Hundreds of nurseries may be forced to close or lay off staff in the coming weeks, following a restriction of furlough funding for the sector.
In new guidance published on Friday night (17 April) – just three days before applications for the Coronavirus Job Retention Scheme opened today (20 April) – severe limitations were placed on access to the furlough scheme for early years settings which also receive local authority funding to provide free childcare.
This goes against earlier guidance published on 24 March, the Department for Education published which explicitly stated that ‘providers can access this scheme while continuing to be paid the early entitlements funding via local authorities’. This was backed by a letter to the sector from Children and Families Minister, Vicky Ford.
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The new guidance says that private providers should only furlough employees if:
- the employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding
- the employee would otherwise be made redundant or laid off
- the employee is not involved in delivering provision that has already been funded (free entitlement funding)
- (where appropriate) the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child
- the grant from the Coronavirus Job Retention Scheme would not duplicate other public grants received, and would not lead to financial reserves being created
It specifies that if ‘it is difficult to distinguish whether staff are funded through free entitlement or private income…then an early years provider can access the CJRS to pay the proportion of its paybill that comes from ‘parent paid’ hours'.
For example, if a provider’s average monthly income is 40 per cent from funded hours and 60 per cent from other sources, it could claim CJRS support for up to 60 per cent of its paybill.
Many nurseries and other childcare providers have already furloughed staff on the basis of the previous guidance, and they will now face a choice between paying staff not to work or making them redundant.
With half of nurseries already closed completely due to financial pressure from the loss of parents’ fees, this decision is likely to result in many childcare workers being made redundant and more providers closing, either temporarily or permanently.
Tulip Siddiq MP, Labour’s Shadow Minister for Children and Early Years, is calling on Ministers to rethink this decision and come forward with a plan to fund childcare providers through the coronavirus crisis.
‘This withdrawal of furlough funding for early years providers was buried in government guidance released on Friday night, leaving the childcare sector panicking just three days before the scheme opens.
‘Early years providers were struggling before coronavirus, and many now face an existential threat from the loss of parents’ fees in this crisis. I understand that Ministers want to ensure businesses can’t profit from emergency support, but the funding that providers were led to believe they could access was a lifeline.
The Early Years Alliance has slammed the Government for backtracking on guarantees of financial support, describing the move as a 'kick in the teeth' for the sector and warning that it is likely to lead to nursery closures and threaten the long-term viability of the sector.
Chief executive Neil Leitch said: ‘It is completely unacceptable that having given a clear and explicit assurance to childcare providers that they would be able to rely on financial support from both 'free entitlement' funding and the Job Retention Scheme during the coronavirus crisis, the government is now saying that it will be watering down this support.
'Early years businesses will have made significant financial plans and decisions based on the guidance already published, and many will have already started furloughing staff. It is simply too late for the government to start adding new caveats, conditions and limits now.
At National Day Nurseries Association (NDNA), chief executive Purnima Tanuku said:
‘This comes as a huge shock to the sector which is relying on both the Job Retention Scheme and early years funding entitlement to be able to survive this crisis.
‘Many nurseries that have remained open to critical workers’ children are doing so at a huge financial loss.
‘The Government does not appear to have early years on their agenda, which is appalling at a time when early years providers have stepped up to deliver the care that’s desperately needed for critical workers.’
Sector organisations will be meeting urgently with DfE on Monday to challenge them on their decision and the impact this will have on the early years sector.