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The government has announced a minimum hourly funding rate of £4.30 for all local authorities in its response to the consultation on early years funding changes.

 

The move, which cost the Department for Education (DfE) an extra £30m per year, will mean that no local authority will receive less than £4.30 per hour from government when the early years national funding formula (EYNFF) comes into effect in April 2017.

 

In its response to the consultation, the government confirmed that it would proceed with plans to introduce the formula, which will see local authority funding rates calculated based on local staff and premises costs, and the number of children with additional needs in the area. Plans to force councils to implement a universal base rate for all provider types by 2019/20 are also going ahead, as is the introduction of a minimum pass-on rate of 93% to all local authorities (increasing to 95% in 2018), although the DfE will now consider council appeals to opt out of this requirement "in exceptional circumstances".

 

The DfE also confirmed it will limit the amount of funding channelled through supplements to 10%, although plans to introduce efficiency and '30-hours' supplements have been scrapped, with supplements for quality and English as an additional language taking their place.

 

Commenting on the news, Alliance chief executive Neil Leitch welcomed the minimum hourly funding rate as a positive step in the right direction, but stressed that there is still much to do to ensure the sustainability of the sector. He said: "...we are still in a situation where the early years funding rates that local councils will receive next year will remain stagnant until 2020, while business costs will continue to rise. This is not sustainable and must be addressed if the government is to ensure the sector can survive in the long term.

 

"As such, 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."