Historically, all local authorities have received widespread disparities in education funding, which has impacted on the early years sector.
While the Government acknowledges that the current school funding system is 'unfair and out of date', it now intends to delay implementing a national funding formula until after the next spending review, which is after the general election.
The proposals are set out in the consultation Fairer Schools Funding in 2015-16, which was published just before Easter and closed on 30 April.
Instead, the Department for Education (DfE) intends to share an extra £350m in the interim between the 62 'least fairly funded' local authorities. All other local authorities will keep their per-pupil funding in cash terms at the 2014-15 level.
Sarah Steel, managing director of the Old Station Nursery, criticised the timing of the consultation, which coincided with the Easter school holidays, and the short six-week time frame for responses.
Ms Steel, who is the PVI early years representative on the Oxfordshire Schools' Forum, attended an emergency meeting about the plans last week.
She runs three nurseries in the county and, along with the other members of the forum, has written to the three MPs responsible for the areas where her nurseries are based calling for a more equitable review of funding.The MPs include David Cameron, who is MP for Witney.
'Oxfordshire is already a poorly funded authority and this review will only compound this injustice, which will affect children from birth to 18,' she said. Oxfordshire is set to receive an increase of just 0.1 per cent for 2015-16 (see table above). In its briefing paper, sent to local MPs, Oxfordshire County Council says the proposal to focus only on the school block unit of funding is 'a flawed methodology as it ignores the impact of splitting the DSG (Dedicated Schools Grant) into three blocks of funding in 2013-14.' The DSG is split between schools, high needs and early years.
Meanwhile, Ken McArthur, who runs Polly Anna's Nursery in York, said he was surprised that his council was not on the list of local authorities set to receive extra funding, despite historic issues of education underfunding in the city of York.
Mr McArthur, who is the early years representative on the local schools forum, said that he believed that the council would be challenging its omission.
He questioned why neighbouring local authorities, such as the East Riding of Yorkshire, North Yorkshire and North Lincolnshire, have been earmarked for extra funding when the City of York has not.
'I'm gobsmacked that we're not on the list when I know that some local authorities on it pay their PVI providers more,' he said.
The nursery owner added that the nursery was 'terrifically underfunded' and that he loses £30,000 a year in turnover from underfunding of three- and four-year-old places.
Around one third of the children at Polly Anna's receive nursery education funding, and there are some funded two-year-olds.
Although education and childcare minister Elizabeth Truss has stressed that local authorities must pass more funding to the frontline, this does not necessarily solve problems of underfunding in early years.
Mr McArthur said that York only retains 6 per cent of its funding, just over half the DfE's recommended amount of ten per cent. 'The local authority does its very best, but can't do a great deal with very little,' he said.
Jon Stonehouse, director of children's services, education and skills, said that York City Council, currently the 23rd lowest funded local authority, would see its relative funding position fall to the 7th lowest funded without extra funding.
'The current funding allocations to local authorities rely too much on historic levels of expenditure rather than on relative levels of need, ' he said.
'However, we believe that the introduction of the Minimum Funding Levels (MFL) do not properly address the current unfair allocations. In addition, the MFL should be expanded to cover high needs and early years and we would like to see more discretion allowed to LAs to target funding in support of small schools based on local needs.'
The National Day Nurseries Association (NDNA) submitted a response to the consultation. Claire Schofield, director of membership, policy and communications, told Nursery World that there was a really wide range of funding rates for early years even in neighbouring areas and that part of the reason was that the money was taken from across the schools funding budget.
'To some extent, local authorities' hands are tied because of historic inequities. The £350m is an interim measure and is still not going to improve the situation fast enough. What we need is a solution that makes a difference on the ground,' she said.
Seventy per cent of NDNA's members report underfunding for three- and four-year-old places.
Ms Schofield said that the Government's decision to fund two-year-old places at a flat rate and to publish the figures was a 'step in the right direction' but that the delay in implementing a national funding formula would only 'exacerbate the problem' of underfunding for three- and four-year-old places.
Most early years settings outside London receive £4.85 an hour for the twos places. Around half of NDNA's members experience a shortfall for offering these places.
Ms Schofield said that as long as underfunding persists, and more and more nurseries become dependent on the free hours for their income, nurseries would be forced to take measures such as limiting the number of places they offer for funded twos.
'The system needs an overhaul,' she said. 'If something is not done it will push up fees and make it harder and harder for nurseries.'
A DfE spokesperson said, 'Our new minimum funding levels are the biggest step towards fairer school funding in a decade. Funding will be allocated on the basis of the actual characteristics of pupils and schools in each local authority so that, for the first time, pupils will receive a set level of funding, regardless of where they are in the country.
'We have ensured no local authority will see a reduction in its budget, while 62 local authorities will get a cash boost. Those that have not received additional funding are already receiving above the minimum funding levels we’ve set.'