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Childcare providers fear 30-hour offer could result in closure

Article By: Ellie Spanswick, News Editor

Almost half of UK childcare providers have said they fear they could be forced to close as a result of the 30-hour free entitlement offer, a survey conducted by the Pre-school Learning Alliance has revealed.

The survey found that almost half of providers would reduce the number of places available to children of other ages if they did deliver the extended 30-hours entitlement.

The findings have been published ahead of the Public Account Committee meeting with the Department for Education to question the potential impact of the policy as part of a large enquiry into free entitlement.

Commenting on the survey results, chief executive of the Pre-school Learning Alliance, Neil Leitch, said: “These figures are a stark warning of what could happen if the Government insists on rolling out an underfunded, under-resourced free entitlement offer.

"While we welcome plans to increase average early years funding rates as an important first step, independent research has shown that, with continued cost pressures including the introduction of the ‘National Living Wage’, this will still leave a significant funding gap for early years providers. Given that the move to 30-hours means that most providers will no longer be able to cross-subsidise in order to plug this gap, it’s no surprise that so many are fearing for their future.

“The Department for Education seems to be working on the assumption that the sector will simply fall in line and roll out the offer, whether or not the funding is there to support it – but it cannot expect providers to put the sustainability of their businesses at risk to fulfil a manifesto promise that they didn’t make and that wasn’t properly thought through in the first place. The fact that 98 per cent of survey respondents currently deliver the 15-hour offer, but only 30 per cent are definitely planning to deliver the 30-hour offer, speaks volumes. We are quickly getting to a point where more and more providers are saying enough is enough.”

Approximately 1,500 providers participated in the online survey in March. The survey found that 49 per cent of providers fear they could close with an additional one per cent already planning to close.

Half of respondents said they didn’t feel confident that they had the capacity to meet the demand for additional places under the 30-hour offer, while 58 per cent said they thought the 30-hour offer would have a negative financial impact on their business.

Almost one fifth of survey participants said they weren’t planning to offer the 30-hour offer at their nursery and a further 51 per cent said they weren’t sure, compared to 98 per cent who said they currently offer the 15-hour free entitlement.

Government turning a blind eye to concerns

Last month, the National Audit Office published a new report on the free entitlement, warning that local authorities could find it difficult to provide sufficient places and that the new entitlement for three and four-year-olds could put the implementation of the entitlement for disadvantaged two-year-olds at risk.

Commenting on the results which revealed that half of providers would reduce the number of places on offer to other age groups if they did implement the 30-hour offer, Neil Leitch added: “The Government has chosen to turn a blind eye to concerns over whether the sector has the capacity to deliver the offer, but the fact is, those extra places have to come from somewhere. Many of those providers who are able to roll out the extended offer will have no choice but to reduce the number of places for other age groups, as the National Audit Office warned in its recent report.

“This policy has been sold as a solution for working parents, but unless the sector is adequately supported to deliver it, it’s only going to create more problems.

“We want the 30-hour offer to be a success, for the sake of both families and providers, but the only way that this will happen is if the Government and the sector work together. As such, we look forward to working in partnership with the DfE on addressing these serious concerns and working towards our shared aim of a quality, affordable and, crucially, sustainable early years sector.”

Commenting on the findings, chief executive of childcare voucher provider, Sodexo Benefits and Rewards Services, Iain McMath said: “The nursery sector is currently under intense pressure, with 49 per cent of nurseries fearing they will be forced to close as a result of the Government’s most recent plans to improve childcare provision.

"The Government’s intention to increase free childcare for three to four-year-olds from 15-hours to 30-hours per week is an unrealistic target, with 58 per cent of nurseries saying this would have a negative financial impact on their business. This is a very real problem, with many respondents already stating that they are planning their close. Nurseries have admitted that the only way to plug the shortfall in funding for each free childcare place is to increase the expense of paid childcare.

"Childcare is currently funded by many working parents through employer-supported Childcare Vouchers, however this system is due to be replaced by Tax-Free Childcare (TFC) which will begin its rollout in early 2017. Claims that TFC will save parents up to £2,000 per year are misleading, with 66 per cent of households estimated to be worse off under this new scheme, according to a recent study by Sodexo Benefits and Rewards Services. Furthermore, along with increased nursery costs, it is likely that this could make childcare – outside of free Government subsidies – very hard to afford."


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30 May 2016 1:52 AM

Those in the government need to do their maths GCSEs or could it be that they don't want to pay minimum wage to us? We have a 3:1 ratio of children to carer, a minimum wage for staff of £7.20, maximum 3 carers in one day Add premises costs (even those childminders working from home are likely to be using a good proportion of their home which should not be overlooked as a freebie for the government to use) eg lets say you are using a 400k house/garden/parking and the ground floor is used mostly for childminding, you could expect a 100k loan business loan for that proportion would have set you back around 600pm , of course rental of commercial premises would cost more ! All the art and craft resources, wear and tear to the toys, wallpaper and floors, cleaning and all the loo roll that gets used....... ( I had been happy to include food and outings in my fees as I am not going to stop a child from eating or coming with us!), record keeping registers, journals....extra heating... Then factor in sick pay, holiday pay, maternity pay, pensions and the accountancy fees involved. The long and the short of it is that it is just not worth taking on the extra responsibility of offering more childcare places. Just because we happen to enjoy our jobs we should not be taken for a ride, caring for children is a massive responsibility. Footballers and bankers enjoy their jobs too! Don't forget while we are becoming constrained to only be able to offer our staff a minimum wage we are still expected to attract good, qualified, responsible, able, energetic, intelligent, caring all rounders! I don't see how the government can create more childcare places when we would need more workers yet not be able to keep within the statutory law of pay and entitlements.