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Pre-school Education: Finance

Question for Department for Education

UIN 167963, tabled on 12 March 2021

To ask the Secretary of State for Education, what assessment he has made of the long-term funding needs of early years education and care.

Answered on

17 March 2021

The government has supported nurseries, pre-schools, and childminders during a very uncertain time.

In March 2020, we confirmed that we would continue to pay funding to local authorities for the free early education entitlements for two, three and four-year-olds, providing reassurance and financial support for early years settings in light of decreased demand as a result of the COVID-19 outbreak. This funding continued to local authorities until the end of the autumn term at broadly the levels they would have expected to see had there been no COVID-19 outbreak.

For spring term 2021, we are funding local authorities based on their January 2021 census, but if attendance rose after the census was taken and where a local authority can provide evidence for increased attendance during the spring term, we will top-up local authorities to up to 85% of their January 2020 census level. Further guidance for local authorities, setting out details as to how the 85% top-up scheme works, together with information on our approach for funding the summer term 2021, will be shared soon.

In addition, we have supported the early years sector with financial and business support, including through the Coronavirus Job Retention Scheme and business rates relief, both of which will continue into the financial year 2021-22, as well as the Coronavirus Business Interruption Loan and the Self-employment Income Support Scheme. Further, eligible nurseries may also access the new Recovery Loans, available from 6 April 2021, as set out by my right hon. Friend, the Chancellor of the Exchequer, on 3 March 2021. The new Recovery Loan Scheme will replace the Business Interruption Loan Scheme which is due to end on 31 March 2021.

The government continues to support families with their childcare costs. My right hon. Friend, the Chancellor of the Exchequer, announced at the Spending Review a £44 million investment in the 2021-22 financial year, for local authorities to increase hourly rates paid to childcare providers for the government’s free childcare entitlement offers. Specifically, this will allow them to increase the hourly funding rates for all local authorities by 8p an hour for the two-year-old entitlement and, for the vast majority of areas, by 6p an hour for the three and four-year-old entitlement. 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.

We continue to work with the early years sector to understand how they can best be supported to ensure that sufficient safe, appropriate, and affordable childcare is available for those who need it now, and for all families who need it in the longer term.

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