FISH Special Mailout : Early Years Funding - Important Updates

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29 August 2023

EARLY YEARS FUNDING – IMPORTANT UPDATES

Introduction

The following information provides important financial updates for you to consider, which we think it is important to highlight as soon as possible, in order to help your forward business planning.  Particularly, in relation to future hourly rates for 2-year-old-entitlement funding from April 2024. 

We will also be providing opportunities throughout September via a series of provider engagement meetings to discuss this further and other matters relating to the new early year’s entitlements. Details of these meetings can be found towards the end of this update.   

Background

You will no doubt be aware that at the Spring Budget, new early years entitlements were announced which (when fully implemented) will mean working parents in England will be able to access 30 hours of funded childcare per week, for 38 weeks of the year from the term after their child turns 9 months old to when they start school. This will be rolled out in stages:

• From April 2024, all working parents of 2-year-olds can access 15 hours per week
• From Sept 2024, all working parents of children aged 9 months up to 3 years old can access 15 hours per week
• From Sept 2025, all working parents of children aged 9 months up to 3 years old can access 30 hours free childcare per week

As part of the roll out of the new entitlements nationally the Department of Education (DfE) announced investment of additional funding for the existing early years entitlements worth £204m in 2023-24 (from September 2023) and £288m in 2024-25.

On Friday, 7 July 2023 the DfE announced that for 2023-24, that the mid-year increase of the additional £204m will be distributed to LAs through a new standalone top-up grant called the Early Years Supplementary Grant (EYSG).  The new hourly rate equivalents for these increases were also provided. See fig.1

Fig.1 – East Riding rates

The conditions of the EYSG grant are yet to be issued, but the following guidance has been shared by the DfE at Local Authority briefings:

• This additional funding for local authorities to increase hourly rates paid to childcare providers for the government’s existing entitlement offers
• The DfE state the intention is that Local Authorities must pass on the EYSG in full to early years providers for each of the funding streams.
• LAs have the flexibility to determine how best to pass on this funding to their providers.
• In order to ensure that payments to providers can be made promptly, we (DfE) will not require local authorities to consult their Schools Forum but encourage local authorities to engage appropriately with their early year’s providers about the funding amounts from September
• The DfE encourage LAs to update their providers on their plans for distributing this funding in a timely manner

Off the back of these DfE briefings on the 14 July 2023 the LA sent out a communication outlining its intention to ensure all the supplementary grant funding will be passed onto providers, as per the DfE guidance.  This is still the intention, however there is now more to consider on how this is done, following on from information released as part of a new consultation which the DfE opened on the new Early Years Entitlements for 2024/25, on 21 July 2023. 

Along with these consultation questions the DfE provided illustrative data.  Within this data ‘potential’ new hourly rates were also shared.  In East Riding the ‘potential’ illustrative rate for the hourly 2-year-old-entitlement funding is shown at £7.26.  As this is an illustrative rate there is the potential this is the rate that will be finally confirmed, as well as the potential that it could end up being more or less than the £7.26 stated. In previous years, rates have usually been confirmed anytime between November and December. 

Consideration

If the Local Authority immediately distributes the full hourly rate equivalent of the Early Years Supplementary Grant (Fig.1-East Riding Rates) to all providers, the hourly rate providers will be receiving for 2-year-old funding will be £7.37 between September 2023 – March 2024. 

Based on the illustrative figures provided within the consultation, from April 2024 this hourly rate could move to £7.26 or less.  Meaning from April 2024 that there is a chance the rate could decrease by £0.11p per hour or more, particularly if a deprivation supplement becomes a stipulation, as it currently is for 3-and-4-year-old funding.  This is one of the ideas/questions being put forward within the consultation.   

In line with the limited guidance offered to date, the LA is keen to adhere to the points around ensuring providers are paid increased rates promptly.  As highlighted earlier, we are also very clear that all the Early Years Supplementary Grant (EYSG) will be made available and shared with provision over the course of the next 6 months. 

However, after discussions at senior management level based on the potential issues highlighted and along with the fact that EYSG grant conditions are still yet to be issued by the DfE, as a temporary measure it has been decided to issue the estimate payments due for the autumn term (due w/c 4^th September) for the 2-year funding rate only, based on a rate of £7.26p per hour rather than £7.37. 

This is because it was felt it was important to give more of an opportunity to consult formally with providers, as to the best and most effective way of managing the Early Years Supplementary Grant, in consideration and alongside the future conditions and formulae likely to be used for the new entitlements, going forward from April 2024.      

Next Steps

• All providers will be paid their estimates for their 2-year-old-funding at a temporary holding rate of £7.26 per hour from W/C 4 September onwards. All other EYSG increases (3&4-year-old-funding / EYPP / DAF) will be paid at the full hourly rate equivalents (Fig.1-East Riding Rates).  Once the provider engagement meetings have taken place and feedback is gathered on how to manage any remaining EYSG grant, then distribution of this will be organised accordingly as soon as is possible.
• The Local Authority is in the process of responding to the DfE consultation – Early Years Funding Extension of Entitlements. We would strongly urge that you as providers do the same and take this opportunity to respond to this consultation individually with your views and ideas.  The consultation closes on Friday 8 September 2023 Early years funding - extension of the entitlements - Department for Education - Citizen Space
• As well as responding to the consultation, senior leaders within the LA will also be meeting with and briefing senior Councillors who sit on East Riding’s Cabinet.
• Finally, if you are able, please book onto one of the following Provider engagement meetings:

Date & Time: Thursday, 14 September 2023, 7.00 – 9.00pm Venue: Tickton Grange, Main Street, Tickton, HU17 9SH

Date & Time: Tuesday, 19 September 2023, 9.30 – 11.30am Venue: Cottingham Parks Golf Club, Wood Hill Way, HU16 5SW

Date & Time: Thursday, 21 September 2023, 7.00 – 9.00pm Venue: Virtual through Microsoft Teams

You can book up to 2 places per setting. To book any of the dates above please email your details to earlyyearstraining@eastriding.gov.uk

We hope to see you in September. Thank you on behalf of Early Years, East Riding.