National Day Nurseries Association chief executive Purnima Tanuku said their analysis of local authority funding ‘rings alarm bells’, and as they stand, the funding rates do not fully support providers to enable the expansion of the funded hours from next year.
The National Day Nurseries Association (NDNA) has analysed the funding rates local authorities will receive from April to deliver the extended entitlement.
It follows the confirmation of rates by the Department for Education (DfE) earlier in the week, which stated that national average hourly funding would rise to £11.22 for under-twos, £8.28 for two-year-olds and £5.88 for three and four-year-olds.
However, the NDNA analysis finds that the funding gap is actually widening as local authorities will see rates for two-year-olds increase by just 4 per cent on average, and by 4.6 per cent for three- and four-year-olds at a time when the national minimum wage is rising by 10 per cent.
According to the research, 68 of the 150 local authority areas in England will receive less than £8 per child per hour for two-year-old places, meaning providers in these areas will receive less than the average base rate they currently receive, which is £7.99 per child, per hour.
Three- and four-year-old rates
For three- and four-year-old places, the DfE says the average rate to local authorities per child, per hour is £5.88 (currently on the September 23 rate of £5.62), which is up by 26p or 4.6 per cent.
The NDNA analysis finds the local authority area of Bracknell Forest will receive the highest increase to funding rates, with a rise of 6.4 per cent on current rates. At the other end of the spectrum, Bristol will see an increase of just 11p or 1.9 per cent to its rates.
The findings reveal:
- 46 local authorities in the North of England, East Midlands and South-West will be on the lowest rate of £5.47 which means their base rate will be around £5 or just above.
- Kensington and Chelsea’s rate of £8.60 has also only been increased by 1.9 per cent.
- Camden has the highest rate of £9.04.
- 19 local authority areas in London are on a rate of less than £7.
Two-year-old rates
The NDNA says the picture for two-year-old funding is more varied.
According to the DfE, the average rate local authorities will receive from April 2024 is £8.28, up from £7.95 currently, which is an increase of 33p per child, per hour, equivalent to a 4 per cent rise.
The analysis finds:
- 68 local authority areas will receive less than £8 per child, per hour which means that providers in these areas will receive less than the average base rate they currently get of £7.99.
- Once local authorities top slice their funding amount by up to 5 per cent, even more providers will be receiving less than they currently do, despite the rise in wages and other costs
- Rutland council is on the lowest rate of £6.98, a 30p reduction.
- 26 local authority areas will see a funding reduction, ranging from a reduction of 1p to a reduction of 30p.
- 72 local authority areas will not receive the average increase of 33p or more – which is only a 4 per cent rise and not enough to cover the 10 per cent rise in wages.
- Three council areas have no change to their funding.
- Only 17 local authority areas will receive more than a 10 per cent funding increase, but 10 of these (in NE, NW, W Mids and Yorkshire) will still have rates below the average of £8.28.
Tanuku added, ‘For three- and four-year-olds, it’s clear the new rates will all fall short of the needed 10 per cent increase to pay minimum wages from April. Providers in almost a third of local authority areas will be on the lowest rate of £5.47 which is totally inadequate to deliver high-quality education and care.
‘For two-year-olds, it’s much more of a mixed picture, but most local authority areas which will be given more than a 10 per cent increase are still left with a below-average rate. Our main concern is that many providers will experience a reduction in their funding rate which makes no sense when they are expected to extend the service they offer. Costs such as wages, business rates and inflation have all risen and the Government cannot expect providers to deliver this ambitious expansion with less money than they already receive.
‘We would also question the new policy of a 95 per cent pass-through rate for two-year-olds which will leave the majority of providers receiving less than they do now.
‘It is disappointing that the Government does not have a plan of when they will require local authorities to reduce the pass-through figure to 97 per cent as promised in the Spring Budget announcement.’