Most councils face 30-hour funding rates freeze

The early years national funding formula figures for 2018/19, just released by the Department for Education, show that 70 per cent of England's 150 councils will see no change in the hourly rate for the 30 hours of free childcare on offer to three- and four-year-olds.

Of the remaining local authorities, 21 (14 per cent) will have their hourly rate cut and 24 (16 per cent) will see an increase.

The London Borough of Camden's hourly rate will decline the most, dropping from £8.93 to £8.53 an hour while the London Borough of Hounslow will see the largest rise with its rate increasing from £4.98 to £5.70 an hour.

The Department for Education has, however, increased the percentage of the money that local authorities must pass onto childcare providers from 93 per cent this year to 95 per cent in 2018/19.

The funding formula takes account of different factors including labour market costs, the number of children with English as a second language, disability living allowance claimant rates and free school meal levels.

Neil Leitch, chief executive of the Pre-school Learning Alliance, said the lack of increased funding will further threaten the existence of childcare providers.

"The publication of the new early years funding rates for 2018/19 show exactly why so many childcare providers are so worried about their long-term viability," he said.

"Despite the fact that we are seeing staff wages, rents and mortgages, insurance costs and business rates all increase, the vast majority of local authorities in England won't receive a penny more in government funding for the so-called free entitlement next year. Worse still, 14 per cent of councils will actually see a fall in funding. How can this possibly be sustainable?"

He warned that if funding rates do not increase many providers will go out of business.

"The vast majority of childcare providers in this country support the idea of free childcare in theory, but they cannot be expected to deliver it if they are suffering a real-terms loss in funding year after year," he said.

The alliance has gathered more than 5,000 signatures from childcare providers and parents to its Fair Future Funding campaign calling on the DfE to tackle the funding shortfall "as a matter of urgency".

Purnima Tanuku, chief executive of National Day Nurseries Association, said: "With inflation running at three per cent and other business costs rising, this is in effect a funding cut. This is a real threat to sustainability and shows the government has not listened to the sector.

"Funding rates for next year will not increase for the majority of providers. A handful will see their rates reduced, which include some of the most deprived areas of England.

"Many local authorities are already passing through the required 95 per cent, so most nurseries will not see any increase at all in their funding.

"With margins already squeezed and other business costs set to rise in April, it would not surprise us if more nurseries opted out of this scheme due to worries over sustainability."

The early years national funding formula was introduced in April 2017 and sets the hourly rates local authorities receive to fund the free childcare entitlement for three- and four-year-olds. The hourly rates cover both the universal 15 hours and additional 15 hours for working parents.