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ITEM EX8

EXECUTIVE – 10 JUNE 2003

REVIEW OF RENTS AND LEASE ARRANGEMENTS FOR EARLY YEARS AND FAMILY SUPPORT PROVIDERS

Report by Director for Learning & Culture and Director for Resources

1. National developments for the expansion of early years childcare and family support have extended the range of statutory duties for local authorities in several areas, including:

• Nursery Education and Grant Maintained Schools Act 1996 (nursery grant scheme for 4 year olds)
• School Standards and Framework Act 1998 – (statutory basis of EYDCPs) and introduction of national childcare strategy targets.
• The Day Care and Child Minding (Functions of Local Authorities: Information, Advice and Training) Regulations 2001 require the Council to secure the provision of information, advice and training to those who provide child minding or day care or who wish to do so.
• The introduction of local Sure Start programmes in 1999 also supports Part 3 of the Children Act 1989 Section 17 which requires local authorities to provide a range of family support services, including family centres, as they consider appropriate in relation to children in their area.

2. At a number of meetings between June 2002 and January 2003 the Executive has approved strategies for meeting the County Council’s statutory duties for sufficiency of funded education places for 3 and 4 year olds, ‘Learning 3 – 5s’ strategy for implementation of the Foundation Stage and for the development of childcare places to meet targets set out in the Early Years Development and Childcare Plan. In December 2002 the Executive approved the introduction of the County Council Partnership Early Years Unit (PEYU) scheme whereby these duties could be met through the formation of formal arrangements with voluntary sector partners.
3. The County Council has a long history of encouraging pre-school providers to use school sites and covering the occupation by means of both leases and licences. In 1998 the Education Management Sub-committee approved revised charging arrangements. There is no formal scheme to cover the occupation of County Council property by the providers of other childcare provision or for family support provision.
4. This report summarises the current arrangements and makes recommendations for their amendment in part to encourage more voluntary sector providers to join with the County Council in partnership arrangements, which form an important element of ‘Learning 3 –5’ and implementation of the foundation stage across the County.

Summary of Current Policies re Premises Costs

Current Premises Arrangements for Pre-schools on School Sites

5. Below is a summary of current terms for allowing pre-schools and other childcare provision to be located on school sites. Where the County Council owns these sites these conventions ensure that all property occupation costs are transparent in any agreement the County Council enters into. Such service providers can be located in rooms within a school building, in their own building on a school site or in surplus school buildings. There are different terms offered to early years providers in the voluntary and private sectors.
   
   

1. Voluntary pre-schools

• Pre-schools using rooms within a school building owned by the County Council pay a share of premises costs based on the floor area occupied plus rent, which is also based on the floor area occupied. Rent is currently approximately £20 per m² and is due to be reviewed this year.
• Pre-schools in their own premises on school sites are charged a standard annual ground rent (currently £150 per annum, to be reviewed this year).
• Pre-schools exclusively using surplus school buildings owned by the County Council are charged rent which takes into account the market rate and each agreement is individually negotiated.

• A standard £500 one off charge towards the cost to the County Council of producing a new lease for sites and buildings owned by the County Council. In the case of buildings and sites owned by school trustees, fees incurred by the trustees will need to be met.
• Actual costs to the County Council of any subsequent variations to the lease requested by the pre-school.
• Legal costs incurred by the owner of any site or land required for access if this is not the County Council, for example, school trustees. School trustees are also legally required to appoint an independent agent to advise them.

b. Commercial Pre-School and Childcare Groups

6. Family support provision includes facilities such as Sure Start and voluntary managed Family Centres and Children’s Centres. At present these organisations are expected to meet both their own and the County Council’s costs for drawing up appropriate legal documentation and pay a market rental value determined by the Authority’s advisers. The rental payment is sometimes partially offset against service provision by reference to a service level agreement with the provider.
7. Childcare provision includes voluntary out of school childcare such as after school clubs. Again the formal arrangements vary and these are negotiated on an individual basis.

Reasons for changing the current system

8. The Executive has confirmed its wish to encourage and expand the number of partnership EYUs and to continue to enter into partnership arrangements with family support and childcare providers. The current system gives no financial support to voluntary sector providers to join with the County Council in partnership. Voluntary organisations are asked to assist in meeting the County Council’s statutory responsibilities for provision for 3 and 4 year olds or delivery of family support in which they are recognised as equal partners, but in premises terms are treated the same way as providers which do not enter into partnership arrangements. Schools cannot legally subsidise the running costs of a voluntary sector provider on its site but the County Council can consider other benefits conferred by the partnership arrangement in lieu of rent for any County Council owned property.
9. These benefits, outlined below, support the aims of the County Council and the Government aim to promote more ‘joined up’ approaches to raising achievement and reducing social exclusion. There are also significant potential financial benefits which would need to be confirmed in each case by a valuer in order to ensure the County Council meets the requirements of Section 123 of the Local Government Act 1972.

Proposed Changes

10. It is recognised that the Council must continue to ensure that all property occupation costs are transparent when entering into legal agreements. However, this should also include the ability to recognise the benefit to the Council in working in partnership with other organisations, including:
    
    

1. helping to meet the County Council’s statutory duties for education provision for 3 and 4 year olds;
2. providing appropriate family support for children in need, which satisfies the Council’s duty under the terms of the Children’s Act 1989;
3. financial benefits to the County Council by voluntary organisations adding value through their own fund raising and access to other grants, as well as saving on capital and management costs, as in case in the examples below;
4. enabling the provision of seamless education and care for the full Foundation Stage of Education on school sites where there is no designated nursery class or LEA nursery school

Examples of Added Value In the provision of a PEYU at Bloxham CE Primary School the voluntary Pre-school has raised £40,000 towards the provision of a new premises. This contribution was doubled to £80,000 through a successful SEED Challenge bid. Without this contribution the scheme would not be viable. In the provision of a Family Centre at Rose Hill, Sure Start funded approximately £1 million capital building works.

11. It is therefore proposed that for any voluntary Early Years or Childcare Provider who enters into a formal partnership or service level agreement with the County Council to provide services required by statute on a site in the Council’s ownership, the following guidelines should apply.
    
    

1. In all cases organisations will meet their own operating costs (energy, water, insurance, cleaning etc.), internal repairs and maintenance costs and professional fees incurred in the formulation of the lease. In addition to this,
2. Organisations using rooms within a school building should pay no rent and the County Council and school budget will meet external repairs and maintenance costs.
3. Organisations using their own premises located on school sites should pay no ground rent but will meet all other costs associated with their premises.
4. Organisations using separate premises surplus to school requirements should pay no rent and the County Council will meet external repair and maintenance costs.
5. The County Council will meet its own costs in setting up such lease arrangements.
   
   
12. Where leases are provided for more than 7 years, the County Council will need to satisfy valuers that the cost-benefits satisfy the requirements of the Local Government Act 1972.
13. The above changes would apply to community schools only. Terms of occupation of buildings located on the sites of any voluntary controlled or voluntary aided school are a matter for the trustees of that school. Discussions have commenced with the relevant Dioceses in order that they may consider amending their own guidelines in a similar way.

Financial Implications

14. There are currently approx 50 pre-schools (see Annex A) to which leases or licences have been issued to occupy premises on school sites in Oxfordshire
15. The annual rental payable to the County Council is £11,571. Most pre-schools occupy their own premises with a ground lease. In these cases if the pre-school were to enter into a partnership arrangement only the rent payable would be lost to the County Council as other running costs are already borne and would continue to be borne by the pre-school itself. Only four pre-schools have exclusive possession of surplus school buildings and each of these pays a rent of approximately £1,000 per annum. These costs can be absorbed within the Partnership development Fund agreed by the Executive as part of the proposals for the implementation of the Foundation Stage.
16. The additional legal and other costs in connection with the leases/licenses will be dealt with under the existing internal service agreements and contracts.
17. Where leases are provided for more than 7 years, the County Council will need to satisfy valuers that the cost-benefits meet the requirements of the Local Government Act 1972
18. RECOMMENDATIONS

The Executive is RECOMMENDED to:

1. approve the new arrangements outlined in the report for use of premises in the Council’s ownership by voluntary early years and childcare providers who enter into formal partnership or service level agreements; and
2. commend the scheme to the Diocesan authorities for voluntary controlled and voluntary aided schools in Oxfordshire.

KEITH BARTLEY
Director for Learning & Culture

JOHN JACKSON
Director for Resources

Background papers: Using School Premises in Oxfordshire: Guidance for Pre-school Groups

Contact Officers:
Annie Davy, Senior Education Officer, Early Years and Childcare Development Tel: (01865)815493
Allyson Milward, Principal Project Officer (Planning), Premises Development Group Tel: (01865) 428165
John Wilby, Property Services, Resources (01865) 815889

May 2003


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