The new flagship childcare scheme led by the Government is already causing nursery closures across the country, with sector leaders warning that many more will close.
From September, parents who earn less that £100,000 per year each will be able to sign up for the funded 30 hours. But leaders of the nursery school sector have said that this will leave many nurseries facing closure, since the Government is offering 39p below the true hourly cost of childcare.
Under the current scheme, nurseries can make up the shortfall by charging parents more for additional hours over the funded 15. However, when the new flagship scheme is introduced, nurseries will not be able to charge for this since many families will not require more than 30 hours of childcare per week.
Some larger nurseries could increase their opening hours to try and make more money, but for many smaller nurseries with fewer staff this is not an option.
Fidgety Fingers, a nursery in Essex, has announced that they will be closing down. They have been rated ‘outstanding’ by Ofsted.
Under the new scheme, nurseries cannot accept ‘fees’ and will have to ask for ‘donations’ instead to try and keep their settings running.
Kate Allaway, deputy manager at Fidgety Fingers, said how the funding will not be enough to cover their costs. She said: “We can only ask for voluntary donations, and no business is able to run on donations.”
Anchors Nursery School in Rotherwick, Hampshire, also closed this month after 21 years of service. Its principle, Eve Wort, blamed the closure on the Government’s “ill-thought-out 30 hour offer of free childcare.”
“I cannot afford to offer this and refuse to compromise on quality,” she said.
There are other nurseries in the country set to close, this includes Rising Stars Preschool in Eastbourne, Secret Garden Nursery in Skegness and Pip-Kins Day Nursery in Exeter.
Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA) said: “We have warned that nurseries will be pushed out of business by low hourly rates for ‘free’ places and it appears that this is now starting to happen.
“Our fears are that more will follow as expanded childcare is set to come into force in England in under two months.”
She also added that the policy would work if there was an increase in the hourly rate and if there was a way that nurseries were allowed to make compulsory charges for meals and any other extras.
Neil Leitch, chief executive of the Pre-School Learning Alliance, said because of the financial burden, many more nurseries face the risk of closing down.
“The vast majority of providers predict that offering the 30-hours will hurt them financially, with most saying that funding rates still don’t cover the cost of delivering places, and many are fearing closure,” he said.
Robert Goodwill, Minister for Children and Families, defended the hourly rate the Government has set saying that it is “based on a comprehensive review of childcare costs”.
He added: “We are determined to support as many families as possible with access to high-quality, affordable childcare, which is why we are investing a record £6 billion every year by 2020 in childcare – more than ever before.
“This includes an additional £1 billion per year to pay for the free offers and to raise the total hourly funding rate to local authorities for three- and four-year-olds to £4.94 per hour.
“This rate is based on a comprehensive review of childcare costs, which took into account current and future cost pressures.”