Local authorities Nottinghamshire and Oxfordshire are among those not routinely paying free entitlement funding to settings taking on children from other settings, while other councils, such as North East Lincolnshire, are double funding.
Providers have revealed that they are staying open despite facing losses of thousands of pounds - even with Government incentives designed to encourage them to stay open.
Wiltshire County Council is paying £100 per week per child to incentivise settings to stay open – but taking the money from settings which have closed, resulting in a 60 per cent cut for closed providers in June. Despite earlier statements to the contrary, the ability to redistribute funding has been backed by government after it said on Tuesday that councils could transfer money between settings to create more places.
Incentive to close
Providers told Nursery World that the funding rules had created a perverse incentive to close.
Karen Richards, owner of Wolds childcare in Nottinghamshire, said that free entitlement funding made up just 18 per cent of her usual income, with the rest coming from parents’ fees, most of which has now been lost. She is open for around 20 children at any one time across two of her three settings and has had to make three staff redundant, as well as furloughing 70 per cent of her team.
‘Really it is financially more effective to close, furlough staff and turn off the heating. But the nature of what we do is a not a job, it is a vocation. We feel a moral obligation to stay open. We are going to make a huge loss – and we’re not even taking anyone else’s children.
‘I have relinquished my salary at the moment completely. I don’t feel I can take a salary while this is going on.’
Guidance for early years settings from March from Nottinghamshire County Council says that, ‘We have pledged not to withdraw funding for 2, 3 and 4 year olds from providers, but we cannot double fund places –i.e. the funding will not move with the child. There is no additional funding coming into the local authority to provide for this’.
However the council's Group Manager Early Childhood Services, Irene Kakoullis, told Nursery World that it was considering the latest guidance and acknowledged 'it is now likely that funding will follow the child if they have to make a temporary move to a different setting.'
'In exceptional cases, we will double fund a child who has had to relocate to a different setting because their usual setting has had no choice but to close, e.g. childminders who are shielding at home and preschools which operate out of community venues that have been closed by the landlord. We will consider these on a case by case basis' she said.
Ms Richards says it will take her business a year to recover. ‘Unlike pubs and restaurants, we are not likely to be full to capacity for a good many months and redundancies mean we won’t have the staff to meet ratios until we can build the business back up again.’
In Wiltshire, 75 per cent of settings have closed. Plans to take 20 per cent of funding away from settings which are closed in order to give settings which are open £100 per child per week in addition to their free entitlement funding have caused an outcry.
Virginia Sewell, Principal of The Garden Montessori, Shaftesbury, a 16-place setting which has closed due to coronavirus, said not receiving 100 per cent of the cash as initially promised could put her setting’s survival at risk.
‘We have already suffered a loss of income due to the fact that we have of course not asked for any fees or consumables from our parents,’ she said, adding she still has to meet other costs such as rent and insurance. ‘We will sadly enter a post-lockdown world where many parents will not have a choice of settings any more. I imagine that only the big multi-chain settings will remain viable and small settings like ours will have to close.’
The Early Years Alliance has written to the council to object, pointing out that the decision to redistribute the funding came after many settings have closed, budgeted and furloughed staff. ‘Many providers in Wiltshire will have already budgeted on this basis. To suddenly be faced with a 20 per cent reduction in funding … has understandably caused a great deal of worry and anger among local providers,’ says Neil Leitch, the chief executive.
However, John Proctor, owner of 11-strong group South Hills Nurseries, said that the scheme was devised in consultation with the local early years reference group, of which he is chair.
He said, ‘You want to have an incentive for people to stay open not only to support key worker children, but also vulnerable children. The council wanted to encourage children to be there if social workers felt it was desirable that they would be there. They are not looking at paying any less than 100 per cent of the [DSG] grant, just at distributing it differently.’
He said most of his settings were open for small numbers of children – one setting reopened just for two children who couldn’t travel easily – and acknowledged that this would be loss-making. He argues that settings which have closed can take advantage of a range of schemes including furlough, free entitlement, and the business rates holiday, while utilities bills will be slashed.
Wiltshire County Council says the move has been taken ‘to safeguard the sufficiency of the sector’. It is giving 100 per cent of the funding to settings which are closed for April and May and paying 40 per cent in June to closed providers to give them time to budget.
Government direction on this has been contradictory - Children’s Minister Vicky Ford said in March that it was her ‘firm expectation’ that ‘local authorities would pass funding onto providers as if things were usual’, following a DfE decision not to clawback free entitlement funding from closed settings. On Tuesday, however, the government issued new guidance saying it does want to encourage councils to transfer money between settings 'in exceptional cases' where ‘more childcare places are still needed locally’ as a result of coronavirus.
Surrey U-turn
Sarah Porter, of The Stables Nursery, Surrey, has seven of her existing children attending her setting, and has taken an additional four to five keyworkers’ children from other settings which have closed. Surrey had originally devised a scheme whereby three- and four-year-olds would only get the 15 hours universal childcare, not the extended 30 hours entitlement, and no extra children could be claimed for.
Ms Porter says she calculated this would have meant she wasn’t getting half of the free entitlement money she was owed, in addition to the huge loss in parents’ fees.
Earlier this month, she went on BBC Radio Surrey and said, ‘I’d like to ask why it is that Surrey County Council are withholding a significant proportion of the early years funding which eligible children are entitled to. My nursery is remaining open to support key worker children, but every day we do this we are making a loss which I can stomach because I feel it is morally the right thing to do, but when we are not being supported by our LA it makes that decision much harder.’
The council has since backtracked, with leader Tim Oliver saying that they ‘do absolutely wish to support nurseries’.
‘I was quite incensed by the fact that Surrey were not passing on all the funding to us,’ Ms Porter told Nursery World. ‘I was literally going to bang on number ten’s door had that not come in.’
She has got two members of staff who are working, costing about £4,000 per month to fund. The council’s change of heart means she still doesn’t get enough cover staff pay, ‘but can make it work with other sources of income from Surrey and parents,’ she added.
Surrey County Council told childcare providers that advice from the DfE ‘has been evolving daily’ and so ‘the initial advice we sent to early years providers has now been refined’. Now, both universal and extended funding will be passed on.
Providers can now also add any new children who would have started in April 2020, and in a further concession, settings have a four-week grace period over losing funding, meaning they will be funded for four weeks after they close if the child moves settings.
Purnima Tanuku, chief executive of National Day Nurseries Association, said many nurseries were losing thousands of pounds a week by staying open. She said, 'We know providers that have stayed open have faced mixed responses from local authorities with some recognising the pressures providers have been under while others have been less responsive.
'Local authorities need to work closely with providers to understand the support they need.'