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Most childcare providers (65 per cent) which offer 30 hours ‘free’ childcare are charging parents extra for nappies, food and other services because of a lack of money from the Government to pay for the scheme.
Three and four-year-olds have been entitled to 30 hours ‘free’ childcare a week since last September, but it is parents who have been paying the price for the Government's underfunding of the scheme through unexpected charges for items such as nappies, food and trips.
The findings came from an online poll of 1,662 nurseries, pre-schools and childminders in England, conducted by the Pre-school Learning Alliance.
The survey reveals the Government scheme does not give childcare providers enough money to make 30 hours a success and is forcing them to raise their charges or risk going bust.
In a statement, the Pre-school Learning Alliance, which represents 14,000 childcare settings, said: ‘The findings follow repeated warnings from childcare providers that current funding levels – frozen by the Government until 2020 – are too low, meaning that many are being forced to rely on additional charges to parents to fill the funding gap or risk going out of business.’
More than half (55 per cent) of early years providers say the 30 hours funding rate they receive from the Government is less than their hourly parental fee rate and less than the hourly cost of delivering a childcare place.
One childcare provider responding to the anonymous poll said: “Our running cost is £5.05 per child and we are getting £3.77 per child for the 30 hours.”
Nurseries said they had increased fees for non-Government funded hours (35 per cent) and introduced or increased charges for goods and services (37 per cent) as a result. Other providers admit they are offering very few places as the funding rate is so low.
While the financial pain is passed on to parents, Neil Leitch, chief executive of the Pre-school Learning Alliance warned the pressure on providers and parents “is only going to get worse” with early years funding rates “set to be frozen until 2020”, despite inevitable rises in childcare business costs such as staff wages from the National Living Wage, rents and pensions.
Another childcare provider said: “We will have to put up fees from April 2018 as our funding rate is staying the same and will not cover the pay increase for the new living wage.”
Some nurseries have set up a registration fee to cover the cost of daily diaries, name cards, learning journals, development records and to help with costs of consumables.
More than 1,000 nurseries shut in last two years
The poll also revealed a fifth (21 per cent) of nurseries feared they would not be financially sustainable in a year’s time, as a result of 30 hours.
No less than 1,146 nurseries and childminders have gone out business in the past two years according to Ofsted figures which highlight a loss of 1,146 providers from the Early Years Register since 2015, when the Conservative Party was elected promising 30 hours free childcare for parents.
'Failing' Government childcare policy
“It’s clear from these findings that the Government’s flagship childcare policy is failing both providers and parents” said Mr Leitch.
He added parents were left “to pay the price for Government underfunding through often unexpected charges for things like nappies, food and trips, while the Government continues to claim that it’s delivering on its promise of ‘free’ childcare.”
To be eligible for 30 hours a week free childcare, both parents must be working for at least 16 hours a week but each earn less than £100,000 a year.
Since 30 hours ‘free’ childcare was rolled out in September, thousands of parents and providers have joined the Pre-school Learning Alliance’s Fair Future Funding campaign to voice their concerns and demand more money from the Government for ‘free’ childcare.
Mr Leitch added: “If ministers don’t want to leave parents picking up their tab or to risk forcing even more providers to close, they need to recognise that the current situation is unsustainable and increase funding so it meets the cost of delivering places as a matter of urgency.”