On Wednesday, it emerged in the second reading of the childcare bill what the average funding rates would be for delivering 30-hours childcare.

For 3-and-4-year-olds, settings will receive an average of £4.88; however this rate also includes the Early Years Pupil Premium.  2-year-olds will now receive an increase to their funding per place of £5.09 to £5.39 per hour.

Following the report published by the Department for Education on the cost of delivering the early education entitlement, childcare minister Sam Gyimah stated:

“The findings of the review – the first of its kind by Government – have formed the evidence base for our decisions at the Autumn Spending Review.

“On the basis of this review, I am pleased to be able to confirm that the Government is allocating funding for a substantial uplift to the funding rate.”

The government report, based on childcare providers’ experiences of delivering the free entitlement, revealed that:

  • The cost of delivering one hour of childcare for children aged 2 was £5.39 and for 3-4-year-olds it was £3.51
  • These costs were higher among voluntary sectors than those privately-run
  • It revealed a surplus in funding of 22p when setting’s unit costs for providing care to three-and-four-year-olds were compared with local authority rates of funding

Many Early Years organisations have questioned how the new funding rates will affect their general practice and how they will keep up with other financial pressures.

Concerns have also been raised about the funding rate for 3-and-4-year-olds including the EYPP, as currently this applies to children from disadvantaged backgrounds who meet a very specific criteria; therefore there is uncertainty about why this has been factored into the general rates.

The chief executive of the National Day Nurseries Association (NDNA), Purnima Tanuku, has said, “We need to know that this uplift will not stay still. It must continue to increase to keep pace with the financial pressures of the sector, including the introduction of the National Living Wage in April and pensions auto enrolment. It cannot be a one-off.

“We welcome the promise of the new national funding formula for early years and schools, but this must be carefully managed to protect money for early years. This means ring-fencing of funds for under fives is more important than ever.”

The Government has yet to explain how a ‘fair funding formula’ will take into consideration the difference in costs between providers located in different areas of the country.

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