Heads’ and teachers’ leaders are calling for an urgent shake-up of the funding formula for maintained nurseries as a survey reveals many are struggling to cover core costs and face closure.
More than half (52 per cent) of maintained nursery schools had an in-year deficit in 2021-22, a survey carried out by the Early Education charity alongside the NAHT school leaders’ union, the NEU teaching union and Unison has suggested. This is up from 46 per cent the previous year.
One in 10 nursery schools said they broke even last year, while 39 per cent were in surplus.
The survey was sent to all 385 maintained nursery schools and received 169 responses, representing 172 schools in 74 local authorities.
A report released alongside the survey calls for maintained nursery schools to be included in the introduction of a direct National Funding Formula (NFF), in which funding allocations for individual schools will be determined centrally, without much local adjustment.
The DfE has said that it hopes to move to the full NFF before 2027-28.
However, this will not apply to maintained nursery schools, which are funded through the Early Years National Funding Formula, as well as additional funding to reflect the higher costs they face.
The report argues that the early years formula is based on “historic local funding decisions rather than actual costs or a consistent national approach”.
The direct National Funding Formula should also apply to maintained nurseries to address the “inequity of the current system”, the report adds.
It says that maintained nursery schools do not receive an annual lump sum or have the same economies of scale as a primary school.
The report also says that these nurseries are schools and have to “fulfil the same requirements as schools”, but are “repeatedly excluded from funding and initiatives offered to other schools”.
Covid impact: falling pupil rolls
Furthermore, the report says that the pandemic has led to falling numbers of children on roll, loss of parental fee income and additional costs.
Yet maintained nursery schools have not had access to many of the Covid funding streams provided to other providers and schools, such as staff cover costs and business rates holidays, it highlights.
And, while pupil numbers and income are recovering, “given the tight margins within the sector, those schools which did not have reserves, or who have now exhausted them, are at significant risk”.
The survey also suggests that further closures could take place as 2 per cent of respondents were already consulting on closure or expecting to do so imminently, while more than one in 10 (12 per cent) were in discussion about their future with their local authority.
And a fifth (21 per cent) of settings said they expected to face closure within three years on current budget projections.
The report says that to balance budgets, some settings are being forced to reduce staffing and services so much that “for some, the only teacher on site will be the headteacher”.
The report says that these cuts jeopardise the “high quality of teaching which research has repeatedly shown makes a crucial difference to children’s outcomes in some of the most disadvantaged communities in the country”.
‘Impossible to set a balanced budget’
One survey respondent said it was “impossible” to “set a balanced budget” while staying within legal ratios and statutory requirements.
The survey also found that over four in 10 respondents (41 per cent) had been able to set a balanced budget for 2022-2023 but that 44 per cent had not managed to, while 15 per cent were not yet sure if this would be possible.
Early Education’s chief executive Beatrice Merrick said the next steps in the funding reform “must include a review of the MNS supplementary funding to ensure a fair, consistent and viable formula to secure these vital schools for the future”.
Dr Mary Bousted, joint general secretary of the NEU, said it was “essential” that these settings were not lost.
Dr Bousted said that they were often located in the “most deprived areas of the country” and “provide skills and resources which support neighbouring early years settings”, but the government “remains ambivalent to their dire financial situation, and inaction is leading to further closures”.
She said that the situation was “unacceptable” and could not be allowed to carry on.
UNISON assistant general secretary Jon Richards said that nursery schools are “facing a crisis” and need a “fair, long-term funding settlement that pays staff the wages they deserve”.
