Nursery boss tells childcare minister: We're doing 'free' childcare 'under duress'

Childcare minister Robert Goodwill has been warned Government underfunding has created ‘low morale’ among childcare providers with 30 hours ‘free’ childcare and other ‘Government-controlled’ costs like business rates, causing nurseries across England to shut.

In a letter sent on 16 October to childcare minister Robert Goodwill and the education secretary Justine Greening, Josy Thompson, director of Funcare Ltd which runs three nurseries in Harrogate, appealed for more funding telling him: ‘Morale in providers of Early Years is at the lowest I have known it in 17 years’.

'We are participating under duress, and many of us are desperately worried about the future both for our small businesses, our hard-working employees and for the children in our care.’

Her letter began: ‘Following our brief chat in Westminster last Thursday I am writing to plead for you to listen and take action with respect to the current very serious underfunding in Early Years.

‘You stated that research had shown that a funding rate of £3.72 per hour was sufficient to provide an hour of childcare/early education. Even if the Maths in this study were correct, which so many nurseries would strongly dispute, this information is now 2 years old.

‘In these 2 years the living/minimum wage, which is our main cost driver has increased by 15 per cent. Surely anyone with a basic grasp of Maths can see that this does not work? ‘My own calculations show me that I need £4.70 per hour.’

Operating with a shortfall of 80p per hour, which is currently being requested from parents, she states “if they ‘choose’ not to pay my 80p/hour, then I will have no choice but to close my pre-schools, and more than 150 children will have to find alternative provision. This fundamental problem is causing providers to close all over the country.

“All of our costs are controlled by the Government, from staff ratios and floor space requirements to living wage, pensions and business rates.”

The childcare director, which operates three nurseries in Harrogate (namely Woodlands Day Nursery, Little Dragons Day Nursery and Playaway Day Nursery), argues that while the Department for Education (DfE) has increased total funding, funding for nurseries has decreased.

Ms Thompson calls for the funding formula to either be ‘revisited’ with a reasonable hourly rate paid basing calculations on the current living wage and a plan to increase annually in April in line with living wage increases, 'OR give us the means to make ends meet by charging parents, and not begging parents to help us out with voluntary charges.’

Rising nursery costs, in particular business rates, have become a more controversial cost for English nurseries, following the Scottish Government’s decision to scrap business rates for nurseries in Scotland.

Petition to scrap English nurseries’ business rates

Unlike England and Wales, nurseries in Scotland will no longer have to pay business rates from 1 April 2018, with Scotland's finance secretary Derek Mackay announcing the exemption in Holyrood in September. Wales is currently consulting on whether to scrap business rates for nurseries.

Scotland's move sparked the launch of a petition by English nursery owner Sue Johnson who operates Scamps of Benson in Oxfordshire. Nurseries across England are now signing her petition, which calls on the Government to follow Scotland’s example and scrap business rates.

On 16 October, the petition on the gov.uk website which urges the scrapping of business rates and VAT, had more than 2,839 signatures.

Business rates vary between regions and are determined by calculating the properties’ local rateable value with a rating multiplier set by the Valuation Office Agency. Currently, charities receive 80 per cent mandatory relief.

The National Day Nursery Association’s (NDNA) 2017 Annual Nursery Survey revealed 51 per cent of nurseries in England think axeing business rate costs would help them deliver '30 hours' in lieu of a rise of their hourly rate. In the survey, the average new rateable value from April was £23,863 – an increase of almost a quarter (24 per cent) when compared to the previous year.

Referring to the online petition, Ms Johnson states: “Childcare has recently faced huge increases in business rates for their properties. Coupled with this, they pay VAT on purchases but are unable to reclaim this to offset against the business. Along with increased minimum wage, pensions, and 30 hours funding this is leaving them financially unstable.

"With the onset of the Government scheme to offer 30 hours ‘free’ childcare to parents, the minimum funding leaves the childcare provider liable to make up the shortfall. Increases in business rates & VAT charges are making this unsustainable for childcare providers."

You can sign the petition by visiting: petition.parliament.uk/petitions/200679