment. One solution suggested by the researchers is to target a smaller number of parents for whom free childcare is most likely to make the biggest difference. But that would run counter to the government’s policy of making the funding available to as many people as possible, with specified earning limits.

On a final note, I recently came across a very useful 15 minute video on prohibition checks employers need to make before appointing new staff – http://www.safeguardinginschools.co.uk/complete-prophibition-checks-including-s.128-check/

It links with the latest Keeping Children Safe in Education, September 2016, where paragraph 112 sets out the form for your single central record (SCR). Also outlined are details of the three checks which must be made – Prohibition from Teaching, which used to be just for qualified teachers as List 99, but which applies to all staff appointed since April 2012; Prohibition from Management which applies to independent schools; and a check on any person who has trained in the European Economic Area (which is the EU plus Iceland, Leichtenstein and Norway) has received any restrictions on their teaching. The video gives details of how to make these checks. It is likely that an inspector will not spend much time going through individual staff records in the SCR, but will see if you have a system for making the checks.

Best wishes,

Martin