Early years funding allocation changes ‘welcome’ but ‘will do little’ to stop closures

In new guidance published today, the Department for Education advises local authorities to fund providers “at broadly the levels they would have expected to see in the 2020 autumn term had there been no coronavirus outbreak”.

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Providers who have been forced to close on public health grounds - either because of an outbreak at a setting or in the event of a local lockdown - should also be funded at the same level, DfE guidance states.

Those who have closed on grounds other than public health grounds “should not be funded”, it adds.

Ordinarily, local authorities would be paid for the autumn term 2020 based on the January 2021 census data.

However, the government has acknowledged that due to the pandemic “the number of children attending childcare may not have returned to normal levels by early January”, when the census is taken.

Sector leaders have welcomed the funding flexibility but warn it will not reverse the devastating financial impact of the pandemic on the sector.

Recent data from early years analysts Ceeda show that as of 8 June most providers in England were operating at 37 per cent capacity compared with 77 per cent in the same week last year.

A separate report by the Sutton Trust warns that a third of nurseries in the most disadvantaged areas could be forced to close as a result of the crisis.

Its research shows at the height of the pandemic in April, two-thirds of early years providers were closed to all children, including 79 per cent of pre-schools, 59 per cent of nurseries and 41 per cent of childminders.

Of those that were closed, two-thirds expected to be open again by June, with 20 per cent expecting to still be shut and 15 per cent uncertain about whether they would be able to reopen at all, the report states.

The Early Years Alliance (EYA) has called on the government to provide the sector with the short-term funding “it desperately needs”.

Neil Leitch, EYA chief executive, said: “Without it, the sobering reality is that thousands more nurseries, pre-schools and childminders will face no choice but to close their doors for good."

"We welcome today's announcement on free entitlement funding as a step in the right direction. However, let us be clear that this on its own, will do little to ease the concerns of thousands of providers who fear closure in twelve months time. 

"For weeks now, we have been calling on the government to provide the urgent transitional funding the sector desperately needs to survive and today's decision, while positive, can be no substitute for that,” Leitch added.

Purnima Tanuku, chief executive of National Day Nurseries Association, said: “Many of our members have been concerned about their ability to remain open with reduced attendance and increased operating costs to operate safely. The uncertainty about funding from September was causing real concerns.

“It still won’t help providers meet the extra costs they are facing as they work to keep children and staff safe. In Scotland we’ve seen the government there announce transitionary support to the childcare sector and we need to see some more support for childcare providers in England too.

“The Prime Minister has talked about levelling up the country and getting people back to work. If we put the child at the heart of policy decisions we would see that levelling up take place with investment in the early years. And if the government is serious about its Plan for Jobs we need to see a plan for childcare to support working families.”