Parents set to pay the price as childcare providers struggle to deliver 30 hours, survey shows

Parents in England face rising childcare costs and a squeeze on places as a result of government underfunding, a new survey from leading early years organisation the Pre-school Learning Alliance has warned as the Department for Education launches its flagship ’30 hours free childcare’ policy.

A survey of around 1,400 nurseries, pre-schools and childminders, carried out in August 2017, found that, as a result of the 30-hour scheme:

  • 49% of childcare providers plan to increase how much they charge for additional (non-funded) hours as a result of the scheme
  • 52% plan to make changes to what they charge for goods and services, including:
    • introducing or increasing charges for meals and snacks (37%)
    • introducing or increasing charges for trips (20%)
  • 42% don’t feel confident they have enough places to meet demand
  • 38% don’t think they’ll be sustainable in 12 months’ time.

Around three-quarters (74%) of childcare providers say their current funding rate is less than the cost of providing a place, citing an average shortfall of 18%.

The 30 hour ‘free childcare’ scheme, one of the government’s flagship policies, has been beset with problems over recent months, with significant technical issues affecting Childcare Service, the online system parents have to use to sign up for the 30-hours and tax-free childcare schemes, resulting in thousands of parents being unable to sign up for these offers.

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

“As one of the government’s flagship policies, the launch of the 30-hours offer should have been a day of celebration. Instead, all we have is a policy in chaos.

“The government’s total refusal to tackle, or even acknowledge, the fundamental problem of early years underfunding has left providers across the country struggling to find ways of delivering the offer that won’t force them out of business. As a result, parents who expected 30 hours of ‘free childcare’ to take up when and how they wanted, are now facing additional fees and charges and either unexpected restrictions on when they can take up their places, or a struggle to find places altogether. This is a direct consequence of the complete mismanagement of this policy and it is unacceptable for government to continue to turn a blind eye to the situation it has created.

“We cannot wait for this problem to solve itself. Every week we’re hearing of more and more parents struggling to find places that actually suit their childcare needs. Every week we’re hearing of more and more childcare providers being forced to shut down as a result of the 30 hours. This simply cannot continue.

“It’s time for the government to step up, admit it got this wrong, and fix the mess that it has made. Otherwise it will be parents and providers who pay the price.”

Provider case studies:

“We are offering 30 hour funded places because we’re concerned that if we don’t families might look elsewhere for childcare. We said that we will try it for a year until the national minimum/living wage goes up again. However, the only way we can do this is to ask parents to pay for “additional services”, which are things we have never charged for before. Additionally we have put fees up for younger children and non-funded hours. Ultimately this policy will lead to a reduction in quality and choice for parents as providers close or cut corners to remain sustainable.” 

Sarah Presswood, George Perkins Day Nursery, Birmingham

“Our setting closed at the end of the summer term. This was because of the impact of the government’s ‘free’ entitlement offer, in particular the introduction of 30 hours. Our funding was reduced from £4.44 per hour to £4.36 per hour, when our hourly costs are around £6 per hour.

“Without being able to charge supplementary fees, our traditional nursery school operation is not sustainable. I am simply not prepared to sacrifice quality of staff and staff ratios to achieve a cost target, as I do not believe this is in the best interests of the children. It is very sad that this government policy is having such a damaging effect on the diversity of childcare provision.”

Eve Wort, formerly Principal of Anchors Nursery School, Hampshire

“Like many nurseries, I have limited the number of 30 hours places I am offering. I will review this at the end of this term and if the loss is too great, I will have to stop offering them completely. This has also impacted the number of 15 hour places I can offer.

“The main issue for us is the funding. Even if you only take into consideration the national minimum/living wage and staffing ratios, the margins are extremely tight and not realistically do-able. On top of that, I’ve also got to cover business rates, utilities, admin, cleaning and equipment – the list is endless. Why should a reputable business have to ask for donations to make up the shortfall from this poorly thought-out and poorly funded policy?”

Karen Simpkin, Managing Director, Sunflower Children’s Centre, Sheffield 

“It has always been our ethos to provide high-quality, affordable and flexible childcare, but the 30 hours offer will mean that we have to compromise on some of these aims. We are only offering the funding for five hours in the afternoon, so parents will have to pay for the morning session at our usual hourly rate. We have also increased our rates for two-year-olds as well as for any additional non-funded hours. We have to do this to remain financially viable. We are not being greedy, we just need to cover our actual costs in order to have a sustainable business model and the current level of funding does not support that. In 21-years working at this pre-school, I have never known such a financially difficult period.”

Jane Jones, Mulberry Bush Pre-school, Surrey

EDITOR NOTES

Survey results

The Alliance ran an online survey from 3 August to 23 August 2017, which received 1394 responses, as below:

Does your current funding rate cover the cost of delivering a 30-hours place? 

Yes: 25.88%

No: 74.12%

Are you planning to place any restrictions on what days of the week and/or times of day parents can access the 30-hour entitlement? 

Yes: 37.19% 

No: 44.90% 

Undecided: 17.91%

Will the way you offer the 30 hours differ for parents only taking up funded hours versus parents taking up additional hours and/or paying for extras goods and/or services? 

Yes: 20.91% 

No: 61.19% 

Undecided: 17.90%

Are you making any changes to how much you charge for non-government funded hours as a result of the 30-hour offer? 

No, no changes: 50.04% 

Yes, we are planning to increase fees for non-funded hours: 49.45% 

Yes, we are planning to decrease fees for non-funded hours: 0.51%

Are you making any changes to charges for additional goods and services as a result of the 30-hour offer? (Respondents could select more than one option) 

No, no changes: 47.65% 

Yes, we are planning to introduce/increase charges for meals and snacks: 36.98% 

Yes, we are planning to introduce/increase for nappies: 8.63% 

Yes, we are planning to introduce/increase for trips: 19.56% 

Yes, we are introducing/increasing charges for other goods or services: 25.28%

Do you feel confident the number of 30-hours places you plan to offer will be enough to meet demand? 

Yes: 58.16% 

No: 41.84%

As a result of the introduction of the funded 30 hours by the government on 1 September, do you believe your business will be sustainable in 12 months’ time? 

Yes: 62.13% 

No: 37.87%

Points of note

  • Government funding only covers this for 38 weeks of the year (i.e. during term-time). The ‘free’ entitlement is actually 1140 hours of childcare per year, meaning that if a parents wants to access funded childcare for 52 weeks of the year, they can only take up 22 hours per week – and have to pay for any additional hours.
  • Government funding only covers the cost of delivering early years care and education, not additional goods and services such as food and trips. In the past, many providers absorbed the cost of these optional extras; however, many are now introducing or increasing the (voluntary) fees for these services as a result of underfunding. In July 2017, the Department for Education amended its guidance on delivering the 30 hours to state that parents can “expect to pay for any meals offered by the provider alongside their free entitlement [and] other consumables or additional activities offered by the provider, such as nappies or trips.”
  • The government often cites an average funding rate of £4.94 (previously £4.88) in relation to the 30-hours. However, this is the average funding rate given to local councils, not childcare providers.
  • Both today’s survey and a previous Pre-school Learning Alliance Freedom of Information Act request to all local councils in England put the average funding rate to childcare providers at £4.27 per child per hour – and in reality, this varies considerably from area to area, and provider to provider, with some providers receiving less than £3.60.

    An Alliance Freedom of Information request found that, in 28% of local authority areas in England, average provider funding rates have increased at less than the rate of inflation over the past five years.
  • In November 2014, five months before the Conservative Party announced their 30-hour pledge, then-early years minister Sam Gyimah said at a the House of Lords Affordable Childcare Committee oral evidence session: I am not sure that providers necessarily want to deliver 25 hours of state subsidised childcare, because it limits their ability to offer other childcare that may come to them at a higher rate, to be brutally honest. The increased cost of that is quite enormous. Going from something like 15 hours to 25 hours would cost an extra £1.5 billion at least.” (source: http://www.parliament.uk/documents/lords-committees/affordable-childcare/Affordable-Childcare.pdf)
  • The evaluation of the 30-hour pilot scheme found that childcare providers in the trial tended to see “higher delivery costs and lower profits”: around a third of providers that took part in the trial saw their costs increase, while four in 10 saw their profits decrease.

For further comment, or to interview an Alliance representative, please contact:

Emma Caldwell

Pre-school Learning Alliance

T: 020 7697 2598

E: emma.caldwell@pre-school.org.uk

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ABOUT THE ALLIANCE

  • The Pre-school Learning Alliance is the largest voluntary sector provider of quality affordable childcare and education in England.
  • Through direct provision and its membership of 14,000 nurseries, sessional pre-schools and parent and toddler groups, the Alliance supports over 800,000 children and their families in England. The Alliance also develops and runs family learning programmes, offers information and advice, runs acclaimed training and accreditation programmes and campaigns to influence early years policy and practice.