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News and Insight

Questions Over Government Funding Not Reaching Providers

As part of the package of measures to support the childcare sector during the Covid-19 crisis, the government in England agreed to continue funding local authorities at pre-Covid rates, regardless of the number of childcare places actually taken up. This funding arrangement was expected to continue until the end of the year when it would be reviewed in line with the circumstances at that time. However, a freedom of information request from the Early Years Alliance on 19th August this year has revealed that 17% of the 120 councils who responded to their survey are not paying these funds forward to childcare providers at the rates they were before the pandemic.

Government guidance does state that local authorities should pass the funding on to early years providers, but it does not absolutely require them to. According to the FOI request responses, not all councils are implementing the government’s advice, and some are only partially doing so or have yet to make a decision. With many in the sector facing financial difficulties, sector voices are raising concerns that their businesses may not recover if funds are not reaching them. In response, the government has said that local authorities should only take a different approach from that set out in the guidance if they have a good reason to do so, and clearly communicate this to providers.

In other funding news, the government has reported a £1.7 billion underspend on its Tax Free childcare programme. This initiative, that was the brainchild of the Coalition government over seven years ago, has struggled to achieve penetration amongst parents, despite representing up to a £2000 discount on an annual childcare bill. What will happen to the unspent funds is unclear, but campaigners from the childcare sector have made it clear they will not be pleased if it is diverted away from the industry.

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