Capital Funding - Making room for 30 hours

With just over a year to go until the planned introduction of the 30-hour free entitlement offer, much sector focus is on the many unresolved issues around early years funding. But funding is only half the story. If the 30-hour offer is to have any chance of succeeding, the government must also ensure that there is sufficient capacity in the sector. Despite arguing that fears about this have been largely overegged, the Department for Education (DfE) has acknowledged that some additional places will need to be created ahead of the roll-out of the extended offer. To support this the Government has pledged £50m in capital funding, and launched a funding application process for local authorities and providers to bid for part of the pot (which totals £40m for this bid round).

If you didn’t know about this, you are not alone. Many providers have said they were not aware there was a capital funding bid process under way – 39 per cent of respondents to a recent Twitter poll – while we know of several local authorities who have only just contacted providers to ask if they are interested in putting together a bid, despite the fact that the deadline is 31 August.

HOW TO APPLY

So what should you do if you are interested in applying for capital funding? First, contact your local authority to check that they previously submitted an ‘expression of interest’ to the DfE (this is essentially a brief summary of what they might want to use capital funding for, and how they can prove it is needed). All local authorities were invited to do so in April; only those that did are now eligible to submit an official capital funding bid.

Although all bids must have at least one lead provider, the application itself is local authority-led, so you cannot submit a bid for capital funding without them.

If you are a new provider that has not yet been inspected by Ofsted, you can still be part of a funding application if your local authority is willing to write a statement confirming your provision is of high quality. DfE guidance on this is very unclear: it states that, ‘New providers, who do not have an Ofsted track record, will not be eligible to apply for this funding.’ However, according to the DfE, ‘new providers’ actually means ‘potential providers who have not yet registered with Ofsted’, while ‘Ofsted track record’ actually means ‘an Ofsted registration’ (we have asked them to amend the guidance to make this clearer). If you are a childminder, you can also be part of a funding bid – however, you cannot be the lead or sole provider, nor can the proposed project involve your own home.

It’s important that, if you are planning on bidding, you feel confident that you can, in partnership with your local authority, provide the DfE with all the information it needs. Firstly, for whatever you are proposing – new build, extension, refurbishment or conversion – you will need to demonstrate a need for places. This means not just that you are currently close to capacity but that other local providers are as well. Also consider whether you are in an area with a high proportion of eligible children. Local authorities will have an idea of ‘target areas’ where the need for places is greatest and likely to be given priority. It’s interesting to note that in 2013 the DfE expressed a desire to focus capital funding on settings within walking distance of these target areas for the two-year-old free entitlement (in this case, £100m was made available).

You will also need to show that your project is likely to have positive outcomes – for example, that you will be able to deliver a high number of additional 30-hour places without reducing the number of 15-hour or two-year-olds places available. Projects involving Good and Outstanding providers will also be more highly rated throughout the application process.

Finally, you’ll need to demonstrate value for money – that the cost of the project is ‘reasonable’, although bid assessors will take into account that projects involving the expansion of provision for children with SEND will inevitably have higher costs. Be warned, though: under the process rules, projects must be receiving at least 25 per cent of funding from other sources – and the more alternative additional funding a project is receiving, the more highly rated it will be. Yet local authority funding rates have yet to be confirmed, with the consultation on the early years funding formula which distributes them not yet launched, so providers are currently in the dark about what their revenues are likely to be next year. Given that this is information which investors forking out significant sums for an extension are likely to want to know, this could present a real stumbling block.

There are still many questions to be answered about the capital funding process. The Government has promised £50m to the sector, but only £40m is being made available in this bid round. When is the remaining £10m to be spent? Why has the Government chosen to direct all information about the application process to local authorities, given that all bids involve providers too? Why is the process being carried out, in large part, over the summer holidays, when the many term-time-only settings (and schools) are closed? Will, as some fear, maintained settings be given preference in the application process (it is notable that schools that have never previously delivered provision for three- and four-year-olds are allowed to apply for funding)?

That said, PVI settings, particularly those in areas of deprivation, have received capital funding in the past – so it is possible, and it can make a big difference to a business (see case study). The lack of certainty over 30-hours funding won’t make it any easier.

CASE STUDY: TEENY DAYS, LUTON

Shazia Latif, owner of Teeny Days in Luton, received £30, 646 from the two-year-olds capital funding scheme in August 2013 to revamp a kitchen, the outdoor area and purchase resources.

She says, ‘I found out about the scheme from the local authority. Filling in the forms took a day or two, getting quotes took about a couple of weeks. For some of the projects, such as the kitchen, we needed two or three quotes. We found we were able to include two with the forms and send a third along afterwards.

‘The money has to be for creating new space and not just using existing space. We put in two bids, the other being for an extension to the front of the building to create more space, but though the nursery is quite large we weren’t using most of the space there was, so this was rejected on those grounds.

‘It is daunting when you get the application form, with all the jargon, but when it came to working out how we fitted into the criteria I found that talking to someone was a lot more helpful than just reading a description. The paperwork was actually straightforward –the Pre-school Learning Alliance helped me go through it. We had to relate it back to the two-year-olds and how it supported their learning and ask ourselves how we can help them to get into school and reach their early learning goals.

‘We also had to look at whether the equipment we were applying for could be used by older children as well. We also got feedback from the children about what they wanted, and staff were involved too in working out what we needed.

‘The revamp enabled our two-year-old capacity to go up fourfold – from eight two-year-olds at a time up to 32 per three-hour session – and we still haven’t reached full capacity. We found we had a couple of children with additional needs who we could support, which we might not have picked up on if they had come when they were three. Parents also say they like the look of the nursery.

‘We applied in June so we had to get the money spent before the end of the tax year so we didn’t get taxed on it, and we had to make sure we kept track of the spending.’

FURTHER INFORMATION

https://www.gov.uk/guidance/early-years-capital-funding-application-round

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/206584/2YO-childcare_trialsreport.pdf