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DfE fails to extend funding support to the spring term

By Rachel Lawler

The Department for Education (DfE) has confirmed that funding for the government’s early years schemes will no longer be paid to local authorities at pre-pandemic levels.

Funding for the spring term will instead be funded on the basis of the January 2021 census and local authorities “should return to the normal funding approach”.

If a local authority sees attendance below 85% of the January 2020 census level, and if it can provide evidence for increased attendance in the spring term, the government will provide a “top up” limited to the equivalent of 85% of the council's January 2020 census. 

The government says that this will give local authorities “additional financial confidence to pay providers for increasing attendance later in the term”.

The new guidance from the DfE states: "The number of children attending childcare has been increasing across the autumn term and attendance is much higher than during the first national lockdown. Therefore, we will fund all local authorities on the basis of their January 2021 census for the spring term."

Job Retention Scheme extended
The Treasury has announced an extension to the Job Retention Scheme that will allow employers to keep staff on furlough an extra month, until the end of April 2021.

The guidance for early years providers accessing the Coronavirus Job Retention Scheme has been updated to reflect the change in funding for providers.

Reduced income
This update comes shortly after the government released the results of its Survey of Childcare and Early Years Providers and Covid-19- Wave 2, which was carried out in between September and October 2020.

The survey revealed that just 42% of nurseries and pre-schools and 51% of childminders believed that it would be financially sustainable to continue to run their childcare provision for a year or more.

According to the survey, open nurseries and pre-schools were losing an average of more than £7,000 a month in private income while open childminders were losing an average of £700 a month in private income.

"Not good enough"
Neil Leitch, chief executive of the Alliance, commented: “It is inconceivable that at a time when the government’s own figures show ever more childcare providers are barely keeping their heads above water, it would decide to return to funding early years places based on actual attendance. How exactly does the government expect settings to remain open when their bills come in, but their funding does not?

"Providing ‘some’ support on a case-by-case basis simply is not good enough. We know that nurseries, pre-schools and childminders are still seeing significant reductions in the demand for places, which is having a hugely detrimental impact on their income. With the government admitting just last week that it has been overestimating childcare attendance – and its own report today which showed private fees have fallen drastically - it is simply unbelievable that they have taken this decision, and worse still, given providers so little notice of a potentially substantial fall in income.

"The government knows all too well that things aren’t going to be returning to normal for some time - why else would it announce yet another extension to the furlough scheme today, an extension which by definition will prolong the period for reduced childcare demand? There is simply no justification for making such a short-sighted and damaging decision.

“With early years settings also experiencing other huge drains on their finances, such as the costs of enhanced cleaning, PPE and other supplies, and the impact of an increased need for staff cover, this is likely to be the final straw for many.

“The way the government has treated the early years sector throughout this crisis has been utterly shameful. The government must urgently reconsider this decision – or risk causing the closure of thousands of early years providers over the coming months.”

Find out more
Read the updated guidance in full