Contingency measures for free childcare funding ‘risks providers going bust’

Since 2016, funding for places for vulnerable two-year-olds and all three- and four-year-olds in England has been calculated based on a per-hour rate multiplied by an estimate of the number of hours of free childcare used in that local authority.

Providers have previously been asked to record the number of hours children are using in a particular week – census week – in January each year, but due to the impact of the coronavirus pandemic, many children are not currently attending nursery, making it difficult to get an accurate idea of demand.

Instead, the Department for Education has asked providers to complete this year’s census based on the number of children registered for places – even when those parents are choosing to keep their children home for now. It has also said that it will fund any additional places over and above those currently registered during the spring term, at least up to 85 per cent of attendance levels recorded in January 2020.

However, the Institute for Fiscal Studies (IFS) has warned that it is not clear that current registration levels will reflect childcare demand for the rest of the year.

Children with birthdays during the autumn 2020 term would have been expected to start accessing their free childcare hours this month, but it is unclear whether parents would have registered their children to do so, in light of current circumstances, it said in a briefing note published on its website.

“If current registration levels do turn out to be an underestimate of the demand for free early education places later in the term, many local authorities may find themselves relying on the Department for Education’s promise to fund additional places. But it is not clear why the extent of this support is capped, nor why 85 per cent of January 2020 levels would be the right cap to impose,” the note states.