Thank you for contacting me about early years funding.
I strongly believe that early years are crucial to giving every child the best start in life. I therefore welcome the doubling of free childcare for working parents of 3- and 4- year olds and the introduction of tax-free childcare. More than 850,000 disadvantaged 2-year-olds have also benefited from 15 hours of free childcare since it was introduced.
In order to realise this ambitious expansion, a fairer funding system for early years providers was introduced in 2017. The previous system had been based on historic expenditure, leading to significant variations in funding for local authorities. The new Early Years National Funding Formula is ensuring funding is allocated fairly, transparently and on a sustainable basis.
I am also encouraged that in April 2020, all local authorities saw an increase to the hourly funding rates for two-year-olds and an increase in the vast majority of areas for three and four-year-olds. Ministers are planning to spend over £3.6 billion in 2020-21 on the early education entitlements.
The Government continues to support families with their childcare costs. The Chancellor announced at the Spending Review a £44 million investment in 2021-22, for local authorities to increase hourly rates paid to childcare providers for the Government’s free childcare entitlement offers. This will pay for a rate increase that is higher than the costs nurseries may face from the uplift to the national living wage in April.
These changes have created a fairer system that better provides the affordable and high-quality childcare needed to give children all over the country the best opportunity to reach their full potential.
Maintained Nursery Schools
Maintained nursery schools make an important contribution to improving the lives of the most disadvantaged children in Calder Valley. They often specialise in caring for children with disabilities and those from disadvantaged backgrounds. They also contribute some of the highest quality early years education. According to Ofsted, as at August 2020, 63 per cent of maintained nursery schools were rated 'outstanding' and 35 per cent achieved a ‘good’ rating.
In recognition of the costs that maintained nursery schools incur over and above other providers, approximately £60 million extra funding is invested each financial year. This is in addition to funding received under the Early Years National Funding Formula. I am pleased that Ministers have confirmed that supplementary funding worth up to £23 million for Maintained Nursery Schools will be continued through the summer term of 2021 to enable local authorities to provide them with reassurance.
This provides maintained nursery schools with certainty about funding for the 2020-21 academic year.
More broadly, the 2020 Spending Review (SR20) provided £44 million for early years education in 2021-22 to increase the hourly rate paid to childcare providers for the Government’s free hours offers. This is on top of the £66 million increase confirmed at SR19.
SR19 also allocated £780 million more in 2020-21 compared to 2019-20 funding levels to support children and young people with special educational needs and ensure all receive a high-quality education. High needs funding will increase by a further £730 million next year – bringing it to a total of £8 billion in 2021-22.
I am also assured that ministers continue to meet a variety of early years professionals and representatives from maintained nursery schools to discuss a range of key issues, including funding.
Non-maintained Early Years Settings
I understand your concerns and strongly believe that early years are crucial to giving every child the best start in life. There is extensive evidence to demonstrate that high-quality childcare supports children’s development and prepares younger children for school. It is welcome that all three and four year-olds, and disadvantaged two year-olds, can now access at least 15 hours of free childcare each week. This is backed by £3.6 billion of funding for 2020-21. The 2020 Spending Review (SR20) also allocated £44 million for early years education in 2021-22 to increase the hourly rate paid to childcare providers for the Government’s free hours offers. This is on top of the £66 million increase confirmed at SR19.
As I understand it, funding rates for the early education entitlements were based on the Review of Childcare Costs, which was described by the National Audit Office as “thorough and wide ranging”. That said, I am assured that Ministers recognise the importance of keeping the evidence base on all aspects of early years sector costs up to date and that they continue to monitor the provider market closely via a range of regular and one-off research projects.
I also understand that rateable values of nursery premises in an area are taken into account in the amount of early years funding provided to local authorities for them to distribute to providers. If a non-maintained childcare and early-education provider is also a registered charity for business rates purposes it may qualify for relief too. Alongside this guidance, support is being offered to providers to help them make their businesses more financially sustainable and operate efficiently.
Thank you again for taking the time to contact me.
Craig Whittaker MP