Last week, the Department for Education (DfE) published tighter guidelines regarding financial support for Early Years providers during the COVID-19 crisis.

In what appears to have been a collective interpretation by the sector on advice meant specifically for Early Years settings it was assumed that all nurseries and other providers would be able to access the Coronavirus Job Retention Scheme, enabling them to furlough staff and cover 80% of their monthly wage, and also carry on receiving ‘free entitlement’ funding for children who are not attending their setting at the moment.

The clarification of guidance came on Friday (17^th April) via Coronavirus (COVID-19): financial support for education, early years and children’ social care. As well as examples showing where settings will not be allowed to furlough staff, this document also suggests that some providers will be unable to apply for the full amount of financial support to both the ‘free entitlement’ funding and the Coronavirus Job Retention Scheme. It states that:

No organisation should profit from the exceptional financial support available, and should therefore only access the support required. For example, organisations which continue to receive government funding should not furlough staff whose salaries that funding could typically be considered to fund, and therefore will not need access to the Coronavirus Job Retentions Scheme (CJRS).

The suddenness of this clarification and its implications has left Early Years providers confused and angry. Neil Leitch, from the Early Years Alliance voiced the sector’s concerns:

For early years providers across the country who have already struggled for years as a result of government underfunding, to be told weeks into this crisis that the support they were promised may be far less than they were led to believe is a complete kick in the teeth. What the government is proposing would have a devastating impact on childcare settings, and in the worst cases, could lead to permanent closures across the sector.

After the initial shock of Friday’s announcement, we examined the figures.

We took an example of a nursery with £50000 income per month who gain 90% of their fees through funded hours and 10% through private fees. Let’s say their wage bill is £25000 per month. They receive 90% of fees from the local authority, as usually, providing an income of £45000. If they are then allowed to furlough all staff they receive £20000 of furlough payments. The nursery has a 20% reduction in its wage bill and has received £65000 through funding and the CJRS. Breaking these figures down like this, we begin to see why the government sought to tighten guidance on a scheme whereby settings are potentially benefiting substantially, at a time when the economy as a whole is under unprecedented strain.

The issue is that the clarification came far too late. To tell settings that they will receive their funding and are able to furlough staff at the full 80% rate has led providers to make decisions that they might otherwise not have taken. They may have agreed to furlough staff on this basis, only to find that they now can’t afford to do this. Underfunding in the sector has meant that many settings were already struggling financially before this period of lockdown. They will have followed the collective interpretation of the original guidance for early years providers, but as a result of the tighter advice, may now find themselves committed to a financial course of action that will be very hard to fulfil.

June O’Sullivan, MBE, from LEYF Nurseries, writes in her blog that this comes at a time when early years educators are being asked to be on the frontline and care for vulnerable children and the children of key workers. She advised settings to reflect and take a closer look at the new document before taking any steps:

… look closely at the small print. The Government is not saying you cannot furlough staff, but is saying that the level of financial support the Government is willing to provide will now vary and the more funding a provider gets through Government funding, the less support they will be able to get through staff wages.

Tim runs a childminding business, and in the light of Friday’s changes, he looked at the decisions he has made based on what the Government promised at the beginning of the pandemic:

In my setting, I have a wage bill of approx. £6000 per month with an income of approx. £8000. Of that £8000, only £1000 (12.5%) is funded as I have mainly under 3’s who do not qualify for means tested funding. I have furloughed staff and expected their wages to be covered at 80%. However, I have all my other non-staff related expenses and am reliant on the ‘free entitlement’ funding to cover these. I have no access to business rate relief grants, as I operate on domestic premises, so if my furlough payment is reduced by 12.5%, I will have to rely on personal savings and possibly loans to make ends meet.

Looking at the figures, I can understand why the DfE has changed its mind about financial support for the sector. But I would have been in a much better position had I been able to plan from the outset, rather than now having to react with no business days’ notice before the go-live date for the Job Retention Scheme.

We are all in unchartered waters, and hindsight is a wonderful thing. With it, perhaps the DfE could have chosen a clearer path on how early years providers would be funded from the outset of this crisis. Or perhaps they could have chosen to honour the original support for the first furlough period, giving settings notice of the next furlough period, and providing time to adjust. And they could have chosen to announce their changes to the guidance earlier than the Friday before the opening of access to the Job Retention Scheme.