Summary: Mr X complained the Council failed to pay the correct amount of funding for pupils at his pre-school. The Council cannot evidence it sent Mr X emails about his annual funding review and it sent his funding notice letter to the wrong address. The Council was at fault and should pay Mr X the funding he was eligible for.

The complaint

1. Mr X complained the Council stopped applying an uplift to the Early Years Free Entitlements funding which his pre-school was entitled to and had previously received. He said that the Council failed to contact him to tell him he needed to reapply for the uplift. By the time Mr X noticed the shortfall the Council said it was too late to apply the uplift.
2. This has resulted in Mr X’s pre-school suffering a shortfall in funding.

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The Ombudsman’s role and powers

3. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
4. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

5. As part of the investigation I have considered the following:
• The complaint and the documents provided by the complainant, as well as the information we discussed in a telephone conversation.
• Documents provided by the Council and its comments in response to my enquiries.
• Education and Skills Funding Agency ‘Operational Guide on Early Years Entitlements 2018 to 2019’.
• The Council’s Funding Guidance 2017/18.
• I have written to Mr X and the Council with my draft decision and given them an opportunity to comment.

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What I found

6. Under the Childcare Act 2006 and 2016, parents of children aged between two and four can receive between 15 and 30 hours of free childcare a week. This is known as early years education.
7. The government has issued guidance to councils about how it funds early years education providers. It sets a base rate which every provider is entitled to. Mr X’s base rate for 2018 was £4.00 per child per hour. Providers may also be entitled to additional funding in certain circumstances. This is known as a funding supplement. Providers who employ staff with relevant qualifications are entitled to a discretionary supplement.
8. The Council’s funding guidance stipulates that a provider is entitled to a funding supplement of £0.30 per child per hour if it has a nominated leader with either qualified teacher status or early years teacher status. This is known as its quality supplementary rate.
9. An annual data collection exercise is carried out during January each year, in order to determine the supplementary eligibility of each provider.
10. A provider’s funding rate is set on an annual basis and cannot be amended during the year.

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What happened

11. Mr X’s pre-school has received the supplementary funding rate since 2013, owing to the qualifications of one of its staff.
12. In January 2018 the Council started its annual review of early years providers funding. The Council said it sent Mr X an email on 5 February, asking him to complete a questionnaire so it could assess his funding. It said this needed to be completed by 12 February 2019. The Council said it sent this email as part of a batch sent to all early years providers.
13. On 9 February 2018 the Council said it sent a chaser e-mail to those providers who had not yet returned the questionnaire, including Mr X. Mr X said he did not receive either of these emails.
14. On 7 March 2018 the Council sent a letter to Mr X’s pre-school. This confirmed it would receive the hourly rate of £4.00 for the upcoming year, made up of the base rate only. The letter also stated Mr X had until 30 March 2018 to query the rate awarded, otherwise it would be fixed until the Spring Term of 2018. Mr X said he did not receive this letter.
15. On 17 December 2018 Mr X contacted the Council by telephone after realising that he had only received the base rate of £4.00 since March 2018. The Council said it had sent him a questionnaire in February 2018, which he had not returned. It also said it had sent him a letter confirming the rate of funding in March 2018.
16. In December 2018, Mr X contacted the Council and told it he had not received the two e-mails or the letter sent in March 2018. He requested copies of the correspondence. Mr X asked to be awarded the funding supplement, backdated to March 2018, or for the remainder of the year.
17. The Council exchanged several emails with Mr X. It provided Mr X with a copy of its letter dated 7 March 2018 addressed to Mr X’s pre-school and confirming the rate of funding. It said it could not provide confirmation of the emails it had sent because it was part of a batch and he would see the contact details of other recipients. It said it could not amend his rate of funding.
18. Mr X responded stating that the letter had been sent to the pre-school address, rather than his correspondence address. He explained the pre-school address was used by other groups and had no letter box. He said the Council always sent funding documents to his correspondence address and he questioned the address the Council held on its system for him.
19. The Council told Mr X that the Early Years records were separate from the accounts records. It said the pre-school address was the address recorded on its Early Years records and it was Mr X’s responsibility to update.
20. Mr X wrote to the Council on 11 January 2019 to submit a formal complaint. He complained that his rate of funding had been reduced and that the Council had not communicated this reduction with him. He also complained that the Council refused to award the funding he was eligible to receive, as he had notified them too late.
21. On 17 January 2019 the Council sent its stage one complaint response. It did not uphold Mr X’s complaint. It said that some other providers had missed the deadline, but they had only been awarded the supplement when it had been evidenced that the Council had not sent emails or had used the incorrect address. The Council said it had fulfilled its responsibilities to Mr X by contacting him through his e-mail and postal address.
22. On 25 February 2019 Mr X took his complaint to stage two of the Council’s procedure. On 18 March 2019 the Council wrote to Mr X, again it did not uphold his complaint.
23. Mr X remained dissatisfied with the Council’s response and brought his complaint to the Ombudsman.

The Council’s response to enquiries

24. The Council provided me with a copy of its list of pre-school provider contact details. Mr X’s e-mail address was on the list. It also provided blank copies of the e-mails it sent out. However, it was unable to provide evidence it had sent the emails to Mr X in February 2018, because the senders outbox had been deleted. It has provided records of previous e-mail correspondence with Mr X, to the correct address, dating back as far as July 2017.
25. The Council said it introduced a new computer system in September 2017. The new system only allows one address to be used, and it kept the address of Mr X’s pre-school, not Mr X’s correspondence address. The Council confirmed that before it introduced the new system, it sent letters to Mr X’s correspondence address, not the pre-school address.
26. The Council said it is Mr X’s responsibility to keep his records up to date. It said it sent him an e-mail on 26 July 2018 asking him to update his details. This e-mail asked Mr X to update his phone number and e-mail address, not his correspondence address.

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My Findings

27. The Council has been unable to evidence it sent Mr X the funding review emails in February 2018. As Mr X has replied to the Council’s e-mails in the past and as the Council can evidence previous e-mails sent to Mr X, it demonstrates it had the correct address and that this works. Therefore, there is no reason for the emails it sent in February to have not been delivered. There is also no reason why Mr X would not have replied and requested the higher rate of funding, as he had done so in the past. Therefore, on the balance of probabilities, I find it most likely that the Council did not send the e-mails to Mr X as it intended. That was fault.
28. The Council introduced a new computer system in September 2017, this replaced Mr X’s correspondence address with the pre-school address.
29. The Council was entitled to introduce a new computer system, but it was responsible to make sure it had the correct address in place. The Council did not ask Mr X to confirm his correspondence address when it asked him to update his details in July 2017. That was fault.
30. The Council had a record of Mr X’s correspondence address previously and admits that prior to the new system being in place it would send letters to the correspondence address. On the evidence seen, the introduction of the new computer system resulted in the Council sending Mr X’s letter to the wrong address. That was fault.
31. The Council’s funding guidance stipulates that funding rates are assessed annually and cannot be amended once the rate has been set.
32. However, the Council has confirmed that it may amend the funding rate during the year where it established it made an error, such as not sending out communications or using the incorrect address.
33. Mr X would have been eligible for the supplementary rate if he had applied for the funding in February 2018. The Council has not backdated payment because it states there was no error on its behalf. However, the Council has been unable to provide evidence of the emails it sent, and it sent the funding notification letter to the wrong address. The Council was aware of both these faults when it made the decision not to amend Mr X’s funding rate for the rest of the year. That was fault.
34. Mr X did not realise he was not receiving the funding supplement until December 2018 and the Council says he should have been aware sooner. Mr X had made funding applications previously, therefore was aware of the process and should have noticed sooner. However, this does not change the fact that Mr X was eligible for the higher rate of funding and it was the Council’s error which prevented him from applying on time.

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Has the fault caused injustice?

35. If Mr X had received the supplementary rate of funding which he was entitled to, his total funding per child hour for the year would have been £4.30. Instead it was £4.00. Mr X that he received £100,976.00 in funding at the £4.00 rate between April 2018 and February 2019. If a rate of £4.30 was applied, this would have generated £108,549.20 in funding. Mr X has therefore suffered a shortfall of £7,573.20. He has also been put to time and trouble in contacting the Council, going through its complaints procedure and then bringing his claim to the Ombudsman. This is his injustice.

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Agreed action

36. Within one month of my final decision, the Council has agreed to pay Mr X £7,573.20 to recognise the loss of funding.

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Final decision

37. The Council failed to tell Mr X about the annual funding review or send him a funding letter. The action the Council has agreed to take remedies the injustice caused. I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman