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£300m for 30 hours scheme as plans for ‘national funding formula’ are announced

The government will invest £300 million to increase the average hourly rate childcare providers receive, chancellor George Osborne has confirmed today (25 November).

Delivering his Autumn Statement and Spending Review, Mr Osborne said the extra funding would be provided from 2017 - 18.

The chancellor confirmed that the £300 million, plus £50 million in capital funding to create additional places in nurseries, “will be delivered alongside the introduction of a national early years funding formula and other reforms, to ensure funding is fairly allocated”.

Childcare minister Sam Gyimah then confirmed, via his Facebook page, that the new average hourly rates would be £4.88 for three- and four-year-olds, including the EYPP, and £5.39 for two-year-olds.

The eligibility criteria for parents wishing to access childcare have also changed, with an upper income limit per parent of £100,000 and a minimum weekly income level per parent equivalent to 16 hours to access both the 30 hours offer and the tax-free childcare scheme.

This move, the chancellor added, will save £215 million by 2020 - 21.

Despite welcoming today’s announcement as “an important first step towards addressing this historic issue”, Alliance chief executive Neil Leitch expressed concern about the allocation of the extra funding in practice.

He said: “Given that early years funding rates vary from local authority to local authority, it’s difficult to understand how the additional funding announced today will translate in practice. How will it be distributed across different local authorities? Will rates increase evenly across all provider types?”

Neil also questioned the decision to factor the EYPP into the new average hourly rate for three- and four-year-olds, asserting that this funding was originally allocated “only to children from disadvantaged backgrounds who meet very specific criteria”.

The Alliance will be speaking with the Department for Education “imminently”, Neil confirmed, to find out more details on the announcement and to ensure that the government “provides clarity on what this increase means in practice for the sector, how it will be implemented, and what it will do to ensure that it is distributed fairly and effectively across the sector”.