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30 hours update: FAQs on the free childcare extended entitlement

The Childcare Act is now law, and from September 2017, 3- and 4-year-olds of working parents in England will eligible for 1140 hours of government-funded childcare per year – the equivalent of 30 hours per week over 38 weeks of the year. The Department for Education is currently consulting on certain aspects of how the scheme will be delivered. PACEY has produced new FAQs on the extended entitlement summarising what we know so far.

Who will be eligible for the 30-hour free childcare extended entitlement?

The extended entitlement is available to 3- and 4-year-olds of working parents. To qualify, each parent (or the sole parent in a single parent family) will need to earn, on average, at least the equivalent of 16 hours on the national minimum wage per week (currently £115.20 per week for over 25s), and no more than £100,000 per year. Self-employed parents and parents on zero-hours contracts will be eligible if they meet the average earnings criteria.

Families where one parent is not in paid employment (or neither parent works) will usually not be eligible for the additional hours. There are exceptions for parents who are on parental, maternity, paternity, adoption or sick leave. Parents who are studying or in training will not be eligible unless this is combined with paid work which meets the minimum average earnings threshold.

However, parents will be eligible where one parent is in receipt of benefits relating to caring responsibilities or has a disability and the other parent is working. Single parents who are disabled or have substantial caring responsibilities will not be eligible.

Parents will apply for both the extended entitlement and the Tax-Free Childcare scheme through a joint online system being developed by HMRC, as the eligibility requirements for both schemes are the same. Parents will have to declare that they expect their earnings to fall within the required threshold either over the next quarter or the current tax year. Parents who make inaccurate or dishonest declarations can be fined between £300 and £3000.

Local authorities will be expected to check children’s eligibility at key points throughout the year.

The Government has estimated that around 390,000 3- and 4- year olds will be eligible for the full 30-hours entitlement.

All 3- and 4-year-olds – and the 40% most disadvantaged 2-year-olds – will remain entitled to 15 hours of early education per week during term time, regardless of the employment status or earnings of their parents.

What will happen if a parent suddenly becomes ineligible – will they lose their childcare place immediately?

No. There will be a grace period to enable parents to retain their childcare place for a short period if they have become ineligible for the extended entitlement. The Government is currently consulting on how this grace period will work in practice. It is proposing that a child who becomes ineligible in the first half of the term or quarter (depending on what system the local authority uses) will retain their childcare until the end of the term or quarter. A child who becomes ineligible in the latter half of the term or quarter will retain their childcare until mid-way through the following term or quarter. 

For local authorities operating on a termly basis, the proposed arrangements would work slightly different for the summer term. If a child became ineligible half-way through the term, they would retain their place until the end of the term. However, if they became ineligible in the latter half of the term, they would retain their place until the start of the following term in September.

The Government is also proposing that local authorities have the discretion to extend the grace period in exceptional circumstances, for example if the child’s parent is the victim of domestic violence and has left their job and home to escape the situation.

If you have any views on the proposals related to the grace period, we urge you to respond to the consultation or email PACEY with your comments.

Which providers can deliver the extended entitlement?

Any provider on the Ofsted Early Years Register can choose to register with their local authority to deliver the extended entitlement, including childminders, day nurseries, playgroups, pre-schools and nursery schools. In addition, funded places can also be taken up by primary schools offering early years provision and childminders registered with an Ofsted-registered childminder agency.

No providers will be forced to deliver the entitlement if they do not wish to.

The Government is consulting on proposals to allow parents to take up their funded hours with up to three different providers.

How much will providers get paid for delivery the extended entitlement?

The Government has announced that the national average rate paid to childcare providers for delivering government-funded childcare from 2017 will be £4.88 for 3- and 4-year-olds, including the Early Years Pupil Premium (EYPP). For 2-year-olds, the national average rate will be £5.39.

As these rates are only national averages, providers may find that the actual rate in their area will be higher or lower than these.

The rates were set following the Government’s Review on the Cost of Providing Childcare, which formed the evidence base for the Autumn Statement 2015 and Spending Review.

The new funding rates will come into effect in 2017.

I’ve heard the new average rate announced includes the Early Years Pupil Premium (EYPP) – what does that mean?

The national average rate for 3- and 4-year-olds includes the Early Years Pupil Premium (EYPP). The Department for Education has said that EYPP accounts for around 5p an hour of the average rate, implying that the national average rate without EYPP is closer to £4.83.

Two year-olds are not eligible to receive the EYPP, therefore the new 2-year-old rate does not include EYPP.

Since April 2015, early years providers have been entitled to claim the additional funding known as EYPP if they provide the free entitlement for disadvantaged 3- and 4-year-olds who meet certain criteria. EYPP currently amounts to £300 per year (53p per hour) per child. The Government has said that there will be no changes to EYPP funding or criteria.

If these are just national average rates, when will we know the actual rates providers will get paid for delivering the extended entitlement?

A new national funding formula for early years will be introduced in 2017-18 to ensure that funding is transparently and fairly distributed between different types of providers and different parts of the country. The Government has said it wants local authorities to be able to pay providers a sustainable rate and ensure that as much funding as possible reaches the front line.

A public consultation will be launched in spring/summer 2016 on this new national funding formula, including on the transitional arrangements for the local authorities who will be most affected. It is not yet clear when individual local authority funding rates will be available.

How can the Government afford to offer this additional funding during a time of austerity?

The Government is investing an extra £1 billion per year by 2019-20 in the extended entitlement. This includes nearly £300 million per year from 2017-18 for an increase to the national average rate paid for the 2-, 3- and 4-year-old entitlements.

Critics, including Opposition MPs and peers and the Institute for Public Policy Research, argue that the scheme is substantially underfunded.

When can the extended entitlement be provided?

The primary purpose of the extended entitlement is to allow more parents to work, and the Government is currently consulting on a number of proposals to ensure funded places are delivered more flexibly in the future. It wants parents to be given the choice of a ‘stretched offer’ so that the free hours can also be taken up outside of term time, as well as on weekends.

It is also proposing that the minimum free entitlement session length be extended to three hours for provision delivered between 9am and 3.30pm (up from 2.5 hours currently), and removed for provision delivered before 9am or after 3.30pm. It is proposed that the maximum funded session length remain at 10 hours per day, but that local authorities be permitted to fund provision between 6am and 8pm (currently it can be offered between 7am and 7pm).

Local authorities will also be required to ensure that providers and parents are aware that providers cannot restrict the times that funded places can be taken up in order to charge parents for additional hours.

The Government is proposing that parents be able to take up their funded hours with up to three different providers.

If you have any views on when the entitlement should be able to be provided, including thoughts on the barriers to more flexible provision, we urge you to respond to the consultation or email PACEY with your comments.

It’s not worth my trouble to offer funded places at the moment due to issues such as delayed payments and red tape. Is anything being done to address these issues?

The Government has said that it would like to increase the number of providers – and childminders in particular – offering funded places. In an effort to do so, it is currently consulting on proposals that would encourage local authorities to pay providers more promptly and regularly (ideally monthly) and sign up to the Prompt Payment Code. To cut down on red tape, it is also proposing that local authorities use a national, standardised model agreement as the basis for their agreement with providers. If you have any views on the payment system or on the national model agreement (and what it should contain), we urge you to respond to the consultation or email PACEY with your comments.

Are there any planned changes to ratio requirements?

The Government has repeatedly stressed its commitment to retaining the existing adult: child ratios set out in the Early Years Foundation Stage (EYFS).

It has also confirmed that the staff qualification requirements and indoor space requirements will remain the same for all 30 hours.

What are the Early Implementation pilots and where will they take place?

In September, eight local authorities will begin piloting the extended entitlement to selected 3- and 4-year-olds in their area. The so-called ‘early implementers’ are: Wigan, Staffordshire, Swindon, Portsmouth, Northumberland, York, Newham and Hertfordshire.

In addition to the early implementers, 25 additional local authorities have been designated ‘early innovators’. They have been given a smaller pot of funding to look at innovative ways of making childcare accessible to as many parents as possible. Their experiences will be used to support the full rollout in 2017.

The 25 early innovators are:

  • North West: Stockport, Bolton, Trafford, Cheshire West & Chester, Bury
  • Midlands: Nottinghamshire, Nottingham City, Walsall
  • South West: Cornwall
  • South & South East: Hampshire, West Sussex, Medway, East Sussex, Brighton & Hove
  • London & East: Kingston & Richmond, Barking & Dagenham, Islington, Ealing, Hillingdon
  • North East & Yorkshire and the Humber: Gateshead, Bradford, Sheffield, East Riding, Wakefield, North Yorkshire.

If you live in any of the early implementer or early innovator areas and wish to be involved, we advise to contact your local authority for more information.

Will children with special needs or disabilities (SEND) be entitled to additional support?

The Government is proposing that local authorities set out more clearly what SEND support is available to providers, such as additional funding and specialist training. It also thinks local authorities should be required to provide greater clarity on the minimum level of support providers delivering free entitlement places are expected to give to families, and what legal requirements apply. As part of its consultation on the 30 hours, the Government is keen to hear from providers about what type of support they have received from their local authority around SEND, and what they need to help more children with SEND in their area access childcare.

The Government has said it be looking at the amount of funding for children with SEND as part of the consultation on the early years national funding formula later this year.

In addition, a number of the early implementers and early innovators will be looking at effective approaches to providing flexible childcare for working parents whose children are disabled as part of early implementation of 30 hours from September 2016.

Will childcare providers be entitled to any additional support?

Earlier this year, local authorities were invited to bid for £50 million of capital funding to support the creation of more early years places. The Government estimates that around 45,000 new places will be needed.

In addition, the childcare business support grants scheme is expected to be extended to support the set-up of new childcare businesses.

The Government has also committed to publishing a workforce strategy which will review progression routes within the sector to determine what more can be done to enable good quality staff to maximise their potential and forge a successful career within early years. PACEY has published a policy briefing which makes a series of practical recommendations around workforce development.

How will parents find out about the extended entitlement?

The Childcare Act requires local authorities to publish more detailed information on childcare in their area. The Government is consulting on how often and which format(s) local authorities should be required to update and publish information about childcare for parents. If you have any views, do respond to the consultation or email PACEY.

What other support will be available to families to help with childcare costs?

Working parents who are eligible for the 30 hours of free childcare will additionally receive support with childcare costs of up to £2000 per child through the Tax-Free Childcare scheme, which will be rolled-out gradually from February 2017.

Parents on low incomes will get up to 85% of their childcare costs reimbursed through the childcare element of Universal Credit, which is gradually being rolled out across the country over the next two years.

PACEY will be on hand with practical advice and guidance for childcare providers on how they can support families to participate in all of these schemes.