Early years sector 'in jeopardy' after government U-turn on furlough funding

Fiona Simpson
Monday, April 20, 2020

Sector leaders warn “there may not be a childcare sector left” following the coronavirus crisis, after the government pulled a “shock” U-turn on plans for furlough funding.

Early years settings face uncertain futures over the changes. Picture: Adobe Stock
Early years settings face uncertain futures over the changes. Picture: Adobe Stock

Fresh guidance detailing which childcare employees would be eligible for the Coronavirus Job Retention Scheme (CJRS) was released at 6.30pm on Friday (17 April), less than 72-hours before claims applications for the scheme opened on Monday morning.

Coronavirus (Covid-19): financial support for education, early years and children’s social care says providers may only access CJRS funds “to cover up to the proportion of its paybill which could be considered to have been paid from that provider’s private income”. This means employers will be unable to claim for the percentage of income covered by government-funded “free” childcare places.

The new guidance says that private providers should only furlough employees if:

  • The employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding
  • The employee would otherwise be made redundant or laid off
  • The employee is not involved in delivering provision that has already been funded (free entitlement funding)
  • (Where appropriate) the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child
  • The grant from the CJRS would not duplicate other public grants received, and would not lead to financial reserves being created

However, many nurseries have already furloughed members of staff and have closed after previous government guidance stated settings were eligible to apply for the furlough scheme.

On 24 March, the Department for Education published guidance for the early years sector which confirmed that nurseries and other providers could continue to receive free entitlement funding for children not attending their setting during the lockdown period and ensured providers would also be able to benefit from the CJRS.

Sector leaders have called an emergency meeting with the DfE today, branding the U-turn “shocking” and a “kick in the teeth” for the providers with many warning it could lead to permanent closures or redundancies.

Meanwhile, more than 78,000 have signed a petition, set up by nursery owner Laura Wilkinson, ordering the government to reverse the advice.

Almost 3,000 providers and parents have written to their MP calling for guidelines to be changed, the Early Years Alliance said.

Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA), said many nurseries that have remained open to critical workers’ children are “doing so at a huge financial loss”.

The government has shown “huge disregard” to staff working to keep settings open, she added.

“This will have a detrimental effect on the sector and will lead to many staff being made redundant and many more nurseries being forced to close, both now and into the future. This will cause a huge disruption to children and families when the lockdown is relaxed.

“The government’s main objectives are to ensure sufficient places for key workers’ children and vulnerable children right now and to ensure there is a robust sector available once the crisis has abated. This move puts in jeopardy the direction of travel they claim is of paramount importance and will leave the sector questioning their motives.

“Local authorities underspent early years funding by £63.5m in 2018/19 and reported contingencies of £32m in 2018/19 and £26m in 2019/20. This money should be used to provide additional support to early years at a critical time like this,” Tanuku said.

Neil Leitch, chief executive of the Early Years Alliance, said “watering down” the support for providers was “totally unacceptable”.

He warned that “there may not be a childcare sector left” after the crisis and added: "Early years businesses will have made significant financial plans and decisions based on the guidance already published, and many will have already started furloughing staff. It is simply too late for the government to start adding new caveats, conditions and limits now.

“What the government is proposing would have a devastating impact on childcare settings, and in the worst cases, could lead to permanent closures across the sector.

"Many childcare professionals are putting their own health and wellbeing at risk by continuing to work on the frontline during this pandemic to ensure that critical workers and vulnerable children have the childcare they need, while others who have taken the difficult decision to close are still working hard to support their families remotely. For the government to treat the sector with such a lack of respect and fairness at this time truly beggars belief.

"The Treasury needs to urgently rethink its stance on this, and prioritise giving providers the support they need to continue providing care during this incredibly challenging time by ensuring that all settings can fully access both schemes, as the sector was originally led to believe would be the case. Otherwise, when all this is finally over, there may not be a childcare sector left.”

Liz Bayram, chief executive at the Professional Association for Childcare and Early Years (Pacey) said: "Any childcare provider who employs staff and delivers funded early education places is now between a rock and a hard place with the government back-tracking on its commitment to allowing them to access its furlough scheme and continue to receive funding for these places.

“It is beyond disappointing that what essentially is a compromise between DfE and HM Treasury has left so many providers in this situation.”

Shadow early years minister Tulip Siddiq accused the government of “burying” the withdrawal of funding in its official guidance.

She said: “Early years providers were told explicitly that they could access the furlough scheme while receiving free childcare entitlements from local authorities. Now we learn that ministers want to put severe restrictions on this support, at a time when childcare providers are already struggling to stay afloat.

“Many nurseries planned on the basis of the previous guidance and could now face permanent closure as a result of this U-turn. The government must rethink this decision urgently.”

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