DfE vows to cover £120m 'miscalculation' in funding for under-twos childcare expansion
Amrit Virdi
Tuesday, January 23, 2024
The Department for Education has admitted that a miscalculation in funding for the expansion of childcare places for under-twos from autumn this year has led to a £120m shortfall in investment.
The department has committed to covering the shortfall for all local authorities after it emerged that while it had planned to fund councils to provide 15 hours of funded childcare for eligible under-twos for 22 weeks between September this year and March 2025, some councils had planned to provide 26 weeks of childcare in the same period.
In a statement sent to providers, seen by CYP Now, DfE notes: "We currently estimate that this will cost £120m, but the department will fund however much it ultimately costs for local authorities to provide those additional four weeks, based on final take up of the under-twos entitlement."
Children and families minister David Johnson addressed the issue in the House of Commons yesterday (22 January) after shadow education secretary Bridget Phillipson tabled an urgent question pressing him for a statement on the roll-out of the government's planned childcare expansion.
The expansion is expected to see all eligible working families offered up to 30 hours of funded childcare for children from nine months old from September 2025.
From September this year, nine-month-olds from eligible families will be offered 15 hours of funded childcare.
In his statement, Johnston admitted that funding for this had been calculated for 22 weeks with the DfE mistakenly believing "that covers the period from September to March".
Johnston told the House of Commons that when information on funding allowances for under-twos was released in November, some local authorities told DfE that "they in fact fund 26 weeks" of childcare for families over that period.
"We got that money in order that they can provide that 26 weeks of funding where that is what they do," he told MPs.
DfE added that the full 26 weeks of funding will be provided to all councils to "ensure fairness".
National Day Nurseries Association chief executive Purnima Tanuku said: “While we welcome the DfE’s response in supporting all local authorities to be able to fund 26 weeks for these two terms, nurseries have been suffering from underfunding for years. They have repeatedly been told that there is no more money.
“And yet the DfE says they will fund ‘however much it ultimately costs’. Suddenly the government seems to have found £120m of extra funding to enable this. It’s vital that all this money is passed onto providers.”
This comes as the DfE also announced a temporary fix to support parental eligibility codes for an expansion of the two-year-old childcare offer which will be rolled-out from April.
Parents had raised concerns that they would need to wait until late February or March to access their eligibility code for the two-year-old funded childcare offer if using the tax-free childcare scheme.
The system requires parents to reconfirm their eligibility every three months. Due to this, parents who reconfirmed their tax-free childcare eligibility before 2 January cannot apply for a code to access the new two-year-old entitlement until their reconfirmation window opens.
DfE says it has been in touch with parents affected to send them a temporary code to claim their entitlement.
Early Years Alliance chief executive Neil Leitch said: “We welcome the fact that a workaround has – belatedly – been announced. That said, it's crucial that this new solution actually works in practice, and that parents are able to apply for places – and providers can receive funding for those places – in a timely manner.”
James Hempsall, managing director of early years consultancy Coram Hempsall's, added: "National funding arrangements are one thing, but ensuring they are locally applicable is essential. DfE has listened to local authorities and given additional funds to meet the needs of different patterns for the school year across the country.
"What is clear is that parents like the idea of the new offer and are quick off the starting blocks so their arrangements can be made for April. The IT system does need to be reliable and responsive so parents and settings have the confidence and funding they need to take up and provide the offer."
During her urgent question, Phillipson described the government's plan for its funded childcare expansion “undeliverable”. Johnston added that the expansion will see childcare funding doubled by 2027/28.
