Children: Day Care

(asked on 15th December 2020) - View Source

Question to the Department for Education:

To ask the Secretary of State for Education, what assessment he has made of the effect of the minimum wage increase on the childcare sector; and if he will make it his policy to increase the per child funding rate for the (a) 16 and (b) 30 hours childcare entitlement.


Answered by
Vicky Ford Portrait
Vicky Ford
This question was answered on 23rd December 2020

The government continues to support families with their childcare costs. My right hon. Friend, the Chancellor of the Exchequer announced on 25 November a further £44 million investment in 2021-22.

We can now also confirm that in 2021-22 we will increase the hourly funding rates for all local authorities by 8p an hour for the 2 year old entitlement and, for the vast majority of areas, by 6p an hour for the 3 and 4 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 are also increasing the minimum funding floor - meaning no council can receive less than £4.44 per hour for the 3 and 4 year old entitlements.

The small number of local authorities who have been protected from large drops to their funding rate as a result of the ‘loss cap’ will have their 2020-21 hourly funding rates for 3 and 4 year olds maintained in 2021-22. 2 of these authorities will see an increase to their hourly rate as they come off the loss cap in 2021-22.

In 2021-22, the average hourly funding rate for a 3-4 year old for the 15 hours universal entitlement in England will be £4.91 and the average hourly funding rate for a 2 year old in England will be £5.56.

Throughout the COVID-19 outbreak, we have monitored the health of the early years market through continual contact with early years sector organisations through regular meetings and working groups. We have ensured that early years providers have been able to access all the support available by continuing to fund the free childcare entitlements and via the package of additional support provided by the government, which includes Coronavirus Job Retention Scheme (CJRS,) business rates relief, income support and job retention schemes.

We have also updated the CJRS guidance, so that all providers who have seen a drop in their overall income are able to furlough any staff, so long as they were on payroll on or before 30 October, and aren’t required for delivering the government’s funded entitlements. Providers should consult the full guidance on the CJRS scheme before submitting a claim. Childminders may use the Self Employment Income Support Scheme. The sector has also benefitted from business rates holidays and business loans.

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