Funding for free childcare pilot saps providers' faith in scheme

Jess Brown
Tuesday, May 24, 2016

Department for Education plans to give councils trialling the free childcare expansion different funding rates for the additional hours has "misled" the sector and damaged the scheme, say early years leaders.

Free childcare for 30 hours a week is being piloted by eight local authorities in England, but concerns have ben raised by providers over the levels of funding for the extra 15 hours. Picture: Lucie Carlier
Free childcare for 30 hours a week is being piloted by eight local authorities in England, but concerns have ben raised by providers over the levels of funding for the extra 15 hours. Picture: Lucie Carlier

In February, the Department for Education announced that eight local authorities across England will pilot 30 hours of free childcare from this September.

It said the findings would help inform the full implementation of the government’s flagship childcare policy, scheduled to start nationally in September 2017.

However, childcare experts and organisations are growing increasingly sceptical of this, and are concerned that the opportunity to learn valuable lessons will be missed, which in turn could undermine the impact of the scheme nationally.

Earlier this year, DfE officials were unable to confirm to MPs on the Commons public accounts committee whether findings from the pilots would be available before full implementation (see box, below).

Confidence underminded

The sector’s faith in the pilots has been further dented by the DfE’s decision to use different rates of funding for the first and second 15 hours. Councils will receive the existing levels of funding for the first 15 hours and slightly more for the second 15 hours. Despite this, the department maintains there is no difference in terms of what is offered under the first and second 15 hours.

This is not how childcare minister Sam Gyimah said he expects the national scheme to be funded.

Speaking in parliament, Gyimah said: “Some members have asked whether the first 15 hours of provision will be different from the second 15 hours. We will pay the same rate for each.”

The contrasting approaches to the funding of the pilot and national scheme has caused confusion among early years providers trying to decide if their settings will be able to afford to offer the 30 hours.

Neil Leitch, chief executive of the Pre-school Learning Alliance, says the sector has been misled by the government about the pilot, which is “fundamentally flawed”.

“We were led to believe from the outset that there would be no differential between the second 15-hour rate and first 15-hour rate. Then the government implements a scheme that does the complete opposite. I can’t understand the rationale,” he says.

“We’ve always been led to believe that the value of the pilots is to iron out all the wrinkles. Why wouldn’t the government want to operate the pilots as close to a real life situation? There’s no logic in what it is doing whatsoever.

“We’ve been misled that the pilots were going to do anything close to which they were intended.

“The government has short-changed providers. I cannot see that there is any logic if you are serious about replicating or uncovering issues that might be exposed if there isn’t adequate funding.”

Dalia Ben-Galim, director of policy at Gingerbread, a charity for single parents, also has reservations about how the pilot has been set up. She is particularly concerned that the national implementation is happening too soon after the pilots to sufficiently take forward any learning.

“There isn’t enough time between the pilots and rolling the policy out,” she says. “It also means that parents can’t plan.

“Some of the pilots are focusing on children with additional needs or disability and I believe that is very important to see what the impact is. Ensuring that parents’ voices are given weight in terms of how it is rolled out is absolutely essential.”

Ben-Galim is also concerned that insufficient funding for the 30 hours will see providers introduce fees for extra services, such as activities and meals.

The DfE has said this is not allowed and local authorities should intervene to stop it, although a chain of nurseries in the South West has already started to charge parents receiving free childcare for “extra” services.

“For single parents, what we’re hearing is a lot of anxiety around whether there will be additional costs,” Ben-Galim says.

“That will work contrary to the aims of the policy about supporting parents into work. It means the funding model doesn’t work for nurseries or parents.”

Evidence of the problem with different funding levels first emerged in York, but since then four other councils have confirmed they too are being funded at a higher amount for the additional 15 hours (see box, right).

In York, the first 15 hours will be funded by government at £3.38 and the second 15 hours at £3.95. More than 30 settings have said this funding is too low for them to take part. York Council is currently working with the DfE to resolve the issue.

Menna Godfrey, owner and manager at Quackers Day Nursery in York, has told parents she cannot afford to offer the 30 hours based on current funding rates.

York City Council is yet to confirm what fee it will offer to settings for participating in the pilot, or whether it will offer different levels for the first and second 15 hours.

However, Godfrey says if there are two separate rates it could have serious implications for the pilot and for providers in York.

“All of us in York want this to work,” she says. “We feel that the government is stopping us making the offer [to parents].”

Many parents with children at Quackers will have three or four days of childcare and then receive wraparound care from childminders. As the 30 hours can also be used to employ childminders, it will cause confusion over which provider is paid at the higher and lower rates, says Godfrey.

“I believe that most families in York use a mixture of providers,” she adds. “Any family that wants to do anything different other than using one nursery for all their childcare needs would run into a situation of how that funding is allocated.

“We would usually work in partnership with childminders – I can’t see a practical way forward.”

The other option, Godfrey says, is for the two funding rates offered by government to be combined into an average rate applied across the 30 hours.

“Is it better than no way forward? I don’t know,” she says. “An average rate also doesn’t work because families are not going to take the standard 15 or 30 hours. It will vary depending on the take-up of the family.”

Godfrey says if providers offer 30 hours free childcare with funding that will not cover their costs, there are few ways of making up the losses.

Provision diminished

“My staffing is slightly above ratio, so I could drop that down to the exact ratio, but that would have an impact on quality of provision,” she adds.

Godfrey says some parents have offered to pay her more to make up the costs, “but you can’t budget on that”.

She says York Council’s bid for the pilot to the DfE was centered around partnership working between different types of childcare providers and that this will now be harder to achieve.

Adam Butler, senior policy officer at the Family and Childcare Trust, says the eight pilots are all different, so are not designed to be identical to what will be offered under the national scheme.

“The pilots are intended to test different approaches to implementing the offer, so they will inevitably not all reflect the final approach next year,” he says.

“The basic challenge is not necessarily the approach the authorities are testing, but that there’s not enough funding to offer sustainable rates.

“On average, fees in England for daycare for three- and four-year-olds are significantly higher than the average [funding] allocation for the three- and four-year-old [free childcare] offer,” Butler says.

“If local authorities can’t match the higher fees parents pay (either by increasing the rate for all 30 hours, or a significantly higher rate for the additional hours), then the offer may not be viable for providers.”

Early years organisations say that if the levels of funding offered to providers under the pilot bear no resemblance to those set to be offered through the national scheme, then there is little incentive to take part.


The pilot scheme was announced in February this year, to begin in September.

The pilot will offer 30 hours of free childcare for three- and four-year-olds of families where both parents work 16 hours or more per week.

Eight local authorities were chosen to implement the pilot.

When launched, the Department for Education said of the pilots: “Their experiences will be used to support the full rollout in 2017, with the aim of removing significant barriers to parents taking up their entitlement.”

But Helen Stephenson, director of early years at the DfE, told the Commons public accounts committee earlier this year that she did not know when the evaluation of the pilot areas will be published, “but we obviously want to use the information to inform us as we roll the programme out”.

She said that the DfE is working with the University of East London and consultancy firm Frontier Economics to help design an evaluation framework, which will be in place in time for implementation.

The 30 hours will then be rolled out nationally in September 2017.


  • Northumberland Early years providers will receive the current base rate of £3.15 per hour per child for the first 15 hours and £4.01 for the additional 15 hours. Nurseries are also given between 51p and £1.29 per hour from the Early Years Single Funding Formula based on deprivation. However, this will only be available for the first 15 hours.
  • Hertfordshire Settings will receive £4.62 for the first 15 hours, with the additional 15 hours funded at £4.88. The council has confirmed that more than 60 settings will take part in the pilot.
  • Newham The first 15 hours will be funded at £4.23 and the additional 15 hours at £5.17.
  • Swindon Providers will receive £4.00 for the first 15 hours and £4.41 for the additional 15 hours.
  • York The first 15 hours will be funded at £3.38 and the second 15 hours at £3.95. More than 30 childcare settings have already said these rates are too low to enable them to take part.
  • Wigan, Portsmouth and Staffordshire Details on funding rates have yet to be announced.

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