"We simply cannot afford to offer 30 hours of funded childcare"
Childcare providers will have to plug a massive funding gap when the new 30-hours free scheme starts in September, says nursery owner Sue Gray
Owner, Carousel Daycare Nursery
Posted on: Mon 03-Jul-17 11:39:38
(70 comments )
You're probably aware that all three and four-year-olds in England can access government-funded childcare for 15 hours per week. But you may not know that the money that the government pays providers – nurseries, pre-schools and childminders – to offer these places has, for many years, been far less than the cost of delivery, leaving those of us working in the sector struggling to stay afloat.
In fact, a few years ago, an independent report commissioned by early years organisation the Pre-school Learning Alliance found that government funding only covered the cost of four out of every five children accessing so-called free childcare – leaving providers to make up the shortfall. Often, that has meant higher fees for parents – which is why childcare costs in this country are so high.
When the 30-hour offer comes in this September, things are only going to get more difficult. According to a recent survey by the Alliance, as a result of this underfunding, less than half of providers are currently planning to offer the 30-hours, while a quarter fear that delivering 30-hours places could put them out of business.
I run a small, rural private daycare nursery in Somerset. We are purpose-built to meet all needs of children in our care, and run an on-site Forest School as well as caring for our own sheep and chickens. And we are not going to offer the 30 hours.
Our financial situation has become more and more difficult over recent years as we have had to negotiate an ever-dwindling funding pot. As a result of underfunding and government policy changes, since 2010, we have suffered losses of £16,000 per annum. So why would we sign up to the 30-hour scheme and risk making these losses even worse?
Our business costs do not remain static: we have to meet increases to minimum wage, to business rates, and to domestic services and overheads. Yet government funding has not risen to match this.
If the 'free childcare' offer is truly free, then why am I, as the owner of a childcare business, having to put in £6000 of my own personal savings just to survive the autumn term?
This means that our staff haven't had a real-term pay rise for four years, with three practitioners now on minimum wage (as this has risen to match their existing wages). Our manager is paid less than an unskilled labourer, while I, the owner, worked a 45-hour week until 2015/16 for just £6,200 – this amounts to £3.43 per hour.
We have now been forced to reduce what we can offer to retain quality, going from a 45-hour week, to just 24: three eight-hour days per week, term-time only. This is the only way we can reduce our overheads in the hope of rebuilding the business.
If we are to survive, the government needs to realise its monumental error in promoting the childcare offer as free - when in reality, providers are having to plug a huge funding gap.
If the 'free childcare' offer is truly free, then why am I, as the owner of a childcare business, having to put in £6000 of my own personal savings just to survive the autumn term? This is the only way I can ensure staff get paid, though often at minimum wage and less in my own case. This is the only way that I can cover the shortfall for parents so that they can access the 15 funded hours.
We simply cannot afford to offer 30 hours of funded childcare. If we did, we would close within two terms.
We have made every effort to fulfill the government's pledges to parents: quality staff, quality environment, home-cooked meals and an incredible outdoor learning provision. But now we are left feeling like the government has essentially high-jacked our business.
As members of the 'Champagne Nurseries on Lemonade Funding' group, we know that the majority of childcare providers are in a similar situation, and that for many, opting out is the only option.
How can this be allowed to happen?
This 30-hour 'free childcare' pledge played a huge role in the government winning the last election – and yet I believe they knew the promise would never be fulfilled. Instead, we have early-years providers being advised to charge parents for what the government has said is a free offer.
We have spoken directly to the parents at our nursery about our decision not to offer the 30 hours and all those that it will effect have stressed that it is more important that we stay open. At least they value us.
For us, supporting the Pre-school Learning Alliance's Fair Future Funding campaign is paramount to ensuring quality early-years provision continues: for sufficiency, for sustainability and, ultimately, for the economy.
The Pre-school Learning Alliance's Fair Future Funding campaign is calling for government to ensure that early-years funding matches rising delivery costs to ensure that the 'free childcare' offer is genuinely free for both parents and childcare providers.
Parents that want to support the campaign can sign up at www.pre-school.org.uk/fffparents.
For more information about the 30-hours free childcare offer, please click here.
By Sue Gray
I knew it wasn't going to work. I think anyone with a grain of common sense. Knows it was a daft idea.
To offer out free childcare. That nurseries and providers can not afford, after all. There isnt a magic money tree. Teresa Mays words not mine.
So They're expected to do it for free. What about CMs. That's their only income.
This government needs to stop making promises they can't keep.
And stop offering other peoples kindness and free for all out.
I have been saying since they proposed this that nurseries would struggle. I have heard of some asking parents to pay the difference between what is funded and the normal hourly rate which I think is fair. Still heavily funded but the provider does not suffer.
I strongly agree with the principal of free childcare for all - however it it needs to be properly and fully funded.
It's an ideal Gvmnt policy isn't it - they get to promise a small section of society what sounds like a lovely big bribe, with thousands of small businesses across the country actually expected to absorb the cost.
Of course it doesn't make sense - particularly as (if I've understood this correctly - it STILL seems incredible to me so I am still doubting the figures) couples BOTH earning up to £100 000 can claim it!!! It's not about 'being affordable' for people 'getting by' in average wage jobs or lower.
My sister owns a nursery and isn't going to be able to give these free hours out. As much as she would like to she said if she did it would ruin her and put her out of business. Whoever came up with this idea has no idea how nurserys etc work.
I have had to sign a form each year to confirm to the council that I'm not asked to pay top-up fees on the 15 free hours; is that not the case in private nurseries?
I agree with you OP; I pay more on childcare than I do on my mortgage and I know it's because the nursery needs to cover the shortfall from the existing provision of 15 'free' hours. I'm a single mum working full time, using a nursery for childcare so that I can go to work. What's the point in having free hours for people who don't really need it when it means that people who do just have to pay more? I'd prefer to have fully-funded places on the same means criteria as currently exists for 2 year-olds so that it targets the children who need that intervention the most.
This is not the case everywhere. In my dc nursery they welcome the 30 free hour funding. They don't charge over the odds per day though ( £33 a day) all you pay for free hours is lunch £2 a day and snacks £2 a week.
I am the treasurer of our village pre-school and we are only getting by by having a manager on a rate less than she'd get cleaning and staff who equally are underpaid for their skill set. The committee are all volunteers. I'm finding the work load expected on the volunteers by HMRC, charities commission, the council and Ofsted just increases and increases. I can't see anyone wanting to take over what I do when my son goes to school next year so feeling a bit trapped tbh
I agree that the offer needs to be properly funded, and nurseries shouldn't be expected to take the hit. But having had children at nurseries well before there was such as thing as even 15 hours a week funded places, I know that this isn't the only reason that childcare costs are so high, and it's disingenuous to try to claim that this is the case.
It wouldn't happen in any other industry
Why should providers have to subsidise the shortfall?
Its a shambles
Watch this short video
A brilliantly written post. Well done OP
I've said it before - I appreciate the contribution by government, and am happy to pay the difference to allow for the real costs to be covered.
I would much rather be given an annual allowance of £X/hour attended (up to 30 each week) and have it come off my bill each month.
If the 30 hour funding is meant to get people back to work rather than early education like the 15 hours then shouldn't it be across the whole year instead of term time only?
It can be across the whole year, its 22 hours a week instead of 30
I know you can spread the hours but that's not the point of the program.
15 hours makes sense as term time because it's prep for school.
30 hours is meant to be to help people back to work, which is why there is an eligibility test for both parents.
As a childminder I am finding the way we are paid in my County is financially detrimental but I don't see any other way.
From September we will be offering a total of 104 funded hours per week split over 5 children. The rate isn't the issue. The issue is we will receive 70% of just 48 hours at the end of July. The rest of the money will be paid to us at the end of October. We have to provide the care until then with no income! This is all due to the fact the council set the deadline too early for parents to get their codes and didn't take into account that the web sites would be blocked!
Good point... Regardless I am so looking forward to getting the 30 hours next year when my son qualifies as childcare costs are so extortionate where I live (day nurseries are £72 a day). I am a teacher and so is my husband and we can barely afford to pay our childcare bills each month. The whole system needs to change.
Totally agree OP. Childcare providers have been flagging up these issues since the 39 hours was first proposed but 30 hours 'free' childcare is a vote winner so nobody cares what the providers think... until they all go out of business of course .
I may have said this before:
I went spectaculy bust on Mar 16 after 2 terms when they dropped the funding from £5.06 to £3.30
Made everyone redundant, got a job in a cafe,let down all my parents
But no matter how good I am with a spreadsheet I couldn't do a 40% drop in income with rising costs
Couldn't agree more. I don't earn much but I'm proud that I pay for my child to go to a nursery where staff are paid the living wage. I've cut back in other areas. I believe the people who work so hard to care for my child and so many others deserve to earn a fair wage. It's really important to me.
"I have heard of some asking parents to pay the difference between what is funded and the normal hourly rate which I think is fair. Still heavily funded but the provider does not suffer"
This is what our nursery has done with the 15 hours for the past 10 years or more. The difference between funding and our fees is the amount that we charge for the hours that are not funded.
Our council prevent this - if we were caught we would have all funding removed
It is the fairest way tbh
I'm so sorry to read this article and I think t's outrageous. But parents are trapped in the system too - at £60 per day we have no choice but to move our DC into a nursery preschool. Wrap around care is so much cheaper than the £1255 we pay monthly even with the 15 'free' hours.
katymac that's apalling. A council should not be able to dictate to a private business how it sets its fees nor what those fees should be.
If we hadn't been able to charge for the difference, I think we would have withdrawn from the scheme - and so would many other providers in our area. The council permits providers to charge in order for it to be able to fulfil its obligation to offer the requisite number of "free" places.
We are not permitted to call the free hours a subsidy, but essentially that's what the funding is.
I find it very frustrating that due to finding space for the 30 free hours, there will now be a struggle to find space for the 2 year old funded children as they hit 3 (and who won't qualify for the 30 hours free...despite being deemed as benefitting most from early years education)