Read Children England's description of early years funding as submitted to the House of Lords Public Services Committee last year:

Early years settings have faced a uniquely precarious financial situation, as the Local Government Association describes. Childcare organisations reported well before the pandemic began that government underfunding of the early years entitlement meant they were relying on income from other fees and charges to top up funding for this provision. Whilst they were expected to remain open for the children of key workers during lockdown, and invited to re-open fully in June alongside schools, to do so was to risk failing to cover costs if paying parents didn’t send their children back to nursery, and 69,000 accordingly closed temporarily. Their financial situation as lockdown eases remains unsustainable, and a coalition of early years providers have warned the Chancellor that “10% of early years and childcare settings are unlikely to reopen after the pandemic and a further 30% are unsure of their future plans.” Figures from the Sutton Trust’s report this month are even more worrying, and indicate that it is providers in the most disadvantaged areas who are facing the most critical financial issues.
We are pleased to hear the very recent announcement of Andrea Leadsom’s review of the early years, and hope that will be a more focussed opportunity to examine in detail the problems facing early years and childcare provision. The financial fragility of the whole childcare sector, and any examination of the deep-rooted difficulties in realising the government’s free childcare offer, must grasp the fact that the roots of the problems lie in the government’s payment mechanism for childcare - the fixed hourly per capita rate per eligible child. As we have also seen in the care provider sector for children in care, such ‘spot purchasing’ is an extremely expensive way for the state to spend money on services (effectively buying in bulk, using a ‘retail’ price mechanism), and a deeply bureaucratic and ineffective way of expecting group-settings and services to be run in practice. Decent, well-resourced, flexible childcare is a vital social and economic ‘infrastructure’ investment for the whole nation, and will be especially vital to attempts to reboot local and national economies as we emerge from the lockdown and families are encouraged to return to, or find new, work. This should lead to an ambitious strategy for childcare, and children’s services more generally, as vital infrastructure investment, not just pressurised revenue spending - and the government should boldly embrace the need for long-term development and nurturing of that infrastructure, instead of short-term shopping for it, by the hour.