Pre-school Education: Finance

(asked on 25th January 2021) - View Source

Question to the Department for Education:

To ask Her Majesty's Government what assessment they have made of the gap between funding rates and delivery costs for early years providers.


Answered by
Baroness Berridge Portrait
Baroness Berridge
This question was answered on 8th February 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 further £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.

In the 2021/22 financial year, we will increase the hourly funding rates for all local authorities by 8p an hour for the entitlement for 2 year olds and, for the vast majority of areas, by 6p an hour for the entitlement for 3 year olds and 4 year olds. 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 2021.

During the COVID-19 outbreak, early years settings also have access to a range of business support packages including the Coronavirus Job Retention Scheme. Attendance at childcare has been affected by the COVID-19 outbreak, but we saw attendance rise over the autumn term.

The Department for Education carries out its own regular research on the cost of delivering childcare. The 2019 provider finances report is published here: https://www.gov.uk/government/publications/providers-finances-survey-of-childcare-and-ey-providers-2019.

The provider finances report includes data on the following:

  • total cost and total income of delivering childcare
  • variation in unit costs (an approximate measure of the average cost per child per hour for all children in the setting) and staff hourly pay
  • patterns in parent-paid hourly fees and additional charges for parents

The 2019 survey of childcare and early years providers also includes information on the costs of providing childcare: https://www.gov.uk/government/statistics/childcare-and-early-years-providers-survey-2019.

Reticulating Splines