Released the day before the budget, the analysis of a recent joint survey by the sector organisation and the independent analysts, shows that almost two thirds of nurseries and pre-schools (65 per cent) and four in 10 (42 per cent) childminders had fewer children taking up funded places in January, compared to the same time last year.
The research blames the predicted loss in funding on the Government’s recent decision to base funding for funded early years places for two-, three- and four-year-olds on the number of children currently registered at early years settings during the spring term, rather than on pre-pandemic attendance levels.
Its analysis has found that this means that nurseries and pre-schools with lower headcounts will lose an estimated average of £13,390 funding in the spring term. Childminders with lower headcounts will lose an estimated average of £2,485 funding in the spring term.
This is calculated to mean that the sector currently faces total losses of £247 million this term.
Dr Jo Verrill, managing director at Ceeda, said, ‘The pandemic has thrown into sharp relief how vital the country’s early education and childcare infrastructure is for children, parents and employers. It seems this point has yet to be fully understood by the Treasury. The retraction of funding support at this crucial time is the latest example in a long, well-evidenced, history of short-sighted under-investment in children’s futures, and parent’s capacity to work.’
Funding analysis
During the summer and autumn of 2020, the Government continued to fund early entitlement places for two-, three- and four-old based on pre-pandemic attendance levels.
However, it withdrew this support in January, with funding for the spring term based on the number of children on roll.
The Department for Education’s latest statistics on early years attendance levels show that the number of children attending nurseries, pre-schools and childminders during the latest national lockdown is just 62 per cent of normal daily levels (compared to November 2020 when it was 85 per cent).
Funding losses have been modelled to illustrate the potential financial impact for providers of the government’s decision to base spring term early years funding on current child registrations rather than pre-pandemic attendance levels.
The joint survey captured provider headcounts of children on roll for funded places in January 2020, and from 15 to 19 January 2021.
The difference in child numbers is calculated for each early years entitlement offer, multiplied by the relevant number of hours a child would take in the spring term, and the local funding rate paid to the provider. Calculations assume entitlements are taken in full. The summed total represents the provider’s net difference in funded income across all offers.
The problem with furlough
The Government has claimed that early years providers can recover their funding losses through furlough support.
However, the researchers said that as wage costs account for around three-quarters of nurseries’ and pre-schools’ overall costs, and the Job Retention Scheme only provides funding for 80 per cent of wage costs, even if a setting was able to claim maximum furlough support, this would still only equate to around 59 per cent of what they had lost for an unoccupied funded place.
The survey also found that only a minority of providers (45 per cent of nurseries and pre-schools and 19 per cent of childminders employing assistants) had any members of staff on furlough at the time of the survey, with many only able to receive limited support from the Job Retention team. Reasons given included:
- 40 per cent of nurseries and pre-schools said occupancy was fluctuating rapidly, making it hard to plan ahead for required staffing levels.
- Almost a third (31 per cent) said they still needed their staff despite falling demand, to manage increased cleaning (77 per cent), cover high Covid-related staff absence (66 per cent) and manage the higher staff-child ratios required by ‘bubbles’.
- A quarter (24 per cent) said the extra criteria for furlough claims in early years provision meant it was not possible to claim support for a post only partly paid by funded income.
Childminders
The vast majority of childminders (85 per cent) do not employ staff and are therefore not eligible for furlough support. While most are eligible for the Self-employed Income Support Scheme (SEISS), the decision to calculate this support based on profits rather than income has meant that for childminders, many of whom have made little profit over recent years, the financial support offered by the scheme is limited.
Newly-employed childminders, who fall outside of the eligibility criteria, have received no support at all from SEISS.
Commenting on the analysis, Neil Leitch, chief executive of the Early Years Alliance, said, ‘Nurseries, pre-schools and childminders have been on the frontline throughout this pandemic. It beggars belief, therefore, that at a time when early years providers need the most help to ensure that they can remain sustainable, the Government has inexplicably chosen to reduce the level of financial support it is willing to offer.
‘With the sector facing spring term funding losses of nearly a quarter of a billion pounds, it is absolutely critical that the Government reverts back to basing early years funding on pre-pandemic attendance levels, as it did during the summer and autumn term last year.
‘We urge the Treasury to use this week’s Budget to commit to providing the support that our vital sector needs during this incredibly difficult period, so that settings can continue to deliver quality education and care, both now and in the long term.’
Tulip Siddiq MP, Labour’s shadow minister for children and early years, said, ‘Nurseries and childminders have provided an incredible service remaining open to all children in lockdown, yet the Government is rewarding them with funding changes that could force a quarter of all providers to close their doors for good.
‘Early years providers need targeted support to survive this crisis, not to have the rug pulled from under their feet at the height of the pandemic.
‘There is a real danger that the childcare sector will collapse unless the Government rethinks these funding changes, with young children, working parents and our economy paying the price.’
A Department for Education spokesperson said, 'We know early years professionals are working hard to deliver crucial care and education to our youngest children which cannot be done remotely, and we are working closely with the sector to ensure timely guidance and support.
'All children are able to attend their early years setting in all parts of England, and we are funding nurseries for that attendance - as is usual. Where nurseries do see a drop in income from either parent-paid fees or income from DfE, they are able claim from the Coronavirus Job Retention Scheme for 80 per cent of an employee’s wages for the hours they are furloughed and not working, and nurseries are not required to top-up the employee’s pay for the hours not worked.
'Working parents will remain eligible for childcare support even if their income levels fall below the minimum threshold for 30 hours free childcare and Tax-Free Childcare.'
