CYP Now asked all local authorities how funding retained due to the pass-through allowance was spent to support early years services in their area.
Among the 94 councils that responded to the Freedom of Information (FOI) request the most common use of funds include staff costs for early years teams, staff training, marketing the funded childcare offer for three- and four-year-olds and administration around the entitlement of funded hours.
Around a quarter of the local authorities that responded said they use retained funding to boost support for young children with special educational needs and disabilities (see Analysis).
Hertfordshire Council
Hertfordshire reports the highest budget of all local authorities that responded to the FOI request with a total of £83.5m for three- and four-year-old places in 2022/23.
In its response it states that “funding paid out to providers delivering the free entitlements is through the early years dedicated schools grant”.
Hertfordshire has consistently retained two per cent of available funding since 2019/20, dropping from three per cent in 2018/19. In 2022/23 this equated to £1.6m.
A breakdown available on the local authority’s website shows retained funding contributed towards quality improvement for early years in Hertfordshire, supporting children’s transition between early years and reception, business support and start-up funding for providers.
It also cites IT infrastructure and managing free early education and childcare schemes as benefitting from the funding as well as supporting provision for children with special educational needs and disabilities.
Staffordshire Council
Staffordshire reports an early years budget of £47.6m in 2022/23 funded through the dedicated schools grants.
It retained 4.2 per cent of funding in the same year after retaining the full five per cent allowance in 2018/19 and 2019/20 – equating to £1.9m.
This is spent on “statutory functions, along with back office administration and overheads”, the council states.
In a full breakdown it notes that £1m is spent on statutory functions such as the collection and submission of Early Years Foundation Stage (EYFS) profile data, quality liaison through providing information, advice and training to providers, business support and market development for early years entitlement offers.
A further £776,000 funds back office administration including “management capacity, sufficiency analysis, the provider portal and database, oversight of eligibility checking for funded places, compliance and information, advice and guidance for providers, parents and professionals”.
A further £120,000 is spent on overheads such as the cost of general support to back office administration and general support including the costs of IT, property, legal, website services and the council’s customer service centre.
Hillingdon Council
Hillingdon Council, in west London, had an early years budget of £22.8m in 2022/23.
This was funded “by a combination of parental fees, local authority contribution and dedicated schools grant funding”, the council said in its FOI response.
Hillingdon has consistently retained the full five per cent of funding since 2018/19 which equated to £1.1m in 2022/23.
Retained funding in Hillingdon is spent on placement provision for vulnerable children, the council says, stating: “It is recognised that there are still children and families that have a need for this funding.”
Family information services to help parents access “the early years provision they are entitled to” is also funded through the retained budget.
“This relates to the universal entitlement to free early education for all three- and four-year-olds and covers the entitlement to free childcare for the most disadvantaged two-year olds,” adds the council’s response.
The retained element of the budget also goes towards Hillingdon’s early years advisory service to provide targeted support and guidance to settings, its early years support team and central support services including “strategic and operational leadership and management of the early years system and its finances”.
Oldham Council
Oldham Council reports a 2022/23 early years budget for three- and four-year-olds of £14.6m comprised completely of government funding.
Oldham retained 4.7 per cent of its five per cent allowance in the same year after retaining the full amount for all previous years from 2018/19.
The council reports a lower retention of 4.3 per cent for the current financial year (2023/24) but says it has not made a decision on retained levels going forward due to Department for Education plans to expand funded entitlements to children as young as nine months from 2024/25.
Using 2023/24 as an example, Oldham says it spends 63 per cent of retained funding on the salaries of early years services officers. A further 29 per cent was spent on central support services including IT, HR, finance and property while the remainder was classed as “non-pay expenditure”.
If the DfE was to increase the pass-through rate to 97 per cent as proposed, meaning councils could only retain three per cent of budgets for three- and four-year-olds, Oldham would have retained £440,619 in 2022/23 instead of £693,241.
