The confirmed funding rates represent a slight change to those floated by the children’s minister Claire Coutinho in March.
Writing exclusively for Nursery World she said that the national average hourly funding would rise to £5.50 for three and four-year-olds and to £8 for two-year-olds from September.
In an announcement today, the DfE said that childcare providers can use their share of the £204 million ‘cash boost’ to ‘ease cost pressures such as staffing costs, training and bills'.
Funding rates per child paid from September will increase from an average of £5.29 to £5.62 for three and four-year-olds, and from an average of £6.00 to £7.95 for two-year-olds.
Funding not enough, say organisations
The Early Years Alliance was critical of the rates, claiming that they will ‘do little, if anything, to address years of underfunding’.
The National Day Nurseries Association (NDNA) said that 'many childcare providers will receive nowhere near the average rates published once regional differences and budget top-slicing have been taken into account. It warned that for many, the rise in funding will be 'too little, too late.'
It is still unclear whether the percentage of early years funding that local authorities are allowed to keep back from providers in the Early Years Funding Formula will be altered, after the children’s minister vowed to look again at local authority top-slicing last month.
While the London Early Years Foundation (LEYF) said it was a 'step in the right direction', it highlighted that the extra funding only covers '10 per cent of the £2 billion shorfall from the DfE's own data in 2021', pointing out that this will be 'significantly higher now given increased costs.'
Early Education urged ministers to look again at the 'balance of funding for next year.'
Campaign group Pregnant Then Screwed said if the Government was 'serious about expanding the funded entitlement, then it needs to get the existing funding correct today.'
The childcare offer
The DfE has also confirmed that there will be further funding increases in the amounts paid to local authorities to pass to providers for delivering the Government’s free childcare places moving forward, with an additional investment of £288 million already announced at the Spring Budget for 2024-25.
A consultation on how the funding for the new entitlements in 2024-25 will be distributed will be launched soon, to ‘make sure it remains fair in light of the radically expanded free childcare offers’, says the DfE.
A further £12 million is also being given to local authorities this financial year to support them to ‘effectively’ roll out the new offer.
'These reforms will be transformative.'
Chancellor Jeremy Hunt said, I know the cost of childcare can be a real struggle for parents and can become a barrier to work.
‘That’s why we announced the largest ever expansion of free childcare at Spring Budget, and today we’re increasing hourly funding rates to make sure the system is ready to deliver, including uplifting rates for a two-year-old by a third.
‘These reforms will be transformative, and ensure that we build a childcare system comparable to the best’.
Education secretary, Gillian Keegan, added, ‘This initial investment of over £200 million will go a long way in supporting the fantastic early years sector to prepare for the expansion of free childcare hours available to parents next year.’
