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On the day the Government launches its 30 hours ‘free’ childcare scheme, childcare practitioners are warning they will be forced to charge parents to top up the Government’s underfunding of the scheme.
From last Friday, working parents of three and four-year-olds will be able to claim 30 hours of ‘free’ childcare. The policy to double the existing 15 hours of ‘free childcare’ was the Tories’ ‘jewel in the crown’ of their 2015 manifesto.
However, the Pre-School Learning Alliance and National Day Nurseries Association say the scheme is in disarray with some nurseries claiming it will make their business unsustainable and force them to shut and others saying they will have to start charging parents for extras like meals and snacks.
A survey carried out by the Alliance in August reveals that 49 per cent of childcare providers plan to increase how much they charge for additional (non-funded) hours as a result of the scheme and 52 per cent plan to make changes to what they charge such as meals, snacks and trips. Thirty-eight per cent fear they will not be sustainable in 12 months’ time.
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.”
The Alliance’s poll also found that 74 per cent of childcare providers stated that their current funding rate is less than the cost of providing a place. In addition to this, the same 74 per cent cited that this shortfall would leave them out of pocket by nearly 20 per cent.
To bridge this funding gap, many nurseries have had to be ‘creative’ just to ‘make ends meet’. The manager, Sarah Presswood, from George Perkins Day Nursery in Birmingham, which Ofsted recently rated as ‘Outstanding’, explained how her nursery has had to adjust.
She said: “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.”
It’s not just the nurseries who have reservations. In a research poll by comparethemarket.com, which questioned over 2,000 parents, it was revealed that more than a quarter of parents felt the policy could lead to a decline in the quality of childcare services being provided.
The majority of parents however, were ‘confident that the policy will provide their families with a bit of financial relief’. The Government has estimated that the scheme will save families around £5000 per year per child.
Shakila Hashmi, head of money for comparethemarket.com, says while many parents welcome the scheme, those with children under three will end up with an increased childcare bill. “We know that childcare is not only a huge expense, but often a huge worry too. Therefore, the Government’s decision to increase the amount of free childcare is a welcome policy for many parents, who are already facing growing financial pressures elsewhere.
“However, whilst it is heartening to hear that the majority of parents eligible for the policy think that it will improve their finances, there are a significant number of families who won’t benefit from the policy at all. In fact, there are concerns that this new policy could put increased cost pressures on those families with children not eligible for the free places, with many nurseries admitting to having to increase their fees.”
Parents have also been affected by technical issues with the HMRC website designed to deliver the scheme, leaving the HMRC boss red-faced and paying parents compensation. This has caused extra work for nurseries and anxiety for parents, although this is just one of the problems associated with the ‘chaotic’ new scheme - the main issue still being underfunding.
Mr Leitch is emphatic that the funding for the scheme needs to be routinely scrutinised by the Government, as soon as possible, to prevent the mass closure of nurseries.
He said: “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.”
Purnima Tanuku, chief executive of National Day Nurseries Association, is equally concerned about the policy and is calling on the Government to “acknowledge that there is a serious problem and that we are at a crisis point with 30 hours funded childcare. This is from a funding point of view and also regarding the Childcare Choices website.
“It must be acknowledged that there is a funding shortfall to pay for this childcare, which is not free and never has been.”
She added: “We strongly urge the Government to allow nurseries to deliver this scheme in a way which suits their own businesses. If this means charging parents for additional services or only offering it during certain hours in the week, that has to be a business decision in order to balance the books. If providers are not allowed this flexibility, then they risk seeing many more businesses closing their doors.”
The Government however is insistent that the scheme is a ‘landmark offer’, with Education Secretary Justine Greening saying: “High-quality childcare not only helps our children get the best start in life, it supports many parents who want or need to work.
“For too long lots of families really struggled to manage the cost of childcare and that’s why we have delivered on our promise to provide 30 hours free – saving working families around £5,000 a year.
“Alongside the support we are giving through Tax-Free Childcare and Universal Credit, it will make a real difference to families’ lives.”
To see the research survey visit: www.comparethemarket.com/life-insurance/content/parentdex