FAQS: early years funding in 2021


Early years funding during the spring term 2021 and beyond - we answer some of your key questions.

Full guidance:


How are early years providers being funded in the spring term?

Government guidance states that all local authorities should fund early years providers delivering the early entitlement offers on the basis of the January 2021 census.

The census count included not only children physically attending the setting, but children who would normally be attending the setting but were not present during census week due to, for example, illness, self-isolation or parental concerns about the safety of settings.

As such, as a minimum, all providers should be funded based on the number of children they had ‘on roll’ during census week.

My attendance levels are starting to increase and I now have more children on roll than I did in census week. Will my funding increase?

The Department for Education has said that where a local authority can provide evidence for increased attendance during the spring term, the government will fund the additional hours taken up above the January 2021 census level, up to a limit of 85% of the January 2020 census attendance level.

A simplified example would be as follows:

Let’s say that a total 1000 hours of funded places were being taken up in a particular local authority at the time of the January 2020 census, but due to the impact of the pandemic, this had fallen to just 700 hours being taken up at the time of the January 2021 census (including children on roll who were not physically in attendance due to illness, self-isolation or parental concerns). 

If the number of funded hours being taken up increases over the course of the 2021 spring term, the central government will give that local authority extra funding to pay for those additional hours, but only up to a maximum of 850 funded hours (85% of 1000).

This means if the overall level of attendance in a local authority increases to more than 85% of the January 2020 level, central government funding will not be provided for all these hours. The Department for Education has not set out what it expects to happen in such a situation.

The Institute of Fiscal Studies has criticised this approach, saying: “it is not clear why the extent of this support is capped, nor why 85% of January 2020 levels would be the right cap to impose”. It warns that: “where take-up rises above 85% of its January 2020 levels, it could be up to local authorities to find funding for these places, even though this would traditionally have been funded by the UK government”.

My attendance levels are likely to continue to change throughout the term. How will my overall spring attendance levels be calculated?

The DfE has stated that it will use the attendance counts that local authorities will carry out in the summer term to work out the final attendance levels for the spring term, and then – because “childcare attendance may have gradually increased throughout the spring term” – aim to base funding on a likely mid-point spring term attendance level. 

This means that, essentially, the DfE will look at how high attendance levels were in a local authority at the start of the spring term (based on the January census) and then look at how high they are at the end of the spring term (based on the summer count) and then base funding for the term on a mid-point between the two.

If that mid-point attendance level is higher than the January 2021 census level, then top-up funding will be provided (but, as explained above, to no more than 85% of the January 2020 census level). 

Has the government confirmed how providers will be funded in the summer and autumn terms?

The DfE has confirmed that funding for the summer and autumn terms in 2021 will now be based on termly counts, instead of the annual census – so the summer 2021 term will be based on the 2021 summer count, and the autumn 2021 term (to cover September 2021 to December 2021 period) based on 2021 autumn count. 

The Department for Education has confirmed that local authorities have been advised that these termly counts should be done on the same basis as the January census i.e. based on the number of children on roll, rather than the number of children physically attending settings.


The Alliance’s view

Commenting on the Department for Education’s approach to early years funding, Neil Leitch, chief executive of the Early Years Alliance, said: 

"While basing this term's funding on registered children is undoubtedly preferable to restricting funding only to children actually attending at a time when the public is being told to stay at home, it still falls well short of funding providers at pre-pandemic levels, particularly for those providers who normally enjoy a huge rise in new registrations in January.

"Similarly, the decision by government to limit any 'top-up funding' where demand for places increases throughout the term to 85% of January 2020 attendance levels appears to be completely arbitrary, and the IFS is right to warn that this could place significant financial pressure on providers at a time when they are most in need of support.

"It's clear that government must go further in terms of financial support if it is to ensure that the early years sector can remain viable over the coming months. We urge it to do so sooner rather than later."


Useful links

Coronavirus (COVID-19): financial support for education, early years and children’s social care

Use of free early education entitlements funding during coronavirus (COVID-19)

Business Advice page: FAQs for providers


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