Ofsted new framework: when councils could withdraw funding
With the new Ofsted inspection framework in place from 10 November, NDNA has been asking the Department for Education to clarify whether councils would be allowed to withdraw funding for poor inspection results. And if so, at what level?
The Department for Education has now responded to explain that local authorities would have the power to withdraw all funding in the following two circumstances:
- If safeguarding standards are “not met”
- If the “leadership and governance” at a setting is judged as needing “urgent improvement”
In addition, councils may remove funding for the two-year-old entitlement for Families Receiving Additional Support (FRAS) if the “leadership and governance” at a setting is judged as “needs attention”. The council would need to show that there are available places at a high quality provision nearby before removing funding for these places.
Tim McLachlan, Chief Executive of NDNA said: “With an average of 80% of a nursery’s income coming from funded hours, any withdrawal of that can be crippling for a setting and lead to their closure. These powers allow councils to look at withdrawing funding but it is important that this position is not mandatory.
“We all want to see children accessing the highest quality early education and care because we know this makes the biggest difference to their outcomes. We will continue to campaign that the first action should be to support a setting to get back to where they want to be, not punish them for a change in inspection outcomes.
“Schools do not have their funding cut if they receive such a judgement, they actually receive additional support to in order to improve their quality and this principle should be applied equally across educational settings.
“We will continue to fight for equity for all providers at the highest levels of Government and with MPs.”
Now that there is no longer an overall grading for nurseries but a five-point grading scale for different areas of regulation, the issue of withdrawing funding is much more nuanced. The above relations are due to come into force from January 2026. The statutory guidance will be updated to reflect this early in 2026.
Local authorities may be updating their provider agreements as a result of these changes.
You can read more detail in the news item here Newsflash: Ofsted reform and entitlements regulations
- England
- childcare
- Department for Education
- DfE
- early education
- early years
- funding
- Inspection
- NDNA
- Ofsted
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