Agenda item

2 year old and under - funding consultation


The Schools Forum received a report from the Director of Children and Families relating to the 2-year-old-and-under Funding Consultation. The report was necessary to comply with the government’s requirements for LAs to consult with early years providers, maintained nurseries and Schools Forum on elements of the early years funding formula for the new entitlements.


The Forum was informed that the 2023 Spring Budget announced additional funding for the existing early years entitlements for working parents, by extending the 30 hours free childcare offer from the point that their child was 9 months old, continuously through their early years to the start of school, thus removing the barriers to work for many parents. This was a government phased introduction which would commence in April.


It was noted that the government also extended eligibility for the early years pupil premium (EYPP) and the disability access fund (DAF) to all children accessing the entitlements from 2024-25, to provide support for disadvantaged children in the younger age groups. The government had proposed the funding formula for the new entitlements’ cohort to follow the shape of the existing 3- and 4-year-olds formula. Although the new formula would follow the same structure as the existing 3 and 4-year-old formula, the Government were taking a different approach to deprivation in the additional needs factor. It was using a combination of free school meals data and a measure based on the income deprivation affecting children index, to reflect the different levels of deprivation across the country.


The Forum heard that LAs must plan to pass through at least 95% of their funding entitlements to Early Year providers. The 95% pass through included budget lines such as:

  • base rate funding for all providers
  • supplements for all providers, including deprivation.
  • the funding paid directly to providers from the special educational needs inclusion fund (SENIF)
  • contingency funding


The Government had stipulated that the prescribed listed optional funding ‘supplements’ that were available for 3 & 4-year-olds should also be made available to      2-year-olds and under, but it was highlighted that adoption of any of the optional ‘Funding Supplements’ would reduce the Base Rate.


On 29 November 2023, the DfE announced that the deprivation supplement would also be an optional requirement with respect to funding for 2-year-olds and under, which was a change to their consultation position, where it was stated that the deprivation supplement would be mandatory.


The initial consultation was set to take place between 13 November and the 8 December 2023. Following the announcement by the DfE regarding the deprivation funding supplement, a supplementary question was sent out on the 6 December 2023 to early years providers to gain views on adopting the deprivation as an optional funding supplement. The deadline for responses to the supplementary question was the 15 December 2023.


The results of Staffordshire County Council’s consultation with Early Years (EY) settings were included in Appendix A of the report. 217 Early Years Providers provided a response.


Most notable responses included:


     52% (114 providers) agreed the contingency amount should be no more than 1% of the total budget, with 93% agreeing with any unused contingency being redistributed back to providers in the year following the underspend.

     57% (125 providers) agreed that if the deprivation factor had been mandatory, it should be the only funding supplement, with the majority preferring no other funding supplement be introduced.

     84% (184 providers) agreed with the Income Deprivation Affecting Children Index (IDACI) metric being used to assess whether a setting qualified for this additional payment to their base rate.

     Responses to the additional supplementary question, there were 76 responses received with the majority 67% (51 providers) agreeing with no deprivation supplement being paid for 2-year-olds and under.


Following assessment of the survey results, the proposals put forward by SCC were:


     to maximise the base rate as far as possible for the 2-year-old rate and under 2-year-old rate, and not use any additional funding supplements, including deprivation.

     that the contingency budget be no more than 1% of the Early Years budget. Any underspend on the contingency budget would be returned to providers the following year.


Philip Siddell welcomed the results of the consultation stating that the process was a worthwhile exercise. He raised that the Private, Voluntary and Independent EY providers felt that the outcome was as good as could be expected and the right outcome had been achieved. He noted there were a significant number of ‘unsure’ responses received but felt that this highlighted the complexity of the decisions relating to the subject.


Steve Barr highlighted that numerous reports had been published nationally suggesting that not all parents would be able to access the 30 hours of funded childcare, not least because of capacity pressures on the sector. He queried whether this was an issue experienced in Staffordshire at this time, in response it was explained that, from the information available to the LA, there was not an issue with accessing places at this point across the County.


Sadie Jones noted that it was positive to see that deprivation wasn’t being taken off the 2-year-old funding. Sadie noted that it was a concern that so many providers had answered ‘unsure’ to some responses, especially when they were entering into a period of increased administration in relation to the new provision. Sadie highlighted that her nursery setting was already full in the baby unit until June 2025, and suggested that access to provision was becoming harder for parents and would continue to be more difficult with the implementation of the new funded places.


In response to a question from Vicki Lewis relating to the availability of capital funding to support the possible expansion of settings to meet demand, Steve Barr provided information relating to a government announcement made in November 2023, in relation to capital expansion grants. Staffordshire had benefitted from c£1.644m which would be used to support projects that would help to ensure there would be sufficient places available to meet the reforms. SCC confirmed that it was working towards developing a capacity plan, delivery plan and steering group as part of the Governance to help oversee the management of the grant funding. It was noted that there would need to be a significant level of expansion to meet the demand, and it was suggested that the capital funding would not be able to support the large number of EY providers within Staffordshire.


Philip Siddell stated that private providers made up 70% of the EY provision within Staffordshire and felt that the market didn’t have the capacity to provide enough places. Philip also highlighted the additional risk associated with an inadequate Ofsted judgement which would result in the immediate closure of a setting due to a loss of funding. Philip provided an example of the alternative way this situation was managed by Lancashire County Council.


Councillor Mark Sutton stated that, up until this stage, there hadn’t been a particular issue with finding places in EY settings but acknowledged that this information was provided before the changes in 2-year-old and under funding. He stated that he would ask for additional information to be provided at the March 2024 Schools Forum meeting in the item relating to wraparound childcare.


Resolved: a. That the results of the Staffordshire consultation process from early years providers and maintained nurseries summarised in Appendix A be noted.

b. That the proposals on the early years funding formula for the new entitlements be noted.

c. That the Schools Forum comments on the proposals for the 2024-25 Early Years funding formula for 2-year-olds and under 2-year-olds be noted.

d. That an update relating to the wraparound childcare provision, and the management of the capital fund grant be added to the work programme, with an update being provided at the Schools Forum meeting taking place in March 2024.


Supporting documents: