Government allows councils to flex childcare payments to nurseries

The Government has given local councils greater flexibility over how they distribute free early years entitlements so that they can move the money from childcare settings which are closed to those that remain open for key workers’ and vulnerable children.

It says councils will be able to move around government funding for free childcare entitlements for two to four year olds in exceptional circumstances to make sure sufficient childcare places are available for those children who are still able to attend. Childcare campaigners are complaining that last-minute changes to funding are causing childcare providers significant financial problems.

The new rules come after workingmums.co.uk has received many complaints from key worker parents that they have been unable to afford to move their children from one childcare setting which has closed to another as they are still having to maintain their original places and having to pay full funding for a new place on top of that.

Many nurseries have been forced to close due to income and staffing issues during the pandemic.

The Government previously announced that it would continue to pay free entitlement funding to local authorities for all eligible children [including those unable to go to nursery because of the pandemic] throughout the coronavirus outbreak.

It says childcare businesses can also apply for other support available to small businesses, such as business rates holidays, loans and the Government’s income protection schemes, but many say they cannot access loans as they do not think they will be able to repay them.

Furloughing childcare workers

There has also been anger from childcare providers about other recent funding changes, for instance, to the rules on its Coronavirus Job Retention Scheme [CJRS]. According to updated guidance published on Friday, they can only use the portion of their salary that is not funded by early years entitlements to calculate furlough income. Furlough income is 80% of salary and many nursery workers are only paid the national minimum wage.

The Government says today’s new rules on making early years entitlements more flexible mean that any setting which sees their early entitlement funding reduced in order to fund childcare places elsewhere will be able to increase the proportion of their salary bill eligible for the CJRS.

The Early Years Alliance says this is “not an even trade”. It has already received a number of reports from providers whose local authorities are reducing the level of funding being given to settings who are temporarily closed in order to offer additional funding support to those who are open to key worker families and vulnerable children.

Neil Leitch, chief executive of Early Years Alliance, said: “It is absolutely unacceptable for the government to continually move the goalposts for the early years sector at the last minute.

“The Department for Education explicitly stated weeks ago that it expected local authorities to pass on early entitlement funding ‘as normal’ to all childcare providers, and nurseries, pre-schools and childminders will have rightly budgeted on this basis.

“While we, of course, recognise the desire of government and local authorities to do all they can to support providers to stay open for key worker families and vulnerable children, this should not be at the expense of providers who have closed, given that many have had no choice but to take the difficult decision to do so.

“While the government says that providers set to lose ‘free entitlement’ funding as a result of this change can now benefit more from the Job Retention Scheme, this isn’t an even trade as support via the Job Retention Scheme only applies to a provider’s wage bill and is capped at 80%.

“With many settings still reeling from the government’s U-turn on Friday, this latest change is just another blow to a sector doing its best to support local families however they can in incredibly difficult circumstances.

“Once again, we urge the government to rethink this decision and urge that all providers are able to access the support they were originally promised”.

The Government has also announced that providers who are still open will be given greater flexibility in meeting some of the requirements in the Early Years Foundation Stage (EYFS) framework during the pandemic. In addition it is relaxing staff qualification requirements to allow flexibility around staffing in recognition of the challenges facing employers whose staff may have to remain at home.

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