As we reported in October, children and families minister Will Quince had confirmed that the Government was providing an additional £510m for early years funding over the next three years.
However, it has now been revealed that the yearly funding increases will not be cumulative funding increases – with each rise in funding added to the previous year’s funding levels, as the original announcement suggested – but that instead, the yearly funding amounts represent how funding levels each year will compare to 2021-22 funding levels.
Sector organisations said they were told the details of the funding in a meeting with the newly-appointed children and families minister Quince on 27 October, the day after Chancellor Rishi Sunak's Budget, which he then posted on Twitter.
In the tweet, the minister confirmed what the organisations had been verbally told in the meeting, that the Government would be ‘investing additional funding for the early years entitlements worth £160m in 2022-23, £180m in 2023-24 and £170m in 2024-25.’
However, it now appears that the extra funding of £160m for 2022-23 is for that year only, to be followed by an extra £20m in 2023-24, rather than £180m.
In 2024-25 the sector will receive a decrease in funding on the 2023-24 figure - an extra £10m on top of the £160m, not the £170m originally stated.
In the tweet on 27 October, Quince said, ‘This afternoon I met with @EYalliance @NDNAtalk @PACEYchildcare where I was delighted to confirm that we are investing additional funding for the early years entitlements worth £160m in 2022-23, £180m in 2023-24 and £170m in 2024-25.
‘This is for local authorities to increase hourly rates paid to childcare providers for the government’s free childcare entitlement offers and reflects the costs of inflation and national living wage increases.’
As we reported at the time, the twitter clarification came after the Chancellor announced £170m for the sector by 2024-25 in his Budget speech.
In an email to Nursery World, the Department for Education insists that the funding revelations are not new information and that the minister’s tweet on 27 October setting out the early years investments for each year as confirmed in the Spending Review ‘did not infer cumulative increases’.
The tweet was also preceded by a meeting (referenced in the tweet) where the minister discussed with the National Day Nurseries Association, the Early Years Alliance and PACEY the investments for each year. This also did not suggest that these were cumulative increases, it added.
They also point to a written ministerial statement on 27 November, which they said confirms the full details. This includes the phrase 'compared to 2021-22', which was not stated initially in the meeting or the tweet.
The written ministerial statement says that, 'At the Spending Review on 27 October the Chancellor announced increases in the funding for the early years entitlements worth £160 million in 2022-23, £180 million in 2023-24 and £170 million in 2024-25, compared to 2021-22.'
The row has broken out following an early years debate on Tuesday in which Will Quince was quoted as saying, 'we announced additional funding of £160 million for 2022-23, £180 million the year after and £170 million the year after that, compared to the current year.'
Following calls for urgent clarification, sector organsiations said they yesterday received the following clarification from the DfE:
‘As set out in the Written Ministerial Statement on 25 November 2021, the investments in 2022-23, 2023-24 and 2024-25 are all individually in comparison to the baseline for the current year 2021-22.
‘This investment reflects cost pressures as well as anticipated changes in the number of eligible children. On the latter, the number of children is forecast to decrease across this period. This is driven by ONS data, which projects a decrease in the 0 – 4 year old population of around 5 per cent from mid 2022 to mid 2025.
‘We expect to announce the early years funding rates for local authorities for 2023-24 next autumn in the normal way (and the following autumn for 2024-25), ahead of local authorities starting their business planning rounds for the respective financial years.’
'Worse than existing dire situation'
Commenting, Neil Leitch, CEO of the Early Years Alliance, said, ‘We are incredibly concerned about the implications of this new information from the Department for Education.
‘If what seems to be being suggested is accurate, the funding outlook for the sector over the next three years is not only a lot worse than many in the sector understood it to be at the time of the announcement, but potentially worse than the dire situation providers have faced over recent years.
‘Early years providers are facing huge increases in wages, national insurance contributions, business rates and countless other costs, alongside the ongoing financial impact of the pandemic. It beggars belief therefore that the Government could possibly think that an at-best 17p increase in funding this year, following by a marginal increase the following year and a decrease the year after that, would be anywhere near sufficient to keep the sector sustainable – or that providers would have welcomed this announcement if they had understood this to be the case.
‘For far too long, early years settings have faced a constant struggle to remain in business in the face of stagnant funding and rising costs. Failure to deliver adequate investment into our sector over coming years will almost certainly mean the preventable closure of hundreds, if not thousands, of nurseries, pre-schools and childminders across the country.’
National Day Nurseries Association chief executive Purnima Tanuku said, ‘After the Budget announcement of £170 million extra for early years funding by 2024/25 we were re-assured by the minister who then tweeted which spelled out year-on year increases in funding in the coming three years.
‘We now are being told that “the investments in 2022-23, 2023-24 and 2024-25 are all individually in comparison to the baseline for the current year 2021-22”. So, the extra funding for this coming year will in effect be a one-off and not built upon for future funding increases.
‘This adds insult to injury and the sector is rapidly losing faith and confidence in Government promises to make sure rising costs will be covered.
‘We have already seen that ten local authorities will not see this year’s 17 pence per hour funding increase. If funding is only £20 million higher the year after it is impossible to see how rates will reflect “the cost pressures that are anticipated” as the minister said in a debate this week.
‘Costs will continue to rise as inflation takes hold while providers are already looking at a 6.6 per cent increase in the National Living Wage alone from April. Added to this the extra £12,600 the average nursery will need to find for full business rates bills and we are seeing more real-terms cuts in funding.
‘The challenges caused by years of chronic underfunding cannot be addressed through unconsolidated increases. This does not reflect the Government’s levelling up agenda or any hopes of recovery for the early years sector.’
Liz Bayram, Chief Executive at PACEY, said, 'After initially celebrating last year's announcement of important and much-needed funding for the sector, PACEY is dismayed to hear that the actual allocations over the next three years may only be a third of what was originally presented to us and the final year will actually result in a reduction in funding. We are urgently seeking clarification as to why the sector has been misled in this way.
'This new information will do nothing to ease the worries of providers who have been operating under immense pressure from the pandemic and face yet more bad news amidst rising costs and ongoing temporary closures due to the Omicron variant. They like any other business face increased inflation and rises in minimum wages. This funding will do little to address any of this. Furthermore it will certainly not help the Government’s plan to ensure recovery for all children affected by the pandemic.'