DfE confirms increase in funding rates for childcare places


The Department for Education has confirmed an increase in the hourly rate paid to local authorities to fund childcare places for two, three- and four-year-olds.

In a written statement to councils children and families minister Will Quince confirmed an uplift of 17 pence per hour in “the vast majority of areas” for places for three- and four-year-olds.

Nine local authorities will not receive a rise to their funding rates and will, instead, have their 2021/22 hourly funding rates for three- and four-year-olds protected by a “loss cap”, to ensure that they do not face large drops to their funding rate. 

These councils are Bristol, Camden, Ealing, Halton, Islington, Lambeth, Southwark, Tower Hamlets, and Westminster.

Rutland will see funding increased by 13 pence per hour, in recognition that Rutland’s loss cap protection was only worth 4 pence per hour in 2021/22, Quince said.

An increase of 21 pence per hour for two-year-old entitlement will be given to all local authorities while the minimum rate, known as the “minimum funding floor”, for the three- and four-year-olds funding offer will be increased to £4.61 per hour.

The final rates that early years providers will receive will be confirmed to them by individual councils before the changes are introduced in April, DfE documents state.

Quince also announced that the supplementary funding hourly rate for Maintained Nursery Schools will increase by 3.5 per cent, equivalent to the increase in the hourly funding rates for three- and four-year-olds.

The Early Years Pupil Premium (EYPP) funding rate will increase next year from 53 pence to 60 per cent  per hour and Disability Access Funding, which is made to providers to help to make adjustments within their provision to support eligible children with a disability, will increase from £615 to £800 per child. 

Quince said the increase in early years funding “reflects the increasing costs many employers face, in order to protect and support their employees, including rising wages. Alongside this we are also investing millions in better training for staff through our early years recovery work.”

However, sector leaders say that the increase across funding for two, three- and four-year-olds equates to less than four per cent of current funding rates.

Purnima Tanuku, chief executive of the National Day Nurseries Association, said this is not in line with inflation and will not meet the costs of an uplift of the national minimum wage.

She added: “The 17p per hour increase for three and four-year-old places for most local authority areas will help providers to cover only some of these costs, but many delivering funded hours will still be out of pocket and will still be suffering a shortfall.

“Data released today shows that nine councils will see no change in their funding at all. Providers in these areas will continue to face significant cost increases but with no extra support which is neither fair nor equal.

“This is why we need ministers and officials to fully review the whole policy to make sure that children’s outcomes are truly at the heart of these decisions and providers are supported to deliver the high-quality early education and care we want for all our children.”

Neil Leitch, chief executive of the Early Years Alliance, welcomed the increase but said: “The fact remains that the funding rises published today don’t come close to closing the funding gap identified by the government’s own policy documents, and many in the sector are rightly concerned that they will still face a struggle to remain viable. Worse still, many providers won’t even find out the funding rates they themselves will be receiving until the last minute, making it impossible to budget and plan. 

“If the government truly wants to show that it values the early years, it needs to stop giving providers just enough to survive and start giving them what they need to thrive. What we need now is an ambitious vision for the sector – and the substantial investment to back it up.”

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