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Councils cautious over free childcare funding increase

Councils have welcomed government proposals to increase the hourly funding rate delivering 15 hours of free childcare to three- and four-year-olds – but are concerned that the increase will not be enough with the government planning to double its early years provision.

The government has also committed to double its current offer of free childcare for working parents of three- and four-year-olds from 15 hours a week to 30 hours a week from September 2017.

A new funding formula announced last week by education secretary Justine Greening MP includes a new minimum funding rate of at least £4.30 per hour, enabling local authorities to pay providers at least £4 per hour.

While 80% of local authorities are expected to see increases under the new formula, councillors worry that the increase will still be insufficient to accommodate the planned 30 hours a week.

Cllr Richard Watts, chair of the LGA’s Children and Young People Board, said: “Both councils and childcare providers are under severe financial pressures, which will continue as measures like the national living wage push up staff costs. We are therefore pleased that the government has committed to increasing the hourly rate for providers delivering 15 hours of free childcare to three- and four-year-olds.

“[However] councils remain very concerned that the increase in funding will not be sufficient to secure delivery of these additional 15 hours to all parents who wish to access them.”

Campaigners welcomed how the extra funding would help nurseries, but emphasised the importance of councils supporting providers in driving up the quality of childcare that parents receive.

Anna Feuchtwang, chief executive of the National Children’s Bureau, commented that free childcare does not just help parents to go to work but plays a “vital role” in improving children’s early development, making high-quality services paramount.

“We are pleased to see that the government is encouraging local authorities to raise standards in childcare with a discretionary quality payment and we urge them to go further and create a strategy to ensure the early years workforce has the right skills to do the best job possible,” Feuchtwang added.

The Council for Disabled Children, the umbrella body for the disabled children’s sector, especially praised Greening’s announcement to support young disabled children with a new Disability Access Fund of £12.5m and SEN inclusion funds for local authorities.

The Council said that although the funding was not substantial for individual children, it had “significant and symbolic importance” in highlighting the right of disabled children to be treated equally by providers.

Philippa Stobbs, its assistant director, argued: “We think the Inclusion Fund will help settings to meet the needs of a wider range of children and will help to improve progress for our youngest children.

“But we want to see the impact of this funding evaluated fully and taken into account in Ofsted inspections. This will help us understand if the extra money is enabling early years settings to provide a suitable service for all children and families.”

The government’s plans to introduce a universal basic funding rate have not been universally highly regarded, with London Councils raising concerns that it may cause childcare providers to lose out if they have higher running costs. But the government has said that there will be a funding floor to ensure that no authority will see a reduction of more than 10% as a result of the formula.

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