2 year old funding announcement causes more concern

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The squeeze on nursery places is set to tighten as the Government opens up free childcare for thousands more 2-year-olds.  Deputy Prime Minister Nick Clegg is widening the scheme to families earning less than £16,000 and receiving working tax credits, with a budget of £755m for 2014. This is expected to provide funding for around 40% of 2 year olds by September next year.

Mr Clegg hopes to double the number of 2-year-olds getting free nursery time, saying it will give more disadvantaged children the chance to start school on an equal footing with their peers.

But Fiona Onasanya, Labour’s spokeswoman for children on Cambridgeshire County Council, said although increasing numbers of children entitled to free early years provision “can only be a good thing”, it comes when there are huge cuts to other areas of children’s services.

She said: “The Government is giving with one hand and taking away with the other. It’s like removing someone’s teeth and then asking them to chew.

“We are already struggling to meet the need for places for 3 and 4-year-olds and it is bound to be a real challenge to ensure high quality nursery provision in the right places for 2-year-olds as well.”

The Pre-School Learning Alliance has raised concerns that the Government will continue to pay nurseries at the national average rate of £5.09 per hour to provide the childcare for increased number of disadvantaged two-year-olds.

Neil Leitch, Chief Executive, said: “We are extremely disappointed to see that there has been no increase in the average rate of funding announced last year, despite annual inflation of around three per cent and the fact that providers have repeatedly stated that this figure in no way reflects the true cost of the delivery of this provision.

“Alliance members are already facing enormous challenges. Many indicate that they are subsidising year-on-year increases in costs to enable them to continue to deliver the right kind of individual and specialist support to children in their care – particularly those with more complex needs.

“Quality provision simply cannot be provided on the cheap. It is unfair – and frankly, unfeasible – to expect providers to continue to absorb the additional costs associated with delivering quality care. If the government continues to provide an inadequate level of funding for this scheme, it is inevitable that we will continue to see a decline in the overall quality of early years provision in the long term.”

Purnima Tanuku, National Day Nurseries Association chief executive raised similar concerns in a statement: “The announcement of a £755m funding pot for local authorities to deliver the next raft of two-year-old places must be passed on in full to the early years providers to ensure we have enough high quality places.

“Thanks to a more transparent system announced along with this funding, local authorities and childcare providers will be able to see how many two-year-olds in their catchment area are eligible for funded places.

“Ministers have recently been urging local authorities to pass on the free place funding in full and we would ask them to take notice and listen.

“NDNA’s latest nursery survey showed the rates around 50 per cent of providers were receiving for a two-year-old place was less than the amount it cost to provide the care. In order for the system to be sustainable and provide quality early education and care, funding must meet costs.”

How do you feel about the announcement?  Is it positive for the industry or another example of the government asking too much without enough funding?  Share  your thoughts by commenting below.

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9 thoughts on “2 year old funding announcement causes more concern

  • January 21, 2014 at 8:08 pm
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    One of the most important factors we need to point out to the government is that we need to be paid the childcare fees directly as suppliers rather than keep begging to be paid by the parents. Some parents are aware of the leniency of the childcare providers and take undue advantage leaving the providers in a situation where we need to take unnecessary action. Let’s take action

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  • January 21, 2014 at 11:39 am
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    As a workplace nursery we are not required to make a profit, but even we can not afford to subsidise the 3-4 year old’s ‘free hours’ for much longer. We have had no increase in funding from the local authority for four years – it remains at £3.60 per hour. We have to credit our customers at cost; for a part time place this is £4.70 per hour. This year we will lose over £6000 by accepting EYE. I am sure even the government, with its slight grasp of simple economics, must realise this is not sustainable. Neadless to say we declined the invitation to lose even more by accepting 2 year old funding.

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  • January 13, 2014 at 11:32 pm
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    I have refused to accept 2-year old funding at my setting as I cannot afford to lose even more money. It is bad enough funding 3&4 year olds – how are we supposed to offer high quality provision and care with highly qualified staff on £3.82 per hour? The funding is not being increased for the next year either – how many other sectors in the UK would consider that to be acceptable? Maybe we should all go on strike for a fair rate of pay!! That’s what they would do in France!

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  • December 24, 2013 at 12:49 pm
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    I totally agree with Rich Benton above. It is one thing the Government announcing the stretch of the 2 year old free
    entitlement offer. We have not had a raise for our ‘Free Places’ for 3 and 4 year olds in 4 years! the hourly rate has remained at £3.66.

    I too will be closing in 2015 as I cannot and will not subisdise this Governments initiative on free childcare.

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  • December 23, 2013 at 4:43 pm
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    I have to agree with these comments and ditto for three and four year olds. No allowance is made for rent and business rates that individual nurseries pay for. One of my settings cost £120,000 per year plus 20% VAT and a fraction under £50,000 a year for business rates. Without staffing I am looking at 200k a year before wages, insurances, food etc! It’s one reason why I wouldn’t be able to take up offering two year old’s places at my nurseries. The Government really needs to be realistic about settings and locations as I know another nursery that pays just 20k year rent much cheaper by far than mine in Central London. I am not expensive or the cheapest in my area but some allowances have to be made for these kinds of expenses before wages are even paid. It is not the same all over the country and this needs to be reflected in the hourly rate somehow.

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  • December 23, 2013 at 2:37 pm
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    An Outstanding setting, we are full and have waiting lists stretching into 2016. Our costs are £7.50 ph, and our payment for so called ‘free places’ is £4.05. The current 3&4 year old scheme is completely unviable financially – the thought of 2 year old ‘free provision’ is the straw that broke this camel’s back, and we have announced we will close in July 2015. Hampshire CC are surprised! When will politicians of both sides wake up to a broken system?

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    • January 6, 2014 at 4:15 pm
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      I am not picking on Rich, it is just that he has been bold enough to quote figures. By costs I take it he means fees. Looking at some of the fees that are charged locally I am sure that they could break-even if charging much less but why should we? Why should we tie up millions of pounds of capial for little or no return? Why should we taken on the burden of running a busiess with all of the usual stresses and responsibilities for a return in many cases roughly equal to the minimum wage? The answer of course is that we shouldn’t have to.
      The idea of equal funding with maintained provision is laughable as long as we are unable to recover VAT and have to pay non-domestic rates and are unable to enjoy their economies of scale.

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  • December 23, 2013 at 2:19 pm
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    What the Government need to do is raise the amount that they give us for the 3-4 year old free entitlement. It in no way covers the cost that we have to pay for the 3-4 year olds!!!!

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