Early years funding change blocked
A powerful education body has voted to block a plan by Lancashire County Council to withhold £6m in funding that it currently gives to nurseries and pre-school providers - amid warnings that some of them could be forced to close as a result.
A powerful education body has voted to block a plan by Lancashire County Council to withhold £6m in funding that it currently gives to nurseries and pre-school providers – amid warnings that some of them could be forced to close as a result.
The authority last month proposed retaining three percent of the cash that the government sends the county’s way to cover the cost of free childcare entitlements.
However, the Lancashire Schools Forum has concluded that County Hall should continue passing on the full amount it receives to early years operators in its area.
The county council is one of only three local authorities nationwide to take that approach, but has warned that it is “no longer sustainable” to do so – claiming that a top-slice is necessary in order to “maintain and enhance service delivery”. The vast majority of councils keep hold of a proportion of their government funding allocation in order to deliver central support services to individual early years providers.
Lancashire County Council is now considering the results of a consultation into its proposal to do the same, which closed last week. It has the option of appealing against the schools forum’s decision by referring the matter to the Education Secretary for a final ruling.
The proposed change in the county council area – which excludes Blackpool and Blackburn with Darwen – has drawn criticism from the operators who would see their direct funding cut by an average of more than £5,700, according to the authority’s own figures. Childminders would be, on average, £992 worse off, while other private, voluntary and independent (PVI) sector providers would lose £9,972.
Feedback from the early years sector presented to a meeting of the schools forum included a claim that the removal of funding from frontline service providers would be “a disaster”, leading to “more settings closing”.
In its consultation, the Reform UK-run county council noted that the current cost of so-called ‘traded services’ that providers have to purchase for themselves – such as training – can cost up to £424 and acts as “a barrier” to smaller operators. This would be removed under the suggested overhaul, with such services being delivered for free by the local authority, using the retained cash.
However, one provider asked how taking a potential £10,000 from operator budgets in the process was supposed to help when many had struggled to afford a much smaller financial outlay – with another describing the proposals as “counterintuitive”.
It was also suggested that the changes would perpetuate “low rates of pay, high turnover of staff and demoralisation” in what was described by one operator as an “underfunded and struggling” sector.
In proposing the retention of three percent of early years funding, the county council said the shift would deliver a raft of benefits, including improving outcomes for vulnerable children and supporting the delivery of “high-quality care” across the board – but especially in “disadvantaged areas”.
County Hall said the move would also give early years operators access to the best curriculum resources and training for staff to help boost the number of children meeting their “early learning goals”.
In a joint statement, the chairs of the Lancashire network of the National Day Nurseries Association (NDNA), Sharon Fenton and Philippa Perks, said: “Lancashire County Council has always wanted the best outcomes for their children, so this proposed three percent cut potentially puts that at risk.
“More than 95 percent of Lancashire’s nurseries are good or outstanding, but we don’t know if we could sustain that level of quality with less funding.
“One member told the schools forum meeting that a three percent cut would result in 400,000 hours of face-to-face child contact lost and put the equivalent of 200 jobs at risk.”
In response to the schools forum vote, Lancashire County Council’s cabinet member for children and families, Simon Evans, told the Local Democracy Reporting Service (LDRS): “No decisions have been made and we will share the outcome once cabinet has considered the consultation and the feedback from the sector.”
Tim McLachlan, NDNA chief executive, said the organisation was “delighted” by the schools forum vote in Lancashire.
“This is a sensible decision which recognises the financial pressures that early years providers are under and the detrimental impact any reduction in funding could have on early education and care settings across the county.
“We hope that the cabinet of the council respects the unanimous decision of the schools forum and does not appeal to the secretary of state to overturn it.”
Local authorities have previously been able to retain up to five percent of early years funding in order to deliver central services to providers, but that figure was reduced to four percent for the current financial year and will fall to three percent from April 2026 – the point at which Lancashire County Council wants to bring in the change and withhold what would then be the maximum amount permitted.
The authority says pre-school providers have recently received a “significant uplift” in government funding, with base rates from the Department for Education increasing. However, the feedback from operators noted that Lancashire remains one of the worst-funded areas of the country for early years services because of a “flawed” national funding formula.
NURSERY NUMBERS
Six Lancashire schools have so far opened new nurseries as part of a government programme designed to improve access to free childcare places – and more are now being encouraged to follow suit.
The facilities – which can be operated by or independently of the school in which they are based – are accommodating 141 children.
It follows the completion of the first wave of a scheme pledged by the Labour Party in its general election manifesto last year.
Last month, a staged increase in free childcare – introduced under the last Conservative administration – also reached its final phase. That means eligible working parents of children aged between nine months and four years can access 30 hours of such care across 38 weeks of the year.
Asked by the LDRS whether the tally to date of new school-based nurseries in Lancashire reflected the level of interest from local schools themselves or the capacity of the first stage of the programme to deliver them, early education minister Olivia Bailey said the initiative had been “oversubscribed”.
Speaking in September, she appealed to schools in the county to make an application for funding to develop a new nursery during the second wave of the scheme, which is open until 11th December.
Ms. Bailey also said the expanded childcare offering was bringing “many benefits to families”.
“It puts £7,500 per year per child back in family finances and enables parents to maybe increase their hours at work or maybe go back to work.
“It also supports children with crucial early years skills, so that they’re ready for school,” the minister added.
The government is investing £45m in the second wave of school-based nurseries, aiming to add 300 new or expanded facilities to the total during the 2026/27 academic year, to go with the same number that it plans to deliver during the current one.