Education secretary Justine Greening has announced plans to overhaul the funding system for early years providers.
Under plans published today, providers in 112 out of 150 English local authority areas will gain extra per-hour funding from next year, but those in the remaining 38 areas will lose out.
The hardest-hit local authority areas could lose as much as 10 per cent of their hourly funding rate as a result of the change.
The formula will apply to children below primary school age, so although it will not affect schools’ main budgets it will apply to those that have nurseries attached, as well as to other early years providers.
Ms Greening said the current funding system, in which early years funding rates range from £3.24 to £9.17 per hour depending on the area, was in need of reform because it was “driven by historical precedent and not by the costs of providing childcare that meets the needs of children in different areas”.
A consultation document on the proposed new formula said the existing system was “manifestly not capable” of distributing the early years budget “as effectively and fairly as possible”.
It said the new formula had been “designed to allocate funding fairly, efficiently and transparently in order to give local authorities the funding they need to ensure that sufficient numbers of providers are willing and able to deliver 30 hours of free childcare on a sustainable basis.”
The new formula will be based on three factors:
- A universal base rate of funding for each child
- Extra funding for children with additional needs
- An adjustment to reflect the different costs of providing childcare in different areas of the country
'An opportunity missed'
The national average hourly funding rate will increase from £4.56 to £4.88 for three- and four-year olds and from £5.09 to £5.39 for two-year olds. The figures include average pupil premium funds.
The early years pupil premium, worth £302 per year for each child from a disadvantaged background, will remain as a separate funding stream rather than being merged with the pot of money that will be distributed according to the new formula.
However, its value will not be increased to the £1,320 available for primary school-aged children – a move that has sparked concern among headteachers.
“The opportunity to support [disadvantaged] children has been missed in the failure to raise the pupil premium to the same level as that for primary-age children,” said Valentine Mulholland, head of policy at school leaders’ union the NAHT.
“This is something NAHT has been consistently lobbying for, given the importance of early years in laying the foundations for education.”
Ms Mulholland said she welcomed the "move to greater consistency in funding" and "the recognition that funding must be made available to support children with disabilities and special educational needs to access this important phase of education".
Chris Keates, general secretary of the NASUWT teaching union, said: "High investment in early years education is essential. It is vital the sector gets the highest levels of support to ensure children have the best start to their education and their lives.
“The NASUWT has continually challenged the hourly funding rates and identified them as being too low. While any rise to this rate is welcome, it is unlikely that the small increase proposed will address the funding issues for early years providers."