Councils ignoring guidance to fund at pre-Covid levels

• One in six councils ignoring DfE guidance on funding nurseries and childminders at pre-Covid levels
• One local authority makes ‘a U-turn’

With the autumn term under way, thousands of early years providers are already feeling the knock-on effect of the pandemic, as much lower numbers of children have returned or taken up new places.

As a result, many are receiving significantly less funding from their local authorities than this time last year, despite Government guidance published in the summer designed to protect providers from the financial impact of Covid-19. This states that providers should be funded at ‘broadly the levels’ they would have expected in the 2020 autumn term had there been no coronavirus outbreak.

Ministers confirmed in July that local authorities would receive early years funding for the autumn term on the basis of how many children were attending settings in their areas before the coronavirus pandemic hit.

The move was designed to ensure providers are safeguarded from the current low demand for childcare places due to Covid-19 (see box).

However, a recent investigation by the Early Years Alliance revealed that one in six local authorities was failing to adhere to the guidance.

Elise Baird, treasurer of Rub-A-Dub Pre-school in Derry Hill, Wiltshire, said the setting was operating with ‘substantially lower’ numbers than usual.

The term-time-only setting is registered for 24 places and is open 9am-3pm every day.

It provides 720 hours of childcare a week. At the moment, however, the pre-school is running at only 45 per cent occupancy, when it requires a 65 per cent minimum to break even, or make a small profit.

The pack-away setting is based in the village hall and is run by a volunteer committee of trustees, employing five members of staff, including a manager.

Ms Baird said, ‘It is a concern for us. If we were being funded based on last autumn’s funding, I could see us making it to 2021. It’s the difference between making a small profit or a substantial loss.’

At the time of the Early Years Alliance’s Freedom of Information request, Wiltshire Council was one of the local authorities that was not going to fund settings in line with the Government guidance.

However, Ms Baird told Nursery World that in the past couple of weeks, ‘the council have made a slight U-turn and pulled something out of the hat. The fact they’ve come up with something does make a difference. I don’t know how they’ve done it, how they’ve got to the figures, but it is welcomed.’

Wiltshire Council has recently changed its stance on funding after seeking advice from the Department for Education, and has now said it will use a three-year average as a basis for deciding whether early years settings will be given any extra payments, which will reflect the impact of pandemic-related losses and take market forces into account.

It argues that by doing this, the council is adhering to the DfE guidance when allocating funding to early years settings for the autumn term, and funding providers which are open, at broadly the levels they would have expected to see had there been no coronavirus outbreak.

Ms Baird added, ‘To give the council credit, they are trying to do something. To me it has exposed that central Government have not funded settings as they should have done. Wiltshire were always very good at funding us fairly. The central Government budget has never been enough. The Government have said you can do this [to local authorities], without understanding how it works at local level.’

Wiltshire Council has asked settings for October estimates, and has used this to compare to providers’ three-year average.

For those settings with fewer hours accessed than last autumn, the council will offer extra funding in line with the average reduction in hours from the previous three years, which will have been driven by market forces. It says this should therefore fund a setting for losses that could be attributable to Covid-19, if the reduction of hours accessed is higher than normal years.

The council has come up with a formula to determine whether settings are eligible for extra funding. If a group setting has at least 1,472 fewer hours accessed than the three-year average, they will become eligible for the extra payment, and for childminders the figure has been set at 384 fewer hours.

Rub-A-Dub Pre-school does not yet know exactly how much extra funding it will receive, but has been told it is eligible to apply for it.

In a statement, Councillor Laura Mayes, cabinet member for children, education and skills, said, ‘We have funded all settings for September based on the forecast they submitted and will obviously apply retrospective adjustments as necessary based on actual headcounts in November.

‘Settings with fewer hours accessed than autumn 2019 will be funded at their forecast numbers, plus an additional amount which reflects the impact of Covid-19 but removes the average lost hours incurred by the sector in line with the three-year average (2017-2019). This will reflect the impact of Covid-19 losses for settings, and also take normal market forces into account.’

Early Years Alliance FOI

In recent weeks, the Alliance has received a number of reports from early years providers that councils are not adhering to the revised DfE guidance.

In response, the organisation filed a Freedom of Information (FOI) request to every local authority in England, asking if they were basing the funding given to early years providers this term on child attendance numbers from last year, as stated in the guidance.

Of the 120 councils that responded, 20 (17 per cent) said they were not following this guidance. A further seven (6 per cent) said they were only following the guidance in some circumstances, such as funding nurseries and pre-schools based on last year’s childcare attendance numbers, but not childminders, while three (3 per cent) had not decided how they would fund settings this term.

The alliance has provided details of its investigation to the DfE.

Neil Leitch, chief executive of the Alliance, said it was ‘simply unacceptable’ that so many local authorities had disregarded the guidance on early years funding during this critical time and that the money was not making it to the front line.

‘We have been contacted by many providers who had budgeted and planned on the basis of the Government’s reassurances that their funding for the autumn term wouldn’t be affected by the pandemic, only to find out at the last minute that this isn’t the case,’ he said. ‘For many this could be the difference between surviving the next few months and being forced to close their doors.

‘It cannot be that councils can simply choose to disregard Government guidance, when that guidance has been issued to ensure the sustainability of the early years sector at such a difficult time. As such, we urge the department to tackle this issue as a matter of urgency and make it clear that it is a requirement, and not an option, for all councils to fund all providers fully and fairly.’

A Department for Education spokesperson said, ‘Local authorities have a legal duty to ensure there is a sufficient number of childcare places in their area, and our guidance makes clear how we expect local authorities should fund early years entitlement places during the Covid-19 outbreak.

‘Local authorities should only take a different approach from that set out in guidance if they have good reasons for doing so and communicate this clearly to their providers. We are in regular contact with authorities to remind them of this and query any funding approaches where there is a concern.’

What does the guidance say?

In order to protect early years providers from a drop in income as a result of the pandemic, the DfE guidance states that local authorities are expected to fund nurseries, childminders and pre-schools from September at ‘broadly the levels they would have expected to see in the 2020 autumn term had there been no coronavirus outbreak’.

The guidance states that free entitlement funding for the 2020 autumn term will be based on the January 2020 census count (not on January 2021’s) due to the exceptional circumstances.

Children and families minister Vicky Ford has described this as the Government “block-buying” childcare places for the rest of this year at the level providers would have been funded before coronavirus, regardless of how many children are attending.

Funding nurseries and childminders based on the level they would have been funded before Covid-19 would give them security and offer them longer protection to recover, she has said.

CASE STUDY: Northamptonshire

Northamptonshire County Council has told providers there is a deficit of £370,000 and it will not be following the Government guidance to pass on funding at autumn 2019 levels.

Oakey Dokey Childcare, Corby

• Registered for: 120 places
• Currently: 70 places

Owned by Emma and Anthony Serdet since 2012, the nursery is based in an area of high deprivation and is already experiencing the impact of the pandemic on numbers, with a significant drop in footfall.

Ms Serdet told Nursery World, ‘[Unlike schools], children aren’t compelled to return. A lot of parents have been made redundant and so are no longer accessing the 30 hours. I’ve noticed that significantly with returning parents. I had to make six people redundant in March to build up a contingency fund. I lost £10,000 a month from fees between March and June. I’m finding that parents can’t afford to pay because of redundancies or [uncertainty about] short-term contracts.’

For the autumn term the nursery is receiving around £7,000 less a month in local authority funding for two-, three- and four-year-olds compared with autumn 2019, a loss of £28,000 in funding.

Last September, the nursery received £19,500 for funded places from the council, compared with £12,000 this term.

Ms Serdet said, ‘If they’ve received that money from central Government, where is this money? It’s money that should be keeping us sustainable till January. The money should be coming to us from central Government.’

The nursery owner was due to meet with her MP, Tom Pursglove, who she said had been very supportive.

‘I don’t think the Government understand how we have to jump through so many hoops,’ she said.

Northampton County Council said:

‘For the autumn term, Northamptonshire County Council will be paying its early years providers through its normal monthly headcount submission. This means that actuals are paid to every provider matching attendance at their provision.

‘The county council has had to take this position to protect the sector against a future financial shortfall, which ultimately would have to impact future budgets…

‘The local authority is modelling financial forecasts against the grant received from the Government by reviewing the actual take-up of the funding being claimed in the autumn 2020 term. Any surplus realised will be passed to the sector as soon as the local authority is sure that any action this term would not have a detrimental impact on future budgets.’

Councillor Fiona Baker, cabinet member for children’s services