The Department for Education has published more details of what early years providers can expect to receive in funding for two-, three- and four-year-olds, but settings have pointed out that final rates will be determined by local authorities.
This follows news in the Budget that there would be an extra £204 million from this September rising to £288 million next year (financial year 2024 to 2025) to increase the funding paid to nurseries for the existing 'free' hours offers.
Children's minister Claire Coutinho has said that rates for three- and four-year-olds are set to rise from £5.29 to over £5.50 per hour from September, while two-year-old funding will increase from the current national average rate of £6 per hour to around £8 per hour from September.
The Government has said it will provide further details on the distribution of extra funding to local authorities as well as local authority level funding rates for 2023 to 2024 ‘in due course and for 2024 to 2025 in the autumn in line with the usual funding cycle.’
Andrew Dearsley, finance director of Tops Day Nurseries, said funding increases for April varied by local authority between 1.1 per cent and 5.1 per cent, and were well below the inflation levels of 10 per cent +, national minimum wage increases of 10 per cent, as well as energy cost increases seen in the last year.
‘This results in us having to increase prices for private fees and extras as much as affordable to our parents just to break even,' he said.
‘For the additional increase in September, we have to wait six months and we do not know how much the local authorities will yet pass on. Whilst this will help close the gap, it will not eliminate the underlying problem and maybe too late for some nurseries, whilst it may just temporarily delay other nurseries closing.
'This continued underfunding will not support increasing staff pay to a fair value in a sector that is losing qualified staff to retailers’ pay rates, with a backdrop of staff covering two- year-olds that will see a 25 per cent increase in workload due to the ratio change.’
Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA) said, that 30-hour childcare was a challenge for providers and whether the funding is sufficient would 'make or break' the new policy to extend 'free' hours.
‘Although we now have the new headline funding rates, we need to see how this filters down through local authorities and what is actually paid to individual providers per child,' she said.
‘While the tight timeline for delivering this expansion is also very ambitious, it throws existing issues such as the early years workforce crisis, the need to address qualifications, space requirements and capacity in the sector into the spotlight where they need to be dealt with urgently.’
There have long been repeated calls from nurseries that the ‘free’ hours should no longer be described as such to avoid confusion for parents, a move backed by Dearsley.
‘The announcement of future funding for children as young as nine months will help parents costs but the term "free hours" will still have the tendency to mislead, and additional fees will be required for nurseries to be financially sustainable,’ he said. ‘This is due to the expectation is that the additional "free" hours funding will also not be funded at the right levels, resulting in even more closures.’
Tanuku added, ‘We know the existing system for delivering the funding creates confusion for parents and additional administrative burdens for local authorities and providers. Enticing more children into the existing system that’s not fit for purpose risks creating further problems and undermining efforts to implement the well-intentioned policy.
‘The Department for Education has committed to consulting with the sector. We hope this will be done fairly and thoroughly, with policymakers listening to constructive suggestions from providers to avert the pitfalls and learn lessons from the last few years since Government-supported childcare was introduced. This includes calling the hours funded rather than free to manage parental expectations and the hourly rate keeping pace with cost increases year on year.’
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Early education entitlements and funding update: March 2023 is available here
