In response to the consultation on the early years funding changes, the government has announced a minimum hourly funding rate of £4.30 for all local authorities.

The decision means that, come April 2017 when the Early Years National Funding Formula (EYNFF) comes into effect, no local authority will receive less than £4.30 per hour from the government. The move will cost the Department for Education an extra £30m per year.

The government confirmed its plans to proceed with the funding formula, which will see rates calculated based on local staff and premises costs, as well as the number of children with additional needs in the area.

The consultation response confirmed that local authorities will need to use a universal base rate to fund providers for each hour of the free entitlement by no later than 2019/20. It is hoped this will bring about greater equality in funding between different types of provider.

The government will proceed with proposals to require 93% (in 2017-18) and 95% (from 2018-19) of the planned early years funding rate to be passed from local authorities directly to providers. However, the DfE will consider council appeals to opt out of this requirement “in exceptional circumstances”.

The DfE also confirmed it will limit the amount of funding channelled through supplements to 10%.Plans to introduce supplements for efficiency and for delivery of the additional 15 hours have been scrapped, whilst supplements for quality and English as an additional language will take their place.

Chief Executive of the Pre-school Learning Alliance, Neil Leitch, praised the minimum hourly funding rate as a step in the right direction for the sector, but highlighted there is still much to do to ensure its sustainability. He commented: “…we are still in a situation where the early years funding rates that local councils will receive next year will remain stagnant until 2020, while business costs will continue to rise. This is not sustainable and must be addressed if the government is to ensure the sector can survive in the long term.

“As such, while increased funding is undoubtedly welcome, it is important not to confuse ‘more money’ with ‘enough money’. For many providers, the difference between the cost of delivering  ‘free entitlement’ places and the funding received from government remains significant, and unless this gap is closed – as opposed to narrowed – the problems facing the sector will remain.”

Read the full consultation response from the government here.

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