Mayor John Biggs and Councillor Danny Hassell have written to Secretary of State for Education Gavin Williamson MP urging the government to extend a funding lifeline for early years providers who face a financial cliff edge in January.

During the pandemic, early years providers have seen a significant decline in demand for places but remain largely ineligible for business support packages as they have remained open.

Since March 2020, the DfE has been block-buying Free Early Education Entitlement (FEEE) places based on what providers’ income would normally be. This created certainty within the sector and has enabled provision to continue, particularly for keyworkers and vulnerable children, despite significant reductions in take up for places.

In Tower Hamlets provision is mainly made up of many small, single-site providers which are less resilient to the downturn in demand and face closure if government support doesn’t continue into 2021.

John Biggs, Mayor of Tower Hamlets, said: “Early years providers in Tower Hamlets face a crisis next year unless the government commits to continuing the current funding arrangements into 2021. These are viable providers which provide an invaluable service to our residents and the government must ensure the sector remains intact once we get through the worst of the pandemic.”

Cllr Danny Hassell, Cabinet Member for Children and Schools, said: “I have been contacted by many people running early years provision in Tower Hamlets and there is desperation within the sector as they feel forgotten and are struggling to stay afloat. The government can’t withdraw support at such a crucial time and expect these businesses to survive when demand has fallen off a cliff.”

 

Wording of the letter:

We are writing to express our concern about the funding arrangement for early years providers from January 2021.

As you’ll be aware, early years providers have seen attendances decline markedly since the onset of the COVID-19 pandemic which has resulted in a significant drop in income.

Many operators within the sector are largely ineligible for the government support packages, such as the furlough scheme or the business support grants, as they have remained open but are operating under conditions of reduced demand.

The early years landscape in Tower Hamlets is primarily made up of many small, single-site providers and few large chains. These small providers are understandably less resilient to the downturn in demand as they do not have the financial buffers of many of the large providers.

The Department for Education’s initial response has been to block buy Free Early Education Entitlement (FEEE) places based on income from an equivalent non-COVID term. This created certainty within the sector and has enabled provision to continue, particularly for keyworkers and vulnerable children, despite significant reductions in take up for places.

We’re therefore very concerned with your current proposal to end the current funding regime and revert to “follow the child” funding from January 2021. Simply put, if the current model is not maintained into next year, we face the prospect of large-scale closures of early years providers throughout Tower Hamlets and across the country.

For example, a 32-place nursery may only be taking 8 children at the moment – but can still afford to pay their 4 staff (1:8 ratio) with DFE block buying of places. If they are funded for only the 8 children attending from January, they will clearly not be viable.

We have been contacted by many people running early years businesses and there is significant desperation within the sector as they feel like forgotten business which are struggling to stay afloat.  Providers also tell me that keeping the upper threshold of £150,000 of the 30 hours FEEE effective for the whole of this financial year ending on 5 April 2021 supports only the very wealthy.  This inconsistency puts smaller local childcare providers further at risk as high earners do not tend to be their main revenue source. It is these smaller providers who are doing most to support your government’s social mobility agenda of getting parents into work.

With this in mind, we would urge you to look again at the decision to stop the block buying of early years places which has been in place since March 2020.

This policy has enabled many small businesses to remain viable in otherwise extremely challenging conditions and, if continued while the COVID vaccines are rolled out, it should also mean the sector is largely intact once we can return to some form of normality.

With January now just a few weeks away, we’re sure you can appreciate that those working in the early years sector urgently need clarity and assurance about the future so we’re calling on you to look again at your proposals and continue the block buying of places into 2021.

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