Nurseries which fail to fully open during lockdown risk being financially “punished” by new government guidance on under-5s education, ministers have been warned.

Labour hit out after HuffPost UK discovered several councils have interpreted the new guidance on the 2021 Early Years Census 2021 to mean that cuts in funding could occur if not enough children attend their nursery this week.

The census is due to take place this Thursday, but local authorities have emailed head teachers to advise them to keep nurseries fully open to all parents in order to avoid official cuts in their headcount, itself linked to funding.

The Department for Education issued updated guidance on the census last week, which makes clear that it will take into account children not present because their parents have kept them off school, who are isolating or because of staff shortages due to the pandemic.

But in a little noticed move, it also suggested that any nursery that decided to restrict its current intake, for example just to children of key workers or vulnerable children, would have their numbers counted accordingly.

Barnet Council in London is among several who issued an urgent message to heads over the weekend warning them that if their nursery failed to fully open this Thursday there would be consequences.

In an email, passed to HuffPost UK, the council’s education director wrote “these changes do not apply to settings that restrict attendance only to vulnerable and critical worker children; in those cases, settings will only be able to claim funding for children who actually attend”.

“What it means for schools is that you need to communicate to parents that the setting is open with places available to all children on roll, subject only to any restrictions arising from the impact of coronavirus on the setting.

“You can place a limit on numbers if you need to for operational, health and safety reasons, and clearly you will want to prioritise places for vulnerable and critical worker children, but you should make clear that other children may attend as well subject to any overall restriction on numbers.”

Shadow early years minister Tulip Siddiq said: “Punishing early years providers for limiting attendance during lockdown, is putting providers in an impossible position and risks undermining the government’s stay at home message.

“These funding changes could force nearly 19,000 nurseries, pre-schools and childminders to close within six months, which would be a devastating outcome for working families, early years workers and the life chances of young children.

“The government must urgently rethink these funding changes and provide targeted support to providers, or risk decimating the early year’s sector.”

Neil Leitch, chief executive of the Early Years Alliance, said: “Those early years providers who have taken the difficult decision to either temporarily close, or limit the number of children attending their settings, due to their own concerns about the spread of the virus will understandably feel incredibly concerned that they are essentially being financially penalised for doing so.

“No setting should have to choose between their safety and their sustainability. Given the government hasn’t provided any clear evidence on the science behind the decision to keep nurseries and childminders open, hasn’t made home testing kits available to private and voluntary providers, and has yet to prioritise the early years for phase 2 vaccinations, it is grossly unfair to place such pressure on providers.”

When the issue was raised in the Commons, children’s minister Vicky Ford said: “We will continue to monitor the situation very closely and to see if other furlough support is needed.”

Many in the early years sector believe that funding should be based on pre-Covid attendance levels, rather than based on this January’s number of children in nursery in the middle of the third wave of the virus.

A survey carried out by the Early Years Alliance in November found that 25% of the 75,000 childcare providers believed that they would cease to be viable within six months if the government change their approach to early years funding next year.

Barnet council’s email warns: “Please note that the local authority does not have discretion to fund settings other than in line with national guidance. 

“Furthermore, the funding paid to the local authority for early years settings is in line with the same DfE guidance, so it would cost the authority millions of pounds that it does not have to fund settings for places based on pre-covid levels given that it will not be funded by the DfE on that basis.”

Dr Mary Bousted, joint general secretary of the National Education Union, said: “There are less than 400 maintained nursery schools left open in England. Many private nursery settings closed last year, and a significant number say they don’t expect to remain open for long without urgent Government support.

“Last year, the Government maintained funding at pre Covid-19 levels and kept the sector afloat despite the costs and loss of income caused by Covid-19. Insisting that their funding now changes to current occupancy levels will push many providers over the cliff-edge. There is a real danger that the Government’s plans will fatally damage the entire early years sector before the end of lockdown. ”

A Department for Education (DfE) spokesperson said: “Keeping nurseries and childminders open will support parents and deliver the crucial care and education for our youngest children. Current evidence suggests that pre-school children (0<5 years) are less susceptible to infection and are unlikely to be playing a driving role in transmission. 

“We have issued advice to support early years settings for census week. Children should be counted if they’re attending as usual and our advice helps guide providers and local authorities on how to complete the census accurately and consistently, including in situations where children are temporarily not in attendance for reasons including illness, self-isolation and where settings are temporarily closed. Providers should contact their local authority for guidance where they are unsure.”

When asked directly if school nurseries which failed to open fully would lose out financially, the department said: “We will be closely monitoring both parental take-up of places and the capacity and responses of providers, and will keep under constant review whether further action is needed.”

The DfE points out that children could still be counted on the census if they were ill, self-isolating due to other family members or classmates, as long as the child has access to the school.

Any nursery temporarily closed due to staff shortages from shielding, isolation or illness would also be given special consideration.