Calculations from About Early Years, a research programme run by data company Ceeda, has highlighted that the Government’s revised guidance on furlough claims is based on flawed methodology.
This is because it has used the principle that the combination of continued early years funding from the Dedicated Schools Grant (DSG) and receipt of the Coronavirus Job Retention Scheme (CJRS) effectively ‘double-funds’ labour costs.
Early years settings will now only be able to claim for staff wages according to the proportion of their income that does not come from public funding for ‘free’ hours.
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Ahead of the pandemic, About Early Years had flagged up that childcare providers were facing a funding shortfall of £824 million, with over one in four operating at a loss and 78 per cent struggling to fill vacant posts.
Its new paper says that if all DSG income is offset against CJRS claims, this implies that public money pays for labour costs only, when it is actually to pay for the whole delivery of a childcare place. DfE research indicates that staff wages account for 73 per cent of costs on average.
This approach means that the adjusted furlough claims will result in the loss of around £170 million in financial support for March to June 2020, which is lost protection for 31,900 jobs – a tenth of sector jobs.
About Early Years is calling for adjustments to CJRS claims to be based on 73 per cent of DSG income rather than 100 per cent as in the new guidance.
It says that the full impact is likely to be far wider than these predictions as financial plans put in place to manage the crisis are put into disarray.
Dr Jo Verrill, managing director of Ceeda, said: ‘A flawed approach to calculating vital financial support further penalises a sector central in the battle to save lives and rebuild the country. This crisis is throwing into sharp relief the impact of withdrawing early years provision for families and the economy. Urgent action is required to protect this vital infrastructure going forward.'