Council u-turn hits Hampshire nurseries
NDNA is calling for urgent action after Hampshire County Council failed to deliver its commitment to early years funding on summer term figures, leaving settings thousands of pounds out of pocket, with some facing shortfalls of up to 50%.
Hampshire providers were repeatedly assured that the government’s expansion grant would be calculated based on the number of children under two and two-year-olds recorded in the summer term headcount. This was due to be paid by the end of August.
On the eve of receiving the grants this was changed without warning, and the council instead used the EYE claims from the spring headcount as the basis to allocate the grant. This meant significantly fewer children were in nurseries at the time.
The council told providers this was “to meet timeframes set by the DfE”. This decision has resulted in the loss of almost half of the funding they had allocated for and urgently needed.
Our survey responses from Hampshire private, voluntary and independent (PVI) nurseries revealed that:
• One nursery reported a £4,100 shortfall, a 45% reduction in the funding that was promised
• Another lost £2,000 (48% reduction), in funding that they had already planned to spend on a brand-new toddler unit
• A further provider reported a staggering £7,101 loss, saying it had a “major impact” on their ability to pay bills in September, when most children moved onto funded hours.
One provider expressed frustration that the council only admitted the change after payments were made and concerns from providers were raised. They felt that the council had “fundamentally stolen from us with no means of recompense”.
To make the allocation of funding even more difficult, one provider highlighted that HCC pays funding monthly, in arrears. The nursery said: “There is now a 21-day gap where more money previously came from private fees at the start of the month. With 95% of our families now eligible for the 30 hours funding, more of our revenue comes from funding, but bills still must be paid throughout the month.”
In a 2024 FOI request from NDNA, only 5% of councils reported that they paid providers up-front and 45% paid towards the end of the month, causing cash flow issues for nurseries across the country.
Tim McLachlan, Chief Executive of NDNA, said:
“Hampshire providers were told clearly that funding would be based on summer numbers. For the Council to change their tune after payments have been made, without communication, has caused shock, financial difficulties and a deep sense of mistrust.
“Our members are already grappling with rising costs, workforce pressures and tight budgets. These businesses need forward planning, and they had planned their business model around the funding they expected to receive. This could include taking on more staff, whom they will now struggle to pay.
“Losing nearly half of the expected funding means nurseries will struggle to pay bills, delaying expansion plans, and cutting back on resources for children. Parents will inevitably feel the impact through higher fees or a lack of places.”
Where is the funding?
NDNA is calling for Hampshire County Council to put this right and pay providers the difference. Our recent survey responses from Hampshire revealed that it could use some of its colossal underspends from previous years to do so.
Our research showed that more than £65 million of early years funding went unspent nationally between 2022 and 2024, with Hampshire alone reporting a £1.389m underspend in 2022-23. They also reported a £194k underspend in 2023-24 which was claimed to have been distributed to providers.
We are also pressing Hampshire over how it has managed large government grants intended for early years expansion. It was awarded £2.82m for capital funding (the largest in the country), and £2.021m for the general expansion grant.
NDNA’s call for accountability
We recommend that Hampshire County Council:
• Revisits its calculations to base payments on summer headcount data
• Uses its available underspends and grant funding to cover the shortfall to providers
• Improves its transparency and communication with settings to restore trust
• Ensures that vital government funding reaches nurseries in full.
Has something similar affected your setting?
Please get in touch with the team at [email protected]
- England
- early education
- early years
- funding
- NDNA
Similar Articles
Real Living Wage to rise by almost 7% from April
Big increase in percentage of children attending private nurseries in Scotland
