IFS says that new census data will result in “significant” drop in government spending
By Rachel Lawler
The Institute for Fiscal Studies (IFS) says the today’s Early Years Census will reduce government spending on childcare “significantly”.
Under new issued last week, providers are asked to complete this term’s Early Years Census based on the number of children registered for a place – including those whose families have chosen to keep them at home during the ongoing lockdown.
The Department for Education says that providers that can “provide evidence” of increase attendance during the spring term will be a “top-up” on their January 2021 census – up to 85% of attendance levels for January 2020.
Low take-up
In a new ‘’ published today, the IFS describes this approach as one that both “ignores any implications of the pandemic” for take-up of funded childcare offers and “assumes that current take-up represents the ‘new normal’ for the rest of the year”.
This is despite the DfE’s own statistics revealing that current take-up of funded places is at just 50% of expected levels.
The IFS argues that the local authorities and providers most hurt by this decision will be those that see take-up quickly recover to normal levels and where demand for funded childcare places is highest.
Costlier to rebuild?
The IFS said: “The risk that the government faces in tightening the funding environment now is that some otherwise-viable providers will go bust, and it will be costlier and more difficult to rebuild this capacity later on than it would have been to support it to stay open.”
Christine Farquharson, senior research economist at the IFS, commented: “Local authorities have a duty to ensure that there are sufficient childcare places in their local area, so in areas where take-up grows quickly over the coming months, it could be them who are left to pick up what would usually be the government's tab. This comes at a time when many local authorities are experiencing a great deal of financial pressure and when many parents are reliant on childcare to enable them to continue or return to work."
Further support needed
Neil Leitch, chief executive of the Alliance, said: "The IFS is absolutely right to criticise the approach that the DfE has taken to early years funding. While basing this term's funding on registered children is undoubtedly preferable to restricting funding only to children actually attending at a time when the public is being told to stay at home, it still falls well short of funding providers at pre-pandemic levels, particularly for those providers who normally enjoy a huge rise in new registrations in January.
"Similarly, the decision by government to limit any 'top-up funding' where demand for places increases throughout the term to 85% of January 2020 attendance levels appears to be completely arbitrary, and the IFS is right to warn that this could place significant financial pressure on providers at a time when they are most in need of support.
"It's clear that government must go further in terms of financial support if it is ensure that the early years sector can remain viable over the coming months. We urge it to do so sooner rather than later."