Private government briefing documents, obtained by the Early Years Alliance after a two-year FOI battle, show that early years funding rates for 2020/21 were less than two-thirds of what government officials estimated to be the true cost of ‘fully funding’ the sector.

The Alliance originally submitted its FOI request – which asked for proof that the early years funding rates announced in 2015 and implemented in 2017 had been calculated to be enough to cover the rising cost of delivering places over subsequent years – in December 2018. The Department for Education rejected this request, even after a ruling by the Information Commissioner’s Office (ICO) that the information should be released, instead appealing to the First Tier Tribunal against the ICO’s decision.

In October 2019, the DfE was ordered to publish the information it held on how the current early years funding levels in England were calculated.

Briefing documents today

The briefing documents released today by the Alliance reveal that in 2015, civil servants at the DfE estimated the cost of providing a government-funded early years place for a three- or four-year old would reach £7.49 per child per hour by 2020-21. According to independent analysts Ceeda, the average early years funding rate given to local authorities in 2020-21 was just £4.89 – a shortfall of £2.60 per child per hour, or £2,964 per child over the course of a year for children in receipt of 30-hour funding.

The document, entitled ‘Early Years Spending Review Scenarios’ and marked as ‘official sensitive’, stated that:

“There are a number of factors that could risk the sustainability of the [three- and four-year-old] entitlement – from NLW pressures to supporting children with SEND. Fully funding them all is not affordable – by 2020-21 it would be a 3-4yo rate of £7.49, and potentially cost for the uplift alone of over £2bn. We will make reforms and expect providers to become more efficient in order to reduce this cost.”

The same document also acknowledged that the introduction of the 30-hours policy was likely to result in price increases for parents, said:

“Provider costs vary substantially between age groups – primarily because of statutory ratios. Providers generally adopt a more-or-less flat pricing structure across the age phases. Currently this is possible because the free entitlement is only 15 hours. When Gvt purchases the majority of ‘cheaper’ three- and four-year-old places, it will become harder for providers to price in this way. Providers may, therefore, increase prices for younger children – potentially by as much as 30%. This could stop parents returning to work while their children are younger.”

This acceptance of inevitable price increases comes despite the fact that the document goes on to state that:

“A 10% reduction in the cost of childcare might lead to a 1.4% increase in the employment rate for married mothers with pre-school age children.”

A separate briefing note to then-early years minister Sam Gyimah, obtained as part of the FOI request and marked as ‘RE: Early Years Funding Rate Negotiations”, which has been heavily redacted, states that the total annual cost for increasing early years funding rates could be:

“… reduced to c. £500m if Ministers are content that we do not fund providers to cross-subside the privately-paid rate for children younger than 3, and instead accept that prices will rise for these children.”

Early Years Alliance chief exec, Neil Leitch, said:

“For years, the early years sector has warned that the so-called ‘free entitlement’ offer is anything but free, in the face of repeated government claims that the policy is adequately funded. These documents, which they spent more than two years trying to hide, prove otherwise.

“The early years of a child’s life are critical to their long-term learning and development – and yet ministers have been all too happy to force providers to work to maximum ratios, inevitably reducing quality, in order to save the Treasury some money.

“For so long, the government has tried to deflect the blame for rising childcare costs. But these documents prove, in black and white, that it knew that the introduction of the 30-hours policy, along with an insufficient level of investment, would result in higher costs for parents of younger children.

“Early years providers and parents have had enough of being forced to pay the price for this underfunded policy year after year. There is still time for the government to do the right thing, but at this point, the only way for it to maintain any credibility with parents and early educators is by agreeing to a full review of early years policy in this country. That means delivering the substantial investment the sector needs in the upcoming Spending Review.

“Only with fair and adequate funding will we ensure nurseries, pre-schools and childminders can continue delivering the quality, affordable care and education that children and families both need and deserve.”

The full conference line up is available here: Alliance Annual Conference 2021.