‘Free’ childcare – at what cost to providers?

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Spokesperson Jo Morris from campaign group ‘Champagne Nurseries on Lemonade Funding’ gives her overview of the Government’s ‘free’ childcare scheme and its alarming effect on the sector to date:  

We are now into the third term since the Government’s manifesto promise of 30 hours ‘free’ childcare became a reality on 1st September 2017.

Since then, there have been many teething issues. HMRC’s system for parents to get their code was besieged with problems, with parents facing frustrating delays and providers having difficulty verifying codes as many local authorities did not have the upgrades to their portals. Now the scheme is here and the Government are proclaiming it to be a success, with former Childcare Minister Robert Goodwill saying that he ‘hadn’t heard a peep’ about any difficulties.

Champagne Nurseries on Lemonade Funding begs to differ; we have been campaigning for over 2 years to get the Government to LISTEN to the sector when we tell them that ‘free’ childcare is NOT free!

Ofsted regulations, employment laws and business costs are part and parcel for those of us in the sector, however, the underfunding of these ‘free’ hours are putting a huge strain on our ability to cope with them.

Costs rise, we understand that, and none of us begrudge increases in the National Minimum/Living Wages or in statutory pension contributions. Our teams are our biggest assets and we wish we could pay them far more than we can, but, and here is the big one, rule one in business is that when your costs rise, so too must the price you charge for your product or service.

So, what happens when the Government, who are now the biggest purchasers of childcare in the country, fix both the price at which they will pay for an hour’s worth of your service and the cost at which you must deliver it to your customer… then legislate that any charges to parents for anything extra provided during these hours must be voluntary?

The sums don’t add up! Ratios quite rightly dictate how many children each staff member can care for at any time, but logic tells us that when costs are rising but fees are not only static but frozen until 2020, we are being set up for a fall.

So, what are our options as providers?

  • We stop offering ‘free’ childcare and run the risk of losing families to other settings who do.
  • Paid for services such as additional hours or services such as meals, consumables, extracurricular activities and hours for children who are too young for funding must increase to part-subsidise the losses made by the setting.
  • We close our doors because we simply cannot continue to provide high-quality care and education on the rates given.
  • We charge an additional services fee for all the extra things we provide and work very hard to ensure that our families understand why it is necessary.
  • We tighten our belts where we can and try our best not to let this affect the children’s experiences.

A recent post from one of our members caused quite a stir and the resulting poll made for very uncomfortable reading.

One of our members asked, ‘How many practitioners/managers/owners engaging with CNLF campaign would say they are only able to keep working in the sector because they have other sources of additional support for their own personal day-to-day bills and living /housing expenses?

E.g. living with parents or a partner bringing in another income that covers a lot of household bills.

In a nutshell how many of you would say you could still manage financially on monthly pay – or running your nursery business – without another support stream from other family members? Or are you perhaps using up savings or a windfall you might have had previously?’

Most respondents stated that their partners pay most of the household bills because they simply couldn’t afford them on their income from their settings. In some cases, their partners also help them to pay their staff salaries and, in the most extreme example, a provider stated that they had not taken a wage in 17 years of trading. Many said that they have a second job to help make ends meet.

Keith Appleyard, the volunteer treasurer of a charity-run setting, told us that in 30+ years he had never seen the cashflow problems that he is currently seeing. As well as giving 10-20 hours a week of his time unpaid, Mr Appleyard has had to apply for personal loans totalling thousands of pounds just to meet costs.

We started a poll to ask where cutbacks were being made to survive. 169 people responded that they had cut back on resources, 136 on staff training and 111 on the owner’s salary. Other cutbacks included staff salary increases, maintenance, quality of meals, staff time to complete learning journeys, increasing capacity and additional time to support children with special educational needs.

42 providers told us that they are not losing anything because they have additional services charges in place to negate the losses. Only 25 told us that they had not had to make cuts because funding is sufficient to cover their costs, however, there is a consensus that as costs keep rising and funding remains fixed until 2020, this may not continue to be the case.

In the words of the former childcare minister, this is a giant ‘peep’ from the sector. With 96% of settings rated as ‘good’ or ‘outstanding’ by Ofsted, we MUST get the changes to legislation that we need to allow us to continue to provide our youngest children with the quality early education that they deserve. We are constantly told that the early years are crucial and that early intervention is vital in securing the best possible outcomes for our children.

This high quality does not come cheap and it certainly doesn’t come ‘free’. Funding rates DON’T work, every setting has its own unique costs, there is no one size fits all, yet one funded rate is supposed to suit all settings in one local authority? It’s not working and it can’t continue, so we will carry on raising awareness, lobbying, supporting each other and fighting for the sector we love, because all the amazing people in it – big and small – deserve better!

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3 thoughts on “‘Free’ childcare – at what cost to providers?

  • May 14, 2018 at 5:59 pm
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    I shudder at the way this government is riding roughshod over private providers with legislation and heavy handed control of costs. I hope we don’t go down the road of Care Homes, which although are at the opposite end of the scale are suffering the same controls we are, just look at the results in this sector, with hundreds of facilities closing down every month, a frightening example of what could and will happen to the childcare industry if somebody doesn’t wake up to the facts.

    Reply
  • May 8, 2018 at 12:01 pm
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    I believe if the problem of underfunding is not addressed very soon we will be left with a two tier system of nurseries. Some will have better staff and resources to improve outcomes and those on who operate minimum standards to survive will provide lower outcomes for the children who most need them and whose parents cannot afford the top up fees. The idea of closing the gap on children’s development will only grow. Research and experience has demonstrated that no childcare is better than poor childcare. Although we are currently moving away from poor childcare, if rates do not improve we will over a relatively short period of time fall into this trap.
    I am sure this was not the intention of the politicians but will be the outcome of economic pressures. Many experienced practitioners will be looking at exit strategies which will cause a greater loss for the industry. I think everyone affected should make an appointment and voice their issues with their local MPs.

    Reply
  • April 23, 2018 at 6:01 pm
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    Another question that should be added to the list is how many managers/staff have to claim additional benefits to make ends meet i.e. working tax credit or child tax credit. Term time only pay is a national disgrace. How is the PVS sector expected to retain valuable qualified staff? It is a mystery to me that that so many still remain open. Ultimately it is down to the dedicated, committed workforce that is early years whose vocation is to support children.

    Reply

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