Last reviewed 30 January 2017

From September 2017, funding for three- and four-year-olds will increase from 15 hours per week to 30 hours per week (38 weeks per year) for children from working families. Liz Hodgman, Childcare Consultant, explores what these changes will mean for provisions.

This new funding is optional for provisions and there is no penalty for a provider to opt out and continue to deliver the 15 hours funding only. However, before we look at what this means for your provision, let’s take a look at how the funding is being distributed to the local authorities.

Funding formula

This extension to government-funded childcare sees the introduction of a new formula for the Government to calculate how much early years funding each local authority will receive. The Early Years National Funding Formula (EYNFF) has been calculated to reflect the costs of childcare within each area and the local needs. It is based on a base rate (£3.53 per hour) plus an additional needs factor multiplied by an area cost rating. The additional needs factor includes levels of deprivation, English as an additional language (EAL) levels and special and additional needs. Therefore, each local authority will have completely different funding.

Local authorities can also receive the following other sources of funding, aside from the EYNFF:

  • the early years pupil premium

  • transition support for maintained nursery schools moving to the new system

  • disability access (funding to help providers make adjustments to their setting to support disabled children)

  • funding to support quality and expertise within the early years field.

The Government has calculated that, on average, through EYNFF the rate will be £4.71; however, it has also introduced a minimum funding rate of £4.77 per hour. Added to the anticipated 17p per hour from additional funding, the average rate is now predicted to be £4.94 per hour. It is important to remember that this is the funding local authorities receive, not the rate calculated for the providers.

The Government is introducing some changes to the way local authorities calculate the rate for provisions. It will continue to use a single funding formulae (base rate plus supplements), however it will not be permitted to use different rates for different types of providers. So whether you are a private, voluntary and independent (PVI), maintained nursery or primary nursery class you will receive the same universal base rate, although supplements may vary.

Local authorities will be limited as to the amount of funding they can use as supplements (10%). The supplements can be:

  • deprivation (a compulsory supplement)

  • rurality/sparsity

  • flexibility

  • quality

  • English as an additional language (EAL).

They are also required to consult locally on the funding formula, agreeing a central spend by 28 February, ready for implementation in April 2017.

Additional funding to support children with special educational needs and disability (SEND children) within early years provision will be through a new disability access fund and local inclusion funds. A child will need to be in receipt of disability living allowance and be taking up some or all of their funded early years entitlement to be eligible for a one-off payment of £615 per year to their provision. If childcare is split between provisions then it will be paid to the main setting as nominated by the parent. Providers will need to identify children who are eligible and use a parent declaration form (template to be published shortly).

The local special educational needs (SEN) inclusion fund will be used to support children who have lower or emerging SEN.

Who can access the 30 hours?

While the 15 hours funded childcare remains universal, the 30-hour offer does come with criteria.

  • Each parent (if a dual-parent family) must earn the equivalent of 16 hours per week at the National Living Wage (NLW). For those under 25, the national minimum wage will apply.

  • They must earn less than £100,000 per year.

The minimum threshold for applicants relates to money earned rather than hours worked. So, for example, a parent might work just 10 hours per week but if he or she earns the equivalent of a person working 16 hours on the NLW, or more, he or she is still eligible.

Other points to note are as follows.

  • Parents who are self-employed, on zero hours contracts and those on sick or parental leave are also eligible (subject to meeting the criteria for the funding).

  • If one parent is employed but the other has substantial caring responsibilities or has a disability, he or she will be eligible.

  • For parents who are separated, the criteria is based on the parent with whom the child normally lives. If a parent has a partner (through marriage, civil partnership or residing together) then the criteria applies to that partner too.

Checking eligibility

Parents will be able to check their eligibility and apply through an online application form on HMRC’s website. Once parents have successfully applied they will receive a code which they will need to present to their chosen provision. Providers will need to check through an online eligibility checking system that the code is valid and then book the child’s place.

Providers who are unable to allocate places to funded children are expected to refer them to their local authority to support them in finding an alternative provision.

Parents are expected to reconfirm their eligibility every three months. Fines of between £300 and £3000 can be made if parents provide false information regarding their eligibility. If a child is no longer eligible then the provision will be required to continue to provide the 30 hours care, funded by their local authority for a “grace period”. This period of time will be set by the Government and apply across the country. Children will remain entitled to their 15 hours free provision and if their provision was previously divided between providers they can choose which provider to remain with or continue to split their 15 hours funding.

If a parent’s circumstances change and their child becomes eligible for the 30 hours funded childcare the local authority is expected to support the family to find a suitable childcare provision as soon as possible, it must be during the term they become eligible or no later than the start of the next term.

How can it be delivered?

Like the 15-hour offer, the 30-hour funding scheme is optional and provisions will not be penalised if they select to opt out. They can continue to offer the 15 hours universal free childcare. For some provisions, for example those located in community spaces, Church Halls, etc and unable to provide the full extended hours, they may provide part of the 30-hour offer. For example 20 or 25 hours per week.

Parents also do not have to take up the full 30 hours, providing they are eligible they can take up to the 30 hours funded.

The current arrangements whereby the 15 hours do not have to be taken over 38 weeks of the year will also apply for the 30 hours funded childcare. The universal offer is 570 hours per year and the 30-hour offer is 1140 hours. This enables providers to deliver an offer over an extended period of time, for example 48 weeks of 23.75 hours.

Providers that are open for less than 38 weeks of the year must inform parents that they are not receiving their full entitlement and that they will not be able to make up their hours by doing longer hours when the provision is open.

From September 2017 when the new funding starts, provisions will be able to deliver their funded childcare service from 6am in the morning until 8pm at night. The Government has restricted that the session should be no longer than 10 hours per day. There is no minimum session length.

Parents can split their funding entitlement across provisions, but again the Government has limited this to no more than two within any one day. Parents can use as many different providers as they chose during the course of a week but the Government has asked parents to be mindful of the impact of multiple different providers on their child.

Provisions must be delivering funded places to children during the census week in January as funding is based on this data.

Additional charging

The 15 and 30 hours of funding only provides for the education and care of the children and doesn’t cover additional items such as drinks, meals, nappies or outings or additional services such as music or dance lessons. While a provision is free to charge parents for these services, they must not make the additional charges a condition of the funded childcare. Parents must be able to chose if they wish to participate with the additional services and consumables, however the Department for Education (DfE) is very clear that children should not be disadvantaged if they do not take them up. The DfE has also confirmed that the charging of deposits for funded places is not permitted, for either of the types of funding.

Actions for provisions

Prior to 28 February 2017

  • Respond to your local authority’s consultation on the single funding formula.

Prior to September 2017

  • Consult with parents using the provision regarding the likely uptake of additional hours.

  • Obtain the universal funding base rate from your local authority once agreed and review against costs and previous rates of funding.

  • Review the provision in terms of budget, children, staffing and capacity to inform decision re viability of offering 30 hours funded childcare. Consider flexible options or reduced offer or remaining at offering 15 hours per week. Consider opening over school holidays if a term-time only provision and if necessary discuss access to space and costings with landlord.

  • Review relevant policies and procedures to include the new 30-hour funding. These may include the admissions policy, application form and charging policy. It may be necessary to review waiting list for places if a busy provision and remove the requirement for a deposit (if currently charged).

  • Train staff on how parents can access the funding, criteria, etc.

  • Consider providing online access to parents to check eligibility and apply.

  • Promote offers using a number of mediums, signage (banners outside provision) website, social media and newsletters.

  • Plan the provision’s curriculum so that additional services, such as outings or activities that incur additional costs do not disadvantage funded children if their parents do not wish/unable to pay for them. Develop the curriculum to meet the needs of the children who may now be attending for a greater number of hours per week.

  • For provisions that have previously only offered sessional care, consider how children can rest and if necessary sleep if they are attending for additional hours.

  • For provisions that have previously offered sessional care consider how meals will be provided or children’s packed lunches be stored appropriately. How will appropriate eating spaces be provided?

September 2017

  • Implement the new funding structure.

  • Develop a diary system to remind parents to recheck their eligibility every three months. Include a reminder in newsletters and on social media.

  • Ensure the local authority is kept informed of any vacancies as they arise as they will be able to signpost newly eligible funded children to your provision.

Prior to September 2018

  • Review budget forecasts and make amendments if required to incorporate monthly funding from the local authority.