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Alliance slams government U-turn on financial support for providers

Working at deskThe Alliance has slammed the government for backtracking on guarantees of financial support for childcare providers during the coronavirus crisis, describing the move as a 'kick in the teeth' for the sector and warning that it is likely to lead to nursery closures and threaten the long-term viability of the sector.

Last month the Department for Education (DfE) published guidance for the early years sector which confirmed that nurseries and other providers could continue to receive 'free entitlement' funding for children not attending their setting during this period, and that they would also be able to benefit from the Coronavirus Job Retention Scheme, which provides grants covering 80% of monthly salary costs for staff members employed but not working.

However, new DfE guidance announced today (Friday 17 April) - Coronavirus (COVID-19): financial support for education, early years and children’s social care  - gives a number of instances where early years providers will not be able to furlough staff.

It also suggests that in some cases, early years providers will only be able access the  Job Retention Scheme "to cover up to the proportion of its paybill which could be considered to have been paid for from that provider’s private income". This means that many nurseries won't be able to get full access to both schemes, as the department's original guidance suggested.

For example, if a provider receives 40% of its income from government funding, and 60% from other income, the provider can only claim Job Retention Scheme support for up to 60% of their paybill. The guidances states that "this would be done by furloughing staff whose usual salary / combined salaries come to no greater than 60% of the provider’s total paybill". This calculation would be based on the setting's February 2020 income.

The updated guidance states that private early years providers should only furlough employees through the Coronavirus Job Retention Scheme if the following conditions are met:

  • the employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding
  • the employee would otherwise be made redundant or laid off
  • the employee is not involved in delivering provision that has already been funded (free entitlement funding)
  • (where appropriate) the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child
  • the grant from the Coronavirus Job Retention Scheme would not duplicate other public grants received, and would not lead to financial reserves being created

Read the full guidance

Commenting, Neil Leitch, chief executive of the Alliance, said: "It is completely unacceptable that having given a clear and explicit assurance to childcare providers that they would be able to rely on financial support from both 'free entitlement' funding and the Job Retention Scheme during the coronavirus crisis, the government is now saying that it will be watering down this support.

"Early years businesses will have made significant financial plans and decisions based on the guidance already published, and many will have already started furloughing staff. It is simply too late for the government to start adding new caveats, conditions and limits now.

"For early years providers across the country who have already struggled for years as a result of government underfunding, to be told weeks into this crisis that the support they were promised may be far less than they were led to believe is a complete kick in the teeth. What the government is proposing would have a devastating impact on childcare settings, and in the worst cases, could lead to permanent closures across the sector.

"Many childcare professionals are putting their own health and wellbeing at risk by continuing to work on the frontline during this pandemic to ensure that critical workers and vulnerable children have the childcare they need, while others who have taken the difficult decision to close are still working hard to support their families remotely. For the government to treat the sector with such a lack of respect and fairness at this time truly beggars belief.

"The Treasury needs to urgently rethink its stance on this, and prioritise giving providers the support they need to continue providing care during this incredibly challenging time by ensuring that all settings can fully access both schemes, as the sector was originally led to believe would be the case. Otherwise, when all this is finally over, there may not be a childcare sector left.”

A spokesperson from the Department for Education said: “We have already confirmed that we will continue to fund councils for the free childcare entitlements for the duration of these closures, as we ask settings to remain open where needed for children of critical workers and most vulnerable.

“To support them with this we are relieving some of the burdens on staff during these challenging times, temporarily changing some of the requirements of the Early Years Foundation Stage framework and providing significant financial support, including a business rate holiday for many private providers. We have set out further clarity on other support available, including eligibility for the Coronavirus Job Retention Scheme where an employer receives government funding.”

Edited on 19 April to include a response from the DfE.

Useful links

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

Business Advice page: FAQs for providers

Blog: Quick Q and A: Job Retention Scheme and early years entitlement funding