DfE confirms new early years funding rates for 2020-21

Katy Morton
Thursday, October 31, 2019

The Department for Education has announced an extension of supplementary funding for nursery schools, along with a boost to childcare funding rates of up to 8p per hour, per child.

Making the announcement today, the education secretary Gavin Williamson has confirmed that maintained nursery schools will continue to receive supplementary funding in 2020-21, which will be provided to local authorities to enable them to fund the settings at higher rates.

The Government allocated supplementary funding for maintained nursery schools in 2017, which was due to expire in 2020.

Last month, the National Education Union (NEU) warned that nursery schools could lose nearly a third of their budget by September 2020 if the Government did not renew their funding.

Speaking about today’s announcement, Beatrice Merrick, chief executive of Early Education, said, ‘We welcome confirmation of supplementary funding for maintained nursery schools for the full 2020-21 year, and Government's signals of a long-term commitment to this small but vital part of the early years sector. We are delighted that ministers understand they key role nursery schools play in the sector.’

Funding rates

The Department for Education has also released today the new funding rates local authorities will receive for delivery of the funded two-year-old and three and four-year-old places for 2020-21.

The figures reveal that all local authorities in England will receive an increase of 8p per hour, per child for two-year-old places. For the delivery of three- and-four-year-old places, some local authorities will receive up to 8p more per hour, per child. However, some local authorities will see no increase at all.

The increase in funding rates comes from the additional Government investment of £66m for the early years sector, which was announced last month.

Sector response

The Early Years Alliance argued that the impact of the new funding rates will be negligible, while the National Education Union (NEU) called the money an 'insult'.

Chief executive of the Alliance, Neil Leitch said, ‘While the Government might argue that any increase in early years funding is better than nothing, the fact is that for many nurseries, pre-schools and childminders across the country, the impact of these new funding rates will be negligible.

‘These providers are facing huge increases in business costs every year: rises in the national living and minimum wages, mortgages and rents, business rates, utilities costs – the list goes on and on. And yet, many have seen little to no increase in funding over recent years, and so an increase of just a few pennies is going to do little to help those already struggling to remain sustainable in the long-term.

‘Worst still is the news that those areas that have seen funding fall over recent years will now see their rates frozen rather than increase. For providers in these areas already fighting for survival, this could well be the final straw.

‘Childcare providers play an absolutely vital role in caring for and educating children at the most important stage of their development – and yet so many are paid a pittance by Government for doing so. It is insulting, it is demeaning, and it cannot continue. It’s crucial, therefore, that whoever forms the next Government addresses the historic underfunding in the sector and ensures that the early years providers is properly funded, both now and in the future.’

Dr Mary Bousted, joint general secretary of the NEU, said, 'After three years of a funding freeze with absolutely no money for Early Years, eight pence per child per hour is an insult to our nation’s children. The Government needs to invest a further £230m to restore cuts to early years provision in order to stop providers having to close down. We call on the Government, yet again, to guarantee their future. These are the most highly rated schools in the whole system.

'Early Years funding is a scandal and the Department for Education needs to come clean about the resources they’ve committed. We call upon the Secretary of State to comply with the Information Commissioner’s recent demand to release by 14 November the underlying documents that will let the public see, finally, the truth about early years funding.'

Purnima Tanuku, chief executive of the National Day Nurseries Association, said, 'Any increase in funding is always welcome but by the time rates are passed on to providers it will mean less for them due to the 95 per cent pass through rate criteria.

'We are seeing costs continue to rise with proposals for the national living wage to increase to £10.50 by 2024. This extra few pence will still not cover actual delivery costs.

'Now that the general election is confirmed, all political parties will be publishing their manifestos shortly. All parties must clearly cost any manifesto commitments regarding childcare and early years to ensure it covers real costs of high quality delivery. Any further promises to parents for increased funded hours must fully cover all delivery costs and include a year on year uplift in funding to support nurseries sustainability and provide much needed quality care to children and families.'

Liz Bayram, chief executive of the Professional Association for Childcare and Early Years (PACEY), said, 'Any increase in the rate for funded hours is a step in the right direction but this small up lift isn’t adequate when set alongside major expenditure increases like the living wage, which providers will have to cover.

'We have to have a long-term funding plan for early education places, one that ensures fewer settings face closure and all children can access the high quality place they deserve. With an election in Westminster looming, PACEY will continue to call on all political parties to ensure current entitlements are properly funded as well as any future proposals they may have to extend the entitlements families receive, including those for two-year-olds.'

Government comment

Education Secretary Gavin Williamson said, 'A child’s early education is crucial to their future success which is why we are increasing our hourly funding rates for councils so that they can continue to deliver high-quality and free childcare places.

'Over one million children every year are now benefitting from the Government’s record investment in childcare and early years education – which will have reached £3.6 billion by next year. This will give families the flexibility they need to be able to balance their work and family lives.'


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