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Nearly half of early years settings in London under financial strain as parents struggle to pay bills

Article By: Sue Learner, News Editor

Nearly half of early years settings in the capital are struggling financially, because parents can’t afford to pay their childcare bills, according to a new survey.

The London Childcare Providers Survey for the Daycare Trust revealed 44 per cent of childcare providers said the ability of parents to pay for childcare was the issue putting the biggest financial strain on their services, ahead of staff costs, rising rents and free entitlement funding.

Eighty-three per cent of providers claim parents are struggling with childcare costs due to the recession, although 10 per cent blamed the cut in childcare support which has left thousands of families £500 a year worse off.

To help parents, providers would like London Mayor Boris Johnson to lobby for a reversal of the recent tax credit cut (46 per cent); promote family friendly practice and childcare vouchers (36 per cent); include early years in his education enquiry (31 per cent); and promote a ‘know your rights campaign’ on childcare (26 per cent).

Anand Shukla, chief executive of Daycare Trust said: “Our research shows that potentially tens of thousands of childcare places in London are at risk, as sustainability is threatened because parents simply cannot afford their fees. This is not a surprise – parents in London pay higher fees than anywhere else in the country, and are being hit hardest by the cuts to childcare tax credits.

“As the Mayor begins his new term of office and sets out plans for the forthcoming four years, childcare providers across the capital are urging him to make childcare a key part of his agenda.”

Nurseries, childminders and pre-schools said the other big issue currently affecting them is local authority cuts.

Local authority cuts are hitting childcare providers hard – they reported reduced funding from their local authority (68 per cent), reduced training available (65 per cent), reduced general support (55 per cent) and reduced services offered by children’s centres (45 per cent).

Purnima Tanuku, chief executive of National Day Nurseries Association said: “A majority of our members have reported that funding for three and four-year-old places does not cover delivery costs. This means childcare providers are forced to operate at a loss or have to increase fees for paid for places, hitting the pockets of parents.

“When free nursery places are extended to 20 per cent of two-year-olds in 2013, 26,000 additional funded places will required in London alone, so it is vital that this funding issue is resolved sooner rather than later.

"NDNA would recommend ring fencing of the free nursery education funding to make sure the cost of funded places is covered. NDNA would also advocate reducing or exempting private and voluntary nurseries from business rates and VAT to reduce costs to help make them become more sustainable.”

The free entitlement for three and four–year-olds and Early Years Professional Status were both strongly viewed as having had a positive impact, with only 16 per cent and 2 per cent of respondents respectively reporting they had had a negative impact.

Providers overwhelmingly said the factor that would make them most likely to offer free entitlement places for two-year-olds would be an increased funding rate.

Nurseries and other childcare providers would like to see the Government adjusting the level of free entitlement grant funding local authorities receive according to local costs of provision.

Over 400 nurseries, childminders, playgroups, breakfast and holiday clubs across every London borough, who between them provide almost 16,000 childcare places, took part in the survey.

Image: Purnima Tanuku, chief executive of National Day Nurseries Association


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