Government makes U-turn on nurseries' access to furlough cash

The Early Years Alliance said the move was likely to lead to nursery closures and threatened the long-term viability of the sector.

In new guidance released today (17 April), ‘Coronavirus (COVID-19): financial support for education, early years and children’s social care’, the Department for Education gives instances where an early years provider will not be able to furlough staff or will only be able to access the CJRS ‘to cover up to the proportion of its paybill which could be considered to have been paid from that provider’s private income’.

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The move follows weeks of uncertainty in the early years sector about possible contradictions between the DfE early years sector guidance, which clearly stated that providers could access both schemes, without giving any restrictions, and the Treasury guidance on the CJRS, which said that, ‘Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.’

Since the DfE guidance for the early years sector was published on 24 March, no clarification has been issued on this, and as recently as yesterday (16th April) the advice that nurseries could access free hours funding and furlough staff was repeated as the DfE announced planned amendments on EYFS relaxation.

The DfE is believed to have been in protracted discussions with the Treasury about how early years funding guidance should be applied.

Many nurseries have already furloughed a large proportion of their staff or closed temporarily on the basis that they could receive free entitlement and furlough funding. The new guidance was released at 6.30pm on Friday evening, with early years settings due to start claiming through the CJRS portal on Monday 20 April.

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 Coronavirus Job Retention Scheme would not duplicate other public grants received, and would not lead to financial reserves being created

It goes on to specify that if ‘it is difficult to distinguish whether staff are funded through free entitlement or private income…then an early years provider can access the CJRS to pay the proportion of its paybill that comes from ‘parent paid’ hours.

For example, if a provider’s average monthly income is 40 per cent from funded hours and 60 per cent from other sources, it could claim CJRS support for up to 60 per cent of its paybill.

The DfE says it is ‘considering appropriate measures to monitor the use of these schemes in order to detect any duplication of funding, and will be considering potential options to recover misused public funding as required’.

A DfE spokesperson said, 'We have already confirmed that we will continue to fund councils for the free childcare entitlements for the duration of these closures, as we ask settings to remain open where needed for children of critical workers and most vulnerable.

'To support them with this we are relieving some of the burdens on staff during these challenging times, temporarily changing some of the requirements of the Early Years Foundation Stage framework and providing significant financial support, including a business rate holiday for many private providers. Today we have set out further clarity on other support available, including eligibility for the Coronavirus Job Retention Scheme where an employer receives government funding.'

Early Years Alliance response

Neil Leitch, chief executive of the Alliance, said, ‘It is completely unacceptable that having given a clear and explicit assurance to childcare providers that they would be able to rely on financial support from both “free entitlement” funding and the Job Retention Scheme during the coronavirus crisis, the government is now saying that it will be watering down this support.

‘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.

‘For early years providers across the country who have already struggled for years as a result of government underfunding, to be told weeks into this crisis that the support they were promised may be far less than they were led to believe is a complete kick in the teeth. 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.’

Tulip Siddiq MP, Labour’s Shadow Minister for Children and Early Years, said, 'The Government has buried a major U-turn on early years funding in guidance published tonight, withdrawing crucial financial support that they initially promised.

'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.'

Purnima Tanuku OBE, Chief Executive of NDNA, said, 'This comes as a huge shock to the sector which is relying on both the Job Retention Scheme and early years funding entitlement to be able to survive this crisis.

'Many nurseries that have remained open to critical workers’ children are doing so at a huge financial loss.

'The Government does not appear to have early years on their agenda, which is appalling at a time when early years providers have stepped up to deliver the care that’s desperately needed for critical workers.

'They are themselves the fourth emergency service: key workers caring for key workers. This is a total disregard for the fantastic work early years providers are doing, risking their own safety every day to keep the country going. The Government does not appear to acknowledge or recognise this.

'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 £63.5 million in 2018-19 and reported contingencies of £32 million in 2018-19 and £26 million in 2019-20. This money should be used to provide additional support to early years at a critical time like this.'

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