30 hour childcare scheme leading to parent fee increases and growing provider closure fears one year on, new Alliance and Mumsnet surveys reveal

The government’s flagship 30 hours funded childcare offer has led to additional fees and charges for nearly half of parents taking up the offer, while four in 10 childcare providers fear they may have to close within the next year as a result of the policy, new surveys conducted by leading early years organisation the Pre-school Learning Alliance and Mumsnet, the UK’s biggest network for parents, have found.

An online survey conducted by the Alliance between July and August 2018, which received 1,662 responses from nurseries, pre-schools and childminders in England, found that:

  • Four in ten (42%) childcare providers say there’s a chance they will have to close their setting in the next academic year due to the 30 hours and/or underfunding.
  • 8 in 10 (80%) say that it would have a somewhat or significantly negative effect on them if their funding rate stays the same next year.
  • Around half (48%) of providers have increased parent fees as a result of offering 30 hours, while four in ten (42%) have introduced or increased charges for additional goods and services.
  • A third (34%) plan to increase fees for non-funded hours over the next 12 months, and 1 in 5 (19%) plan to introduce additional charges.

A separate online poll conducted by Mumsnet on behalf of the Alliance, which received 1,143 responses from parents of three- and four-year-olds, found that:

  • Just under half (45%) of parents accessing 30-hours places have been asked to additional fees for non-funded hours since taking up the offer
  • Four in ten (41%) have been asked to pay for new or additional charges for goods and services
  • Three in ten (30%) have had difficulties renewing their 30 hour eligibility online

The shock findings come at the end of the first year of the national roll-out of the 30 hours offer, which launched across England in September 2017. Earlier this year, independent sector experts Ceeda revealing that the private and voluntary childcare sector is facing a funding shortfall of more than £500 million. This shortfall estimate has since been increased to £616.5 million following the publication of data by the Department for Education in June which revealed that PVI providers deliver a much-higher proportion of 30 hours places (82% of all places) than previously estimated.

In March 2018, the cross-party Treasury Committee, chaired by former education secretary and Conservative MP Nicky Morgan, for using “misleading” funding data when defending the 30-hour offer, and called on the DfE to increase early years funding rates and ensure that hourly rates are updated annually to reflect rising delivery costs.

Commenting on the survey results, Neil Leitch, chief executive of the Pre-school Learning Alliance, said:

“We have long warned that without significant increases in funding, nurseries, pre-schools and childminders offering the 30 hours would be at risk of closure – and here we are, one year into a scheme that government insists is going smoothly, with four in 10 providers saying they may not survive the next year.

“There’s no doubt that the 30 hours scheme has been popular with parents, but at a time when providers are struggling to keep their doors open, this simply cannot be the sole measure of its success. The fact is that even those providers who are technically managing to make the 30 hours work are often only able to do so by introducing or increasing additional fees and charges. Is this what the government meant when they promised parents 30 hours of ‘free childcare’? And while better-off parents may be able to shoulder these unexpected costs in the short-term, those on the lower end of the income scale – the families that the government claims to be so committed to supporting – are the ones who are likely to suffer as a result.

“Worse still, things are only going to get more difficult, with early years funding levels frozen until 2020 despite the fact that provider business costs like wages, mortgages and rents will inevitably rise over this time. How many increasingly expensive ‘additional costs’ will providers be forced to introduce, how many providers will be forced to close their doors, before government admits there’s a problem? The inescapable fact is that, as these figures show, without urgent action, the 30 hours policy is simply not viable in the long term.

Mumsnet founder and CEO Justine Roberts said:

“The idea behind giving working parents 30 free hours of childcare is, in theory, a good one. Even part-time childcare can be higher than the average UK mortgage bill, and Mumsnet users tell us it's often a real barrier when it comes to getting back to work. But any scheme needs to be backed up by sufficient planning and funding and our users are telling us this simply isn't happening.

“Given the benefits working parents bring to the economy it's not good enough that nearly half of recipients are having to pay additional fees for non-funded hours.” 

***

Comments from childcare providers:

“We are offering the 30 hours funding [and] offer one completely free place. We have had to increase our hourly rates for all parents, and fees for two year-olds are now higher than three- and four-year-olds – the first time we have ever had to do this. Parents provide a packed lunch and food for snack time. This is just keeping us sustainable at the moment, but we don't know how long this will last as the minimum wage, pension payments etc increase. The 30 hours is creating a two-tier system where only those who can afford it will be able to access early years education and those from more deprived backgrounds will not.” – Sue Shuttleworth, supervisor, St. Mary's Pre-School, Sevenoaks.

“I work with my husband so we can provide care for six under-fives a day and have 10 children on our books. This summer term, we have had six of those 10 children claiming the 30 hours which has had a fairly big impact on us. Our funded rate is almost 80p lower than our hourly fee so this difference soon adds up! We have implemented a daily meal charge of £2.50 for every family now and this just about covers the loss.” – Carmela Coady, childminder, Bournemouth

Although we have made a success/survived the first year of the 30 hours we are very worried by what the second year will mean with no increase in funding – our business rates went up 40%, our rent went up 25% and the living wage and auto-enrolment continues to rise. We haven’t put fees up for our other families (yet) because we feel it is wrong that they should be subsidising the government’s underfunding of the sector. – Sarah Presswood, nursery manager, George Perkins Day Nursery, Birmingham

“Funding is capped till at least 2020, but the mininum wage is increasing at a rate of 4.4% per annum, we are having to contribute to staff pensions increasingly year on year, and we now have to pay for compulsory training of staff (previously paid for by local council). We are small and so cannot operate with government staff-child ratios [and] we are rural and cannot employ younger, cheaper staff as they cannot travel to us. As well as our own fundraising efforts, our local community organisations are now having to donate from their funds to help us.” – Maxine Conway, chair of Blakesley Preschool Trustees, Towcester

Comments from parents

“I was really pleased when my daughter turned three and we were finally going to be awarded 30 hours free a week. At first, I was pleased that my monthly invoice was somewhat reduced, only to then receive a letter from my daughter’s pre-school a month later confirming that the scheme is causing their business financial hardship, as the amount they claim back from the government didn’t make up the difference; it left them with a shortfall each month. This has resulted in a supplement fee of £8.30 added to the day rate, which they confirmed as a food supplement fee for the each child. £8.30 per day for my child to eat! … I thought the idea of the scheme was to help parents back into work but if the pre-schools have to increase the day rates, there is no benefit to the parents.” Aimi Turnbull, parent

“My main concerns are about how it impacts on the sustainability of quality early years providers like my daughter's preschool. Because of the funding shortfall for them we were charged for lunchtimes and an extra half an hour every day – and we were asked to pay a voluntary consumables fee, so it cost more than we had originally expected and did not work out 'free'. They said they may have to close if not enough parents make the voluntary payment.” – Louise Mumcular, parent

"Following an initial positive experience with the 30 hours, we had our allocation removed as the provider would not have been able to continue operating if they had continued to support the families who wanted the 30 hours. They introduced a complex system to replace it and offer a few extra hours, but this wasn’t cost-effective while working only three days a week. For me, this is another sad indictment of how working parents are being consistently undervalued and under-supported by the government, and how promises are not being kept. With the removal of universal child benefit and the patchy success of access to 30 hours a week, it seems that we are all spending more than ever on childcare." - Chloe Matharu, parent

'Our first daughter benefited from free nursery education for 15 hours per week when she turned three in 2013. It enabled me to return to my work as a teacher part-time, but it financially nearly broke the nursery. By the time our second daughter became eligible, they were not able to offer the 30 hours when introduced, and began to operate a complicated system of charging. We were only able to afford to send our second daughter for 15 hours per week; 4.5 hours of those were free and the remaining 10.5 hour were charged at the hourly rate. We were really inconvenienced by this (I am still paying off my credit card a year later). I have heard that only one nursery in our area (and there are many) actually offers the free hours.”Anonymous parent (Mumsnet survey respondent)

 

EDITORS NOTES

ABOUT THE ALLIANCE

  • The Pre-school Learning Alliance is the largest and most representative early years membership organisation in England. A registered educational charity, it also provides high-quality affordable childcare and education to support children and families in areas of deprivation throughout the country.
  • The Alliance represents 14,000 member settings and supports them to deliver care and learning to more than 800,000 families every year. We deliver family learning projects, offer information and advice, produce specialist publications, run acclaimed training programmes and campaign to influence early years policy and practice.
  • The Alliance website is www.pre-school.org.uk
  • The Alliance’s Fair Future Funding campaign currently has around 5,400 practitioner supporters and over 1,000 parent supporters.

 

ABOUT MUMSNET

  • Mumsnet is the UK’s largest network for parents, with over 14 million* unique visitors per month clocking up over 128 million page views. It has a network of over 10,000 influencers. It regularly campaigns on issues including support for families of children with special educational needs, improvements in postnatal and miscarriage care, and freedom of speech on the internet. *Source: Google Analytics

 

FULL SURVEY RESULTS

Pre-school Learning Alliance survey of 1,662 early years practitioners based in England. The survey ran from 17 July to 24 August 2018. The data is not weighted.

How would you describe your provision?            

Full daycare nursery/ pre-school: 32.8%

Sessional nursery/ pre-school: 37.0%

Childminder: 26.3%

Maintained nursery school: 0.7%

Primary school nursery class: 1.5%

Out of hours club: 0.2%

Other: 1.6%

 

Does your setting offer the 30 hours scheme to any parents?

Yes: 88.3%

No: 11.7%

 

[The following questions were asked to those respondents offering the 30 hours only]

Is your hourly funding rate for three- and four-year-olds more or less than the cost of delivering places (including any supplements)?

More than the hourly cost of delivering places: 16.7%

Less than the hourly cost of delivering places: 63.5%

The same as the hourly cost of delivering places: 19.7%

 

Is your current funding rate for three- and four-year-olds more or less than it was last year (including any supplements)?

More than last year: 39.6%

Less than last year: 17.9%

The same as last year: 42.5%

 

Have you increased your parent fees for non-government funded hours as a result of offering the 30 hours?

Yes, fees have increased: 48.2%

No, fees have stayed the same: 50.8%

No, fees have decreased: 1.0%

 

Have you introduced or increased any charges for additional goods/services as a result of offering the 30 hour offer?

Yes: 42.5%

No: 57.5%

 

[If yes] What charges have you introduced or increased? (please select all that apply)

Charges for meals and snacks: 78.4%

Charges for nappies: 13.3%

Charges for trips: 41.2%

Charges for other goods or services (please specify): 45.7%

 

Have you had any parents wanting to take up the 30 hours at your provision who you did not offer a 30 hour place to due to a lack of capacity?

Yes: 21.3%

No: 78.8%

 

Have you had any parents wanting to take up the 30 hours at your provision who you did not offer a 30 hour place to because they want to take up funded hours only (i.e. they didn’t want to pay for additional fees or goods/services)?

Yes: 15.5%

No: 84.5%

 

Approximately what proportion of the 30 hours places you offer are delivered “completely free” (i.e. parents do not pay for additional hours, or goods/services)?

None: 28.7%

Less than 25%: 16.5%

Between 26% and 50%: 7.5%

Between 51% and 75%: 5.8%

Over 75%: 11.1%

100%: 30.5%

 

What changes, if any, to how you offer the 30 hours are you expecting to make over the next 12 months? (please select all that apply)

Stop offering 30 hours: 4.1%

Reduce the number of 30 hours places you offer: 12.3%

Increase the number of 30 hours places you offer: 6.0%

Introduce additional charges for parents: 18.6%

Increase additional charges for parents: 17.7%

Increase fees for non-funded hours for all parents: 33.7%

Increase fees for non-funded hours for parents who are not eligible for funded hours only: 9.8%

No changes planned: 39.6%

Other: 4.7%

 

How would you describe your current financial position?

Operating at a loss: 24.1%

Breaking even: 49.1%

Making a profit: 26.9%

 

[If operating at a loss] What do you expect your financial position to be in the next 12 months?

Operating at a greater loss: 49.3%

Operating at a smaller loss: 29.2%

Breaking even: 17.8%

Making a profit: 3.7%

 

[If breaking even] What do you expect your financial position to be in the next 12 months?

Operating at a loss: 20.3%

Still breaking even: 72.1%

Making a profit: 7.5%

 

[If making a profit] What do you expect your financial position to be in the next 12 months?

Making a greater profit: 22.2%

Making a smaller profit: 61.1%

Breaking even: 14.1%

Operating at a loss: 2.7%

 

What financial impact has offering the 30 hours had on your provision so far?

Significant positive effect: 3.0%

Somewhat positive effect: 18.5%

Somewhat negative effect: 29.5%

Significant negative effect: 16.7%

Neither a negative or positive effect: 32.4%

 

Have you considered closing your setting(s) in the last academic year?

Yes: 28.8%

No: 70.3%

I have already closed my setting(s): 0.9%

 

[If yes] Was this related to the 30 hours?

Yes, 30 hours played a significant role: 50.6%

Yes, 30 hours played a small role: 34.9%

No, it was completely unrelated to 30 hours: 14.6%

 

[If considered closing; unrelated to 30 hours] Was this related to a lack of adequate funding?

Yes, a lack of adequate funding played a significant role: 43.9%

Yes, a lack of adequate funding played a small role: 34.2%

No, it was completely unrelated to a lack of adequate funding: 22.0%

 

[If already closed] Was this related to the 30 hours?

Yes, 30 hours played a significant role: 66.7%

Yes, 30 hours played a small role: 0.0%

No, it was completely unrelated to 30 hours: 33.3%

 

[If already closed; unrelated to 30 hours] Was this related to a lack of adequate funding?

Yes, a lack of adequate funding played a significant role: 0.0%

Yes, a lack of adequate funding played a small role: 50.0%

No, it was completely unrelated to a lack of adequate funding: 50.0%

 

Do you think there is a chance you will have to close your setting(s) in the next academic year?

Yes, I have already made plans to close my setting: 1.5%

Yes, there is a significant chance: 11.0%

Yes, there is a small chance: 30.2%

No: 57.3%

 

[If any yes option] Is this due to the 30 hours?

Yes, 30 hours would be likely to play a significant role: 40.0%

Yes, 30 hours would be likely to play a small role: 43.0%

No, 30 hours wouldn’t be likely to play any role: 17.0%

 

[If 30 hours unlikely to play a role] Would this be related to a lack of adequate funding?

Yes, a lack of adequate funding would be likely to play a significant role: 66.2%

Yes, a lack of adequate funding would be likely to play a small role: 21.1%

No, a lack of adequate funding wouldn’t be likely to play any role: 12.7%

 

If your funding rate stays the same next year, what impact would this have on your setting financially?

Significant positive financial effect: 2.1%

Somewhat positive financial effect: 2.1%

Somewhat negative financial effect: 39.9%

Significant negative financial effect: 41.4%

Neither a negative or positive financial effect: 14.5%

 

How has offering 30 hours places impacted on the availability of universal (15 hour) three- and four-year-old places at your provision?

The number of universal places we offer has increased: 4.5%

The number of universal places we offer has decreased: 25.8%

The number of universal places we offer has stayed the same: 69.8%

 

How has offering 30 hours places impacted on availability of places for two-year-old funded children?

The number of places has increased: 3.0%

The number of places has decreased: 20.5%

The number of places we offer has stayed the same: 68.4%

We did not previously offer two-year-old funded places: 8.2%

 

How has offering 30 hours places impacted on availability of places children aged two and under who aren’t eligible for any funding?

The number of places has increased: 3.5%

The number of places has decreased: 16.5%

The number of places we offer has stayed the same: 74.2%

We only offer funded places: 5.8%

 

How would you describe the way you felt towards 30 hours at the time of its national rollout in September 2017?

Very positive: 11.0%

Somewhat positive: 23.6%

Neither negative or positive: 24.5%

Somewhat negative: 27.8%

Very negative: 13.1%

 

How would you describe the way you feel towards 30 hours now?

Very positive: 8.4%

Somewhat positive: 19.1%

Neither negative or positive: 23.8%

Somewhat negative: 29.6%

Very negative: 19.1%

 

How likely are you to continue offering the 30 hours next year?

Very likely: 52.3%

Somewhat likely: 34.4%

Somewhat unlikely: 7.8%

Very unlikely: 5.5%

 

[The following questions were asked to those respondents not offering the 30 hours only]

 

What financial impact has not offering the 30 hours had on your provision?

Significant positive financial effect: 8.5%

Somewhat positive financial effect: 11.9%

Somewhat negative financial effect: 16.4%

Significant negative financial effect: 11.9%

Neither a negative or positive financial effect: 41.8%

I don’t know: 9.6%

 

Do you think there is a chance you will have to close your setting(s) in the next academic year?

Yes, a significant chance: 9.6%

Yes, a small chance: 24.7%

No: 65.7%

 

How likely would you be to offer 30 hours places if your funding rate increased?

Very likely: 24.4%

Somewhat likely: 26.1%

Somewhat unlikely: 15.3%

Very unlikely: 22.2%

Don’t know: 11.9%

 

*    *    *

 

Survey of 1,143 Mumsnet users with a child born between 1st April 2013 and 31st March 2015. The survey ran from 25th July to 13th August 2018. The data is not weighted.

Are you taking up the 30 hours funded childcare offer (even if you aren't taking up a full 30 hours every week)?                                                                                                                                                                               

Yes: 52%

No, because I don't need it: 19%

No, I was unable to secure a 30 hours place: 4%

No, I need more than 30 hours and it's too complicated/disruptive to fold in the 30 hours from a different provider: 1%

No, the sessions/ times offered were too inconvenient: 1%

No, I didn't know about it/missed the application deadline: 3%

No, for another reason: 20%:

 

How would you describe your experience of taking up 30 hours so far? (% of only respondents taking up 30 hours is in italics)                                                                                                                            

Very positive: 45% (50%)

Somewhat positive: 29% (32%)

Neither positive nor negative: 7% (6%)

Somewhat negative: 14% (10%)

Very negative: 5% (2%)

 

Have you experienced any of the following while taking up or trying to take up the 30 hours offer? Please select ALL that apply (% of only respondents taking up 30 hours is in italics).           

Being asked to pay additional fees for non-funded hours: 43% (45%)

Being asked to pay new or additional charges for goods and services (e.g. lunches, consumables, trips etc): 39% (41%)

Difficulties in renewing your 30 hours eligibility: 26% (30%)

Difficulties in applying for the 30 hours online: 21% (23%)

Not being able to access your preferred childcare sessions: 8% (6%)

Your provider deciding to no longer offer the 30 hours after initially offering it: 3% (1%)

Your provider closing down: 1% (1%)

Other: 10% (8%)

N/A – I have not experienced any problems: 19% (19%)