Meeting: Schools Forum


Schools Forum


25 February 2021

Report of                 

Vicky Jenkins, Childcare Strategy Manager, Free Entitlement Steve Williams, Principal Accountant, Health, Adults, Families, Children and Learning Finance


2021/22 Early Years Block of the Dedicated Schools’ Grant: Funding for Early Years Free Entitlement Places for 2, 3 and 4 year olds

Wards Affected      


1. Purpose of the report


To inform and consult the Schools’ Forum about funding arrangements for early years free entitlement (EYFE) places for 2, 3 and 4 year olds for 2021/22.


2. Recommendations


To note the funding allocations announced by government in December 2020, with an 8 pence per hour increase for 2 year olds and a 6 pence per hour increase for 3 and 4 year olds for all local authorities on their 2020/21 rates. This brings Brighton & Hove’s rates to £4.59 for 3 and 4 year olds (1.3% increase) and £5.36 for 2 year olds (1.5% increase).


To note the below average level of funding for Brighton & Hove compared with south east and national averages.


To agree the 2021/22 funding rates outlined in this report for 3 and 4 year olds through the Early Years Single Funding Formula (EYSFF), which includes an increase in the base rate from £4.14 to £4.20 per hour.


To note that that the Early Years Block (EYB) pass through rate will exceed the 95% required.


To note a SEN Inclusion Fund (SENIF) for additional support of £519,700 for 3 and 4 year olds (an increase of £65,000 from 2020/21). For 2 year olds funding for additional support will be £100,000 (also no increase from 2020/21).


To note that £315,000 will come from the High Needs Block (HNB) towards the EYB SENIF.


To note the retention of the deprivation supplements of £1.20/75p per hour


To note the continuation of the Early Years Pupil Premium (EYPP) and Disability Access Fund (DAF) for 3 and 4 year olds.


To note the proposal to fund EYFE for 2 year olds at £5.36 per hour, passing on the full increase to early years providers.


To note the proposal to pass on the full 6 pence per hour increase to early years providers for 3 and 4 year olds.

3. Background


Funding for EYFE for two, three and four-year olds comes from the EYB of the Dedicated Schools’ Grant (DSG). 


In December 2020 the government published its funding allocations for the EYB for the 2021/22 financial year. An 8 pence increase in the hourly rate for 2 year olds and a 6 pence per hour increase for 3 and 4 year olds has been applied to all local authorities.

The EYB of the DSG is comprised as follows:

Funding Area



Universal EYFE entitlement for three and four-year olds


Extended entitlement for three and four-year olds of eligible working parents


EYFE for disadvantaged two-year olds


Early Years Pupil Premium


Supplementary funding for maintained nursery schools


Disability Access Fund


2021/22 Early Years Block Total


Three and Four-Year Old Funding


The government allocates all local authorities early years funding based upon a national formula. Brighton & Hove’s allocation for 3 and 4 year olds at £4.59 is significantly below the national average of £4.99. It is also below the south east average of £4.94 and is the lowest of any unitary authority in the region.


Low funding rates for EYFE in Brighton & Hove have been raised with government ministers on a number of occasions, including on 29 April 2020 in response to additional challenges relating to Covid-19. A change to the early years national funding formula would be needed to increase the rate for Brighton & Hove, and this has not been forthcoming.


Statutory guidance states that local authorities:


Must pass through 95% of the hourly rate they receive from the government directly to providers.


Are required to consult providers on annual changes to their local formula. Schools’ forums must also be consulted on changes to local early years funding formulas, including agreeing central spend by 28 February 2021, although the final decision rests with the local authority.


Are required to pay a universal hourly base rate for all childcare providers in their EYSFF for 3 and 4 year olds.


Must use a deprivation supplement in their local three and four-year old formula, and any other supplements used must fall within one of the allowable categories.


Must not channel more than 10% of their funding for three and four olds through supplements.


Can continue to use lump sums to distribute government funding, including the supplementary MNS funding for Maintained Nursery Schools.


Must provide a SEN Inclusion Fund (SENIF) for 3 and 4 year olds.


Must pass on Early Years Pupil Premium (EYPP) in full to providers for eligible 3 and 4 year olds and must pass on Disability Access Fund (DAF) in full to providers for eligible 3 and 4 year olds.

Two-Year Old Funding


The rate of funding for 2 year olds has been increased by 8 pence to £5.36 per hour. There are no supplements for 2 year olds and the whole amount is passed on to providers.


The average hourly funding rate nationally for 2 year olds is £5.62 and in the south east is £5.72. Along with East Sussex we have the lowest funding rate in the south east at £5.36 per hour.


We have an SENIF of £100,000 for 2 year olds and will retain this for 2021/22.


4. Proposals for Funding Early Years Free Entitlement for 3 and 4 year olds


It is proposed to continue with the 2020/21 formula for 3 and 4 year olds in 2021/22. This is because there has not been a significant change to the DfE’s funding amounts for this year, and because more time is needed to see the impact of the formula before considering changes.

This means:


A universal base rate of £4.20 per hour for all provider types. This is an increase of 6 pence per hour on the rate for 2020/21 (a 1.4% increase).


A deprivation supplement of £1.20 per hour for children living in the IDACI 0 to 10% most deprived lower super output areas (no change from 2020/21).


A deprivation supplement of 75 pence per hour for children living in the IDACI 11 to 20% most deprived lower super output areas (no change from 2020/21).


In 2020/21 16% of 3 and 4 year old children received EYFE hours which attracted the deprivation supplement.


A quality supplement lump sum of up to £3,000 to providers in private, voluntary and independent (PVI) settings where there is a member of staff leading practice who is an Early Years Teacher or Early Years Professional. The lump sum payment will be paid on a sliding scale, depending on the number of children at the setting. This is no change from 2020/21.


Continue to have a SENIF amounting to £519,700 (an increase of £65,000 from 2020/21). This includes a £315,000 contribution from HNB.


Continue to pass on EYPP of 53 pence per hour (no change from 2020/21) in full to providers.


Continue to pass on DAF of £615 per year (no change from 2020/21) in full to providers.


In addition to the early years single funding formula the local authority is proposing to continue to apply an additional lump sum to maintained nursery schools using the supplementary funding allocated by government within the EYB. The provisional amount for 2021/22 is £174,916.


Our funding proposals for 2021/22 will mean that the percentage pass through to providers will exceed 95%.

5. SENIF and High Needs Block


There is increased pressure on the SENIF providing additional support for early years children because since April 2019 [1] local authorities have been required to fund eligible children attending a setting in their area, regardless of their home local authority.


Brighton & Hove is a net importer of children and as a result a £60,000 SENIF overspend is projected for out of area children for 2020/21. The overall SENIF is being increased by £65,000 in 2021/22.

[1] In Brighton & Hove City Council this change was implemented from September 2019

6. Other Issues

6.1 Impact of Covid-19 on the 2021 census and DfE EYB grant


There is still some uncertainty about the impact that Covid-19 has had on the January 2021 census. This census is used by government to determine the annual Early Years Block funding allocation to LAs. There is a concern that the January census is understated in terms of the levels of provision recorded due to the lockdown over the spring 2021 term. This will potentially mean that the level of funding allocated by government will be too low assuming that EYFE take-up increases in the summer term.


DfE guidance states that where attendance is below 85% of local authorities’ January 2020 census and where that local authority can provide evidence for increased attendance during the spring term, they will provide a top-up to their January 2021 census. The top-up would only fund the additional places taken-up after the January 2021 census week count and would be limited to a cap equivalent to 85% of their January 2020 census. More guidance has been promised regarding this but has not yet been received. In any case it is unlikely that our attendance will be below 85% of that in January 2020.


More recently the DfE has asked local authorities for information on their autumn 2020 funding position in order to help policy development which is an indication that they are aware of the potentially difficult position with regard to child numbers for the January 2021 census.


The impact may of lower census numbers in Brighton & Hove may be mitigated by a reduction in the number of three year olds across the city, and a possible reduction in EYFE hours taken up by parents as a result of coronavirus (for example more parents working at home, fewer are commuting, reducing need for formal childcare). Our model predicts a 2.5% reduction in hours as a result of both these factors. A high level estimate is a shortfall of £60,000, which is not significant given the budget..

6.2 Consultation


Schools’ forums must be consulted on changes to local early years funding formulae, including agreeing central spend by 28 February 2021, although the final decision rests with the local authority. A paper was taken to the schools’ forum on 18 January 2021 referencing these proposals and also noting that because of the late notification from the DfE of this year’s funding amounts and the need to complete the January 2021 headcount so that data was available for consideration of the pass through amount, it would not be possible to meet the 28 February deadline.


The early years funding group has been consulted on these proposals. Comments have been received regarding demand for early years provision, lower number of children in the city, impact on provider finances, change in the number of places in the city a result of Covid/19, as well as the continued low funding rate from the DfE. Passing through the whole increase was appreciated, as was continued payment of the deprivation supplement rates..