Press release

Fairer early years funding plan launched

A plan to deliver a fairer funding system for nurseries, preschools and childminders will help support families with the cost of childcare.

Young children at a nursery

Major changes designed to deliver a fairer funding system for nurseries, preschools and childminders have been set out by Education Secretary Justine Greening today (11 August 2016) as part of the government’s manifesto commitment to support ordinary working families with the cost of childcare.

The new funding formula will replace the current system, which is based on how much a council has historically spent rather than how much it actually costs to meet the local need.

The new approach will end this unfair system, giving organisations providing early years care the financial support they need to deliver the 30-hour free childcare offer to working families.

The government is already providing more support to families by investing record amounts into childcare - rising from £5 billion to £6 billion per year by the end of the Parliament - helping to double free childcare to 30 hours for working parents of 3- and 4-year-olds.

Launching today’s 6-week consultation on the proposals, Education Secretary Justine Greening said:

We are committed to making sure this is a country that works for everyone, not just the privileged few. Education lies at the heart of this ambition and the early years are crucial to giving every child the best start in life.

We are working with nurseries, preschools and childminders to support working parents with the costs of raising a family, doubling our free childcare offer to 30 hours for working parents of 3- and 4-year-olds. But to deliver on that commitment we know we must give every area of the country the funding it needs.

These changes will transform the way we fund early years’ education, creating a fairer system that better provides the affordable, high-quality childcare families deserve.

Thanks to the government’s new investment and this fairer approach, the vast majority of councils and providers will see increases in their average hourly funding rates for children in their area. The changes will also make funding more transparent so that more money goes to the frontline where it is needed most.

The government will be creating more childcare places by targeting funding to those areas where there is the greatest need for additional places. Local authorities, working in partnership with providers, are now able to bid for capital grant funding to support 30 hours delivery - linked to the £50 million announced in last year’s spending review.

The new formula is based on 3 factors:

  • a ‘universal base rate’ of funding for each child, so that every local area is funded fairly for the core costs of delivering childcare
  • an ‘additional needs factor’, so that funding takes into account the extra costs of supporting children with additional needs to achieve good learning and development outcomes
  • the cost of providing childcare in different parts of the country

Chief Executive of Family and Childcare Trust Julia Margo said:

We’re pleased that this consultation is being published so quickly following recent political changes. It’s an indication of the importance the government is placing on delivering on its plans for early education, which is really positive news for families.

We particularly welcome the emphasis on children who have special educational needs and disabilities, for whom provision is currently woefully inadequate, and look forward to working with government on this and other aspects of the consultation.

The changes will also deliver a better deal for children with special educational needs or disabilities, introducing targeted access funding for disabled children and providing greater clarity for their parents and providers.

Dame Christine Lenehan, Director of the Council for Disabled Children, said:

Families with disabled children too often experience financial barriers to getting the childcare they need. It is therefore absolutely right that the government has made improving access to childcare for the families of disabled children a priority in their consultation on early years national funding formula. We welcome the intention to give equal access to childcare to all families and will be scrutinising the proposals to make sure that’s what they do.

Lara Warburton, Rolls-Royce UK Diversity and Inclusion Manager, said:

Rolls-Royce operates in a changing and competitive global economy and to build on our success we need to attract and retain a diverse workforce. Anything that makes it easier for us to recruit talent is welcome. We work with hundreds of suppliers in the UK who also need a skilled engineering workforce, so every measure that reduces barriers to employment helps. We welcome the consultation announced today and its aim to provide greater clarity on the free increased childcare provision.

Carillion - a leading international integrated support services business - welcomed the government’s childcare offer:

Carillion welcomes the consultation today on early years funding. The reforms will help people at Carillion by expanding the free entitlement from 15 hours to 30 hours a week to reduce their childcare costs.

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Published 11 August 2016