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At this week’s Prime Minister’s Questions, Labour MP Ruth George raised the issue of nurseries struggling to stay financially afloat due to the 30 hours ‘free’ childcare offer, revealing that one nursery owner is being forced to 'sell her own home' to cover costs.
Nurseries in England have been offering 30 hours of ‘free’ childcare to three and four-year-olds of working parents, since the beginning of September.
They had already said they were finding it difficult to stay sustainable when they were offering 15 hours of ‘free’ childcare to all three and four-year-olds. However the expansion of the scheme to 30 hours has left nurseries finding it even harder to cope and saying in a letter to the Chancellor last month, that they have reached ‘crisis point’.
Ms George addressed the Prime Minister, saying: “My constituent Kate has run a successful nursery for over 14 years. But after two months on the Government’s funding for three and four-year olds she says she can’t make it work.”
She revealed that she is “having to sell her home to pay for staff redundancy” and said: “Over a thousand nurseries have already closed and 58 per cent say they can’t continue. If nurseries close, parents can’t work.
“Please will the prime minister meet with me and nursery owners to discuss such widespread and critical problems.”
Theresa May responded by blaming the problem on the local authorities, saying: “I can say to the honourable lady, that I have met with some nursery owners looking at this issue.
“They have given a very clear message that actually there are parts of the country where local authorities are operating this system very efficiently and very well.
“But there are parts of the country where that is not happening.”
She added: “Of course what underpins this is the decision taken by the Government to improve the childcare offer for parents so they actually have a better opportunity and ensure their children get the childcare they need.”
The Department for Education (DfE) revealed earlier this month, that most local authorities will not see any increase to their early years funding rates next year, with some of the most deprived areas of England even seeing their rates reduced.
The DfE's new figures on early years funding rates 2018/19 show that 70 per cent of local authorities will receive no change to the funding they receive while 14 per cent will see a reduction in their level of funding.
Among these are councils with some of the highest levels of deprivation in the country including London boroughs, Sunderland, Liverpool, Bradford and Stoke-on-Trent.
Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA), called the Government’s refusal to increase the funding "a real threat to sustainability and shows the Government has not listened to the sector".
A total of 47 local authorities will receive the lowest possible rate of £4.30, with 22 of these areas being in the North of England, while 16 per cent will see a rise to their allocations.
09 Jan 2018 4:35 PM
Both Central and Local Government are culpable for this situation. Last year Central Government increased our Authority's funding rates by circa 7% which "at a glance" looks more than reasonable, until you realise that it may have to last for four years in which case it becomes the equivalent of circa 1.75% pa, not much more than half the rate of inflation.
Then we take into account Local Authority input, and hey presto, after taking account of local overheads and the ring-fencing of specific funding for inclusion etc and the base rate passed on to providers was increased by just 3.5%. Again, on the surface at least, this 3.5% increase is expected to last for 4 years with no further increases planned in that time. Equivalent to less than 1% per annum.
A simple solution, which may may not cure the issue entirely, but would certainly help, would be for Government to formalise a parity-link between the funding rates paid directly to providers (currently reviewed every 4 years) , and the increases in the National Living Wage (currently ratcheting up every year) . Sadly at present, it seems beyond the wit of government to be able to correlate one with the other, to recognise that childcare is a human interaction, that labour costs alone can consume 60-70% of income.