To ask the Secretary of State for Children, Schools and Families what steps his Department is taking to assess different options for funding the early years entitlement. (268984)

The dedicated schools grant formula review was launched at the end of January 2008. The purpose of the review is to ensure that all education to the age of 16 is well supported and providers have the confidence they require to plan their spending effectively over the longer term. We have established a DSG formula review group with representation from central and local Government, teaching associations, unions representing support staff and governors’ organisations. In addition, other stakeholders are invited to attend when the most relevant issues to them are on the agenda. We are also considering the extent to which we can rationalise and simplify the different funding streams to deliver children’s services — particularly relevant to early years.

In addition, all local authorities in England are currently in the process of introducing a single funding formula to support the delivery of the free entitlement to early years provision. While this will not mean that funding levels will be equal across all providers, it will mean that it will be provided on an equitable basis, taking into account the same factors, reflective of costs and that any differences will be both transparent and fully justifiable.

It will also introduce a shift away from place based funding toward participation led funding. There are a number of options for consideration in the formulation of the framework—for example how local formulas are used to take account of costs associated with quality, flexibility and outcomes, and under participation led funding when children are counted as participating in provision. The Department is assessing these options through a formula development pilot which was set up in November 2007 and now involves 12 local authorities whose experiences and challenges are being captured.

To ask the Secretary of State for Children, Schools and Families what recent assessment he has made of the effectiveness of the processes by which nurseries had recovered the full cost of providing early years childcare places to three and four-year-olds in the last 12 months. (269198)

Independent research shows that the funding at the national level is sufficient with around £4 billion being spent by local authorities on provision for under fives in 2007-08, including the free entitlement for three and four-year-olds. This amount is up from around £1 billion in 1997-98. The research, conducted by Hedra in 2007 can be found at:

www.everychildmatters.gov.uk/resources-and-practice/RS00042

The cost of delivering the free entitlement will vary from region to region therefore it is for local authorities to make any assessments. As part of the requirement to introduce a single funding formula to support the delivery of the flexible extension to the free entitlement, all local authorities are required to undertake a cost analysis of their providers to ensure that the offer is fully and fairly supported.