30 hours funding: many in the dark, while some face cuts

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Early years providers around the country had not been informed of 2016/17 funding rates for three- and four-year-olds only a few days before the new financial year began.


Paints Pots Nurseries in Southampton, which is getting 6p less per child than in 2015/16

Early years providers around the country had not been informed of 2016/17 funding rates for three- and four-year-olds only a few days before the new financial year began.

A snap poll on Twitter by the Pre-school Learning Alliance carried out on 23 March found that 48 per cent of providers still did not know what their 2016/17 funding rate would be.

Some 26 per cent said their rate was not changing, and just 16 per cent said it was increasing. And for ten per cent of settings their rate was actually decreasing. (The findings were based on 50 responses.)

A Nursery World survey of more than 500 early years providers, carried out in March, found that of those settings that did know their rate for 2016/17, they would receive an average increase of just 3p per hour, from £4.09 to £4.12, for three- and four-year-olds.

Some settings have received a decrease in funding, putting providers under even more pressure as they struggle to cope with the National Living Wage starting this month and the planned 30-hours entitlement for working parents of three- and four-year-olds.

In Southampton, nurseries are receiving 6p less per child per hour than in 2015/16.

David Wright, owner of Paint Pots Nurseries, said, ‘It has been difficult to plan for the financial year and these figures arrived not long before the end of March. The price at which the Government, via our local authority, dictates it will purchase early years education from us in 2016 as a provider is 6p less per child per hour than we received last year, due to the application of a multiplier, the Minimum Funding Guarantee, which reduces this year’s figure under the single funding formula, to 98.5 per cent of our previous year’s rate.

‘The combination of this continuing fall in our funding, coupled with the increase in national minimum and living wages, gives a lie to the Government’s rhetoric that they are providing sufficient and increased funding to providers for a quality early years service.

‘The fact that effective funding rates received by providers are falling, and that there is a huge disparity in rates across the country, just highlights the challenges faced by early years businesses. It is not possible to continue to employ qualified teachers at graduate-level salaries and pay increasing levels of National Living Wage to other staff, while funding rates are falling or static and the opportunity to increase fees for unfunded hours is reducing, particularly so when the planned 30 funded hours come in.’

He added that the only recourse was to keep on increasing fees.

‘We have had to do so again, and to look for cost savings through efficiencies, renegotiations of service contracts or through cutbacks, while not compromising quality. Many, many providers are struggling to do so.’

Meanwhile, settings in Richmond have received an increase to their funding of just 2p an hour.

funding-boxMargaret Baran, who owns Whitton Day Nursery in Richmond-upon-Thames, said it cost the nursery more than the rise to re-calculate the fees for parents and send new invoices, causing a net loss in income.

The nursery owner told Nursery World, ‘Some of the parents told us not to bother changing their standing order and said we should keep the 2p, but of course we [can’t do that], because it’s illegal not to pass on all the funding.

‘Frankly, I find it naïve – if not insulting – of the Government, or the LA, or whoever was responsible for the 2p per hour increase, to think that an increase of just £11.40 per year for funded children will make much of a difference, if any, to parents.

‘What it does result in is increased expenditure for settings, and most increases in expenditure end up being passed on to parents via their fees.

‘All of our invoices for funded children have had to be re-calculated. This is not a five-minute job, especially for small, independent settings that may need to do this via a calculator plus brain power, as there are so many computations, depending upon how many hours/sessions/full- or part-time days the children attend and whether [it] is spread over 38 or 52 weeks.

‘All to give funded children an extra, derisory, 2p per hour, which most parents laugh at when we inform them!’

Neil Leitch, chief executive of the Pre-school Learning Alliance, said, ‘While local authorities tend not to advise on rates until March, we would have expected the vast majority of providers to have been informed by now, and so it is concerning that this has not yet happened in so many cases.

‘We know that 2016/17 is going to be a particularly testing year with the introduction of the National Living Wage, which will have a huge impact on many providers. While providers are doing their best to prepare for the additional strain on their finances, for those whose funding rates are still unconfirmed, this is being made all the more difficult.

‘Equally concerning is the fact that the Government is yet to confirm funding rates for the 30-hours trial. How are providers in early implementer areas expected to be able to plan for the successful delivery of the offer without this information?

‘What’s more, with only five months to go to the trial, Government could end up cobbling together funding rates for this September, which may well end up being completely unreflective of the rates that providers will receive when the scheme rolls out in full next year.

‘It’s vital that the Government addresses this as a matter of urgency. If the 30-hour scheme is to succeed, providers need to be able to plan their finances using real figures, not hypothetical ones.’


Areas in the pilot are still awaiting confirmation of the funding rates they will be able to offer settings taking part in the trial.

One pilot area, Staffordshire, has increased rates for the 15 hours for 2016/17 by between 10 and 12p per child per hour, and also pays deprivation supplements for settings based on the percentage of children from the most disadvantaged areas.

Staffordshire County Council confirmed that PVI nurseries have received an increase of 10p to £3.50 an hour, with the rate for voluntary settings rising to £3.40 an hour. Rates for childminders have risen from £3.64 to £3.76. Maintained nursery schools receive the same rate as last year – £3.88 an hour.

A council consultation found that 74 per cent of providers are willing to offer 30 hours’ free childcare without knowing any details of extra funding.

The council’s cabinet member for children Mike Lawrence said, ‘We have also been invited to be part of a national task group to develop this policy, which means Staffordshire is therefore as closely involved in shaping this initiative as it can be.

‘It is still early days and we are still working through how the pilot scheme will be delivered and how families and childcare providers will be invited to be part of the scheme. At present we are awaiting confirmation from the Department for Education on the hourly rate for 30-hour entitlement – more details will be announced in the coming weeks. We understand the pressure that some childcare providers are under and, from April, we will be making a slight increase to the hourly rate.

‘The Department for Education are currently reviewing funding, and potentially a new funding formula may be in place for the financial year 2017/18.’

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