Failing to invest in MNS is a false economy.  The stopgap solution of Supplementary Funding for MNS was never designed to be a long-term solution and it is not the answer to making MNS viable.  By 2022-23, according to the Department for Education, the percentage of MNS in deficit had risen to 32.5% compared to 18.2% in 2016-17, and much higher than any other part of the school sector.  The extent of underfunding is demonstrated by the fact that the total amount of deficit grew from £4m to £24m in that time, as income per pupil remained flat while increasing for the rest of the schools sector.  Supplementary funding was benchmarked against 2016-17 levels of local funding, but was not increased in line with inflation and was linked to numbers of children on the universal 15 hours, which penalises MNS for delivering the government’s flagship 30 hours policy, the disadvantaged 2-year-old offer and the new extended entitlements.  A new model is long overdue.

Funding for MNS must be set at a rate sufficient to allow them to meet their statutory obligations, including employing a headteacher and qualified teachers, a QTS SENCO and having admissions policies that prioritise the most vulnerable children.  The reality is that often does not even cover core staffing and premises costs, forcing MNS to seek other forms of income where they can.

A rescue package to reduce the pressure on MNS would involve:

• ensuring any form of supplementary funding for MNS covers all government-funded hours, not just the universal 15 hours for 3- and 4-year-olds.
• addressing the inconsistent approach to business rates in the current system, and ensuring that like all other schools, the net effect on MNS  budgets is zero.
• ansuring that MNS are fully funded to support all the children with SEND on roll, including children of statutory school age who remain at the MNS when no primary or special school place can be found for them (these children may have the most complex needs but are not properly funded as they currently fall between early years and school funding systems).

Longer term reform must include:

• a review of the additional funding rate needed by MNS to cover their costs and whether this should be linked to hours or a lump sum, or a hybrid.
• mandating local authorities to fund their MNS to provide a permanent core of SEND provision (eg an assessment centre or specialist provision) so that MNS can retain specialist staff expertise.  This will allow them to act as specialist EY SEND hubs in their localities.
• a targeted programme to eliminate historic deficits where schools are demonstrably viable under a revised formula, to ensure the historic under-funding does not jeopardise the continued operation of MNS.

Ideally a solution to MNS funding issues would be integrated with addressing the underfunding of the whole early years sector by ensuring that

• the hourly rates for all entitlements should be sufficient to cover actual costs, most urgently to address the significant inadequacies of the 3-/4-year-old funding
• funding should be much more heavily weighted towards disadvantaged children through raising EYPP to the same level as pupil premium in primary schools and increasing the disadvantage component of the Early Years National Funding Formula to an equivalent level to the additional needs factor in primary schools
• adequate funding should be in place to support children with SEND, and the processes to obtain it should be quicker and less onerous, with the emphasis shifting to reporting.  There should be a guarantee of high needs block funding for the early years for those with the most complex needs, alongside reformed SENIF and DAF funding.
• funding should be provided for Free “School” Meals in nursery and children’s should be entitled to a free meal in nursery, regardless of the type of setting they attend, not only if they are in a school as at present.

Addressing these issues would reduce the additional amount needed by MNS.

Adequate funding for maintained nursery schools, and a programme of expansion into areas of disadvantage where there is currently a dearth of provision would pay for itself in terms of higher quality provision leading to children’s improved outcomes in relation to education, health and social costs over the life course.