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The Government has announced an extra £30m to support the introduction of a new minimum rate of £4.30 an hour in the new early years funding formula.
This means childcare providers will have at least £4 an hour to fund the doubling of free childcare from 15 to 30 hours from September with average hourly funding rates rising from £4.56 to £4.94.
The Government says the new funding will make for a fairer system, with children attending a private or voluntary setting receiving the same basic level of funding as a child in a nursery class in a primary school.
The funding will be made up of a base rate, plus additional funding for disadvantaged and disabled children and those with English as an additional language. There will be £615 a year for every child who is eligible for money from the disability access fund and funding will be adjusted to reflect the different costs of providing childcare in different parts of the country.
Local authorities will have to fund at least 93% of the cost of places for three to four year olds in 2017-18, increasing to 95% after that.
The Government says 80% of local authorities will see an increase in funding and that any cut will be no more than 10%.
The announcement comes after a consultation exercise on early years funding. An early years formula was supported by the majority of respondents. However, the Government is not going ahead with a proposed efficiency supplement or with a supplement for providers who deliver the extra 15 hours for three and four year olds.
Neil Leitch, chief executive of Pre-school Learning Alliance, said: “While increased funding is undoubtedly welcome, it is important not to confuse ‘more money’ with ‘enough money’. For many providers, the difference between the cost of delivering ‘free entitlement’ places and the funding received from government remains significant, and unless this gap is closed – as opposed to narrowed – the problems facing the sector will remain.”
The Family and Childcare Trust said the Government should start gathering information on the cost of providing high quality provision to inform funding rates in future years.
Megan Jarvie, Head of Policy and Public Affairs at the Trust, said: “Improving the quality of early education is not just about how much funding providers receive per child, but is also about the support that providers receive from local authorities – for example, training and development for their staff, and being able to draw from multi-disciplinary support when a child or family needs it. While the principle of more funding reaching the frontline of delivery is positive, it is important to recognise and fund the vital role that local authorities play in driving up quality locally. We welcome the additional flexibility for local authorities to ensure the supply of free places and would urge ministers to make sure that local authorities can continue to support high quality integrated provision for the most disadvantaged children.”