Thank you for contacting me about early years funding and the impact of Covid-19 on the sector.
Early years providers have been able to welcome back all children since the summer. However, I recognise that the period of closures will have had a big impact on nurseries, pre-schools and childminders and so I am pleased that the Government has acted swiftly to support them. In March, the Chancellor confirmed that local authorities will continue to receive full funding for the free entitlements for two-, three- and four-year-olds. I hope this has provided reassurance for early years providers.
Wider support made available for individuals and businesses will also have benefitted childcare providers, including a business rates holiday; business interruption loans; the Coronavirus Job Retention Scheme; and help for the self-employed. Further details of support available for childcare providers are available here: https://www.gov.uk/government/publications/coronavirus-covid-19-early-years-and-childcare-closures/coronavirus-covid-19-early-years-and-childcare-closures#funding.
I strongly believe that early years are crucial to giving every child the best start in life. I therefore welcome the doubling of free childcare for working parents of 3- and 4- year-olds and the introduction of tax-free childcare. More than 850,000 disadvantaged 2-year-olds have also benefited from 15 hours of free childcare since it was introduced.
In order to realise this ambitious expansion, a fairer funding system for early years providers was introduced in 2017. The previous system had been based on historic expenditure, leading to significant variations in funding for local authorities. The new Early Years National Funding Formula ensures that funding is allocated fairly, transparently and on a sustainable basis.
I am also encouraged that in April, all local authorities saw an increase to the hourly funding rates for two-year-olds and an increase in the vast majority of areas for three and four-year-olds. Ministers are planning to spend over £3.6 billion in 2020-21 on the early education entitlements.
The Government continues to support families with their childcare costs. The Chancellor announced at the Spending Review a £44 million investment in 2021-22, for local authorities to increase hourly rates paid to childcare providers for the Government’s free childcare entitlement offers. This will pay for a rate increase that is higher than the costs nurseries may face from the uplift to the national living wage in April.
These changes have created a fairer system that better provides the affordable and high-quality childcare needed to give children all over the country the best opportunity to reach their full potential.
Thank you again for taking the time to contact me.
