Extra £44m funding will cover living wage rise, minister says in early years debate

Speaking at the Westminster debate on 3 December, initiated by MP Steve Brine, chair of the APPG for childcare and early education, Ms Ford made the claim after hearing from MPs across the country about the fragile state of the sector which Mr Brine said is experiencing a form of ‘market failure’.

She said that the extra £44m announced in the spending review that local authorities will be able to pay to childcare providers in 2021 to 2022 to increase hourly rates for the 30 hours offer will, in turn, cover national living wage increases.

Ms Ford told MPs, ‘For the next financial year, colleagues should understand that there will be a demographic change, and as a result of falling birth rates there will be fewer children in the early years age group. Therefore, the total early years entitlement spend in 2021-22 may be less than in 2020-21.’

She added, ‘However, for 2021-22, the Chancellor has announced a further £44 million, which means that local authorities will be able to increase hourly rates paid to childcare providers for the Government’s free childcare offers. That will pay for a rate increase that is higher than the cost that nurseries may face from the uplift to the national living wage in April.’

‘Further details and information on how the money will be distributed will be made available as soon as possible,’ she said.

NDNA chief executive Purnima Tanuku said that this was an important debate at a ‘vital time’ for the sector.

She added, ‘We heard from MPs the vital examples of the reality on the ground for providers... The minister recognised the importance of the sector and promised that the funding increases for next year would cover National Living Wage increases. We will be asking the Department for Education to show its working out when the rates are published.