The introduction of the Early Years Single Funding Formula (EYSFF) in April was intended to remove discrepancies in funding between the private, voluntary and maintained sectors.
But NDNA's survey of nurseries in 133 local authorities in England found that nurseries in the maintained sector receive, on average, 45 pence more per child, per hour than private nurseries to offer the free entitlement for threeand four-year-olds.
The research found that the EYSFF is failing to deliver consistent levels of funding for PVI nurseries and that the 'base rate' - the minimum they receive from local authorities for providing free entitlement places - varies widely throughout the country.
As an overall average, nurseries in the private sector were being paid a base rate of £3.51 per child per hour, compared with £3.55 for voluntary nurseries and £3.96 for maintained settings.
The lowest base rate was found in North Tyneside, where private nurseries receive just £2.05 an hour compared with the highest base rate found, of £5 an hour in Slough and Hertfordshire.
There are also wide variations between nurseries in neighbouring areas. Nurseries in Leeds, for example, receive a minimum of £3.70 an hour, while those in Bradford receive £4.63 an hour.
The research also revealed:
- approaches to supplements varied, with supplements for quality and flexibility given most by local authorities. If all supplements applied, the average amount of potential additional funding was 84p per child per hour
- nurseries piloting free places for disadvantaged two-year-olds in most cases received between £4.85 and £6 per child per hour. But NDNA said these figures were obtained prior to money for places for disadvantaged two-year-olds being included within the Early Intervention Grant (EIG).
- Supplements given by local authorities as additional funding to the base rate also vary widely, both in the amount and in the different supplements available.
Settings in 110 local authorities gave information on the different supplements available.
While it is mandatory for all local authorities to offer deprivation supplements, the survey found that around a third of LAs gave supplements for quality and flexibility, but only nine gave extra funding for staff qualifications.
Sixteen gave a 'non-specific supplement', four for special educational needs, and five councils did not provide any supplements.
Providers were also asked if their setting was receiving funding from the local authority for workforce development. Of the 117 nurseries who gave this information, 57 had funding from their LA but just over half of these were told their funding would either be reduced or withdrawn.
The report said, 'In many cases the funding nurseries receive for delivering free nursery education for threeand four-year-olds does not cover the costs. Anecdotal evidence from nursery members suggests base rates are stagnant or falling in some local authority areas. This, combined with funding reductions for workforce development, threatens sustainability and quality.'
Purnima Tanuku, chief executive of the NDNA, (above), said, 'A significant proportion of nursery members have been reporting that the EYSFF is not delivering a rate that is reflective of their costs.
'This research has also shown the significant variations in the levels of funding nurseries are receiving. The lowest base rate we found was £2.05 per child per hour - around the average cost of a pint of milk and a loaf of bread. Although a range of supplements may be accessible to settings, in practice they may only add a small amount of additional funding and do not always incentivise and reward quality and flexibility.
'With over half of the free nursery education children receive being provided by private and voluntary nurseries, this research shows the EYSFF is not delivering consistency. A new system of funding with binding national criteria would help address these issues.'
The NDNA said a separate pot of funding for early years should be brought in ahead of upcoming changes to choice of provision for reception-age children and the separation of funding for two-year-olds from the EIG in 2013.
