Does the 30-hour funding stack up?

National hourly funding rates of £4.88 for three- to four-year-olds (including Early Years Pupil Premium), £5.39 for two-year-olds and narrower eligibility criteria for the 30-hour offer were among the key announcements in the Government’s Autumn Spending Review.

Much is yet unknown about how the national rates, inclusive of administrative funds retained by local authorities, will translate into monies received by childcare providers in different parts of the country. Consultation commences in the new year on what a National Funding Formula might look like, with plans to introduce an Early Years National Funding Formula from April 2017.

Ceeda has been taking a look at the detail of the announcements and the assumptions underpinning DfE cost-modelling. We share our initial thoughts here.


The hourly rates in context

In this period of uncertainty it is helpful to place the announced rates in context so we can assess the challenges an Early Years Funding Formula will need to tackle. This can be done by looking at current distributions.

Looking first at funding rates for three- and four-year-olds, the DfE has confirmed that the EYPP element of announced rates is approximately £0.05 per hour. When this is deducted, the national rate for three- and four-year-olds will increase from £4.51 to £4.83(1).
Figure one shows how the 2015/16 national funding rate translated into monies paid to different types of provider, based on England averages. It then compares how this would look in April 2017 if local authorities distribute the new rate in the same way.

Assuming local authorities distribute the new rate in the same way as 2015/16 funds have been delegated, private, voluntary and independent providers (PVIs) can expect to receive an average of £4.27 of the £4.83 national hourly rate.