Nursuries' & Early Years Providers' Finances

Dear Constituent,

Thank you for contacting me about the financial sustainability of non-maintained early years settings.

Early years are crucial to giving every child the best start in life and I'm sure you know that there is extensive evidence to demonstrate that high-quality childcare supports children’s development and prepares younger children for school. I'm glad that all three and four year-olds, and disadvantaged two year-olds, can now access at least 15 hours of free childcare each week. This is backed by £3.6 billion of funding for 2020-21. The 2020 Spending Review (SR20) has also allocated £44 million for early years education in 2021-22 to increase the hourly rate paid to childcare providers for the Government’s free hours offers. This is on top of the £66 million increase confirmed at SR19.

As I understand it, funding rates for the early education entitlements were based on the Review of Childcare Costs, which was described by the National Audit Office as “thorough and wide ranging”. That said, I am assured that Ministers recognise the importance of keeping the evidence base on all aspects of early years sector costs up to date and that they continue to monitor the provider market closely via a range of regular and one-off research projects.

I also understand that rateable values of nursery premises in an area are taken into account in the amount of early years funding provided to local authorities for them to distribute to providers. If a non-maintained childcare and early-education provider is also a registered charity for business rates purposes it may qualify for relief too. Alongside this guidance, support is being offered to providers to help them make their businesses more financially sustainable and operate efficiently.

Thank you again for taking the time to contact me.