BREAKING NEWS: Campaign group reports Government ‘abuse’ of the childcare market to competition authority

BREAKING NEWS: Campaign group reports Government ‘abuse’ of the childcare market to competition authority

PRESS RELEASE on behalf of

Champagne Nurseries on Lemonade Funding

Members of the campaign group ‘Champagne Nurseries on Lemonade Funding’ (CNLF) have made a formal complaint to the Competition and Markets Authority (formerly known as the Monopolies and Mergers Commission) about the Government’s abuse of the childcare market.

The complaint outlines how the Government has abused its legislative powers by regulating the childcare market, stating that “[the] price fixing of both the purchase and sales price is an abuse of market control”.

In September 2017, the Government will roll out its 30-hour offer to eligible 3 and 4-year-old children of working parents in England. However, due to the shortfall between the true cost of providing the ‘free’ hours and the deficit in funding from the Government, many childcare providers believe they will be unable to deliver childcare in a sustainable manner and will be forced to close.

This effect is in direct opposition to the Government’s aim of providing more childcare for the estimated 400,000 families who will become eligible for the additional 15 hours in September.

The complaint by CNLF, which has almost 7,000 members, states that the childcare sector is already in jeopardy due to factors such as the introduction of workplace pensions, consistent increases in the National Minimum and Living Wages and Business Rates revaluations.

It goes on to state that the Government has “ploughed on with its political agenda based on non-representative data” in reference to a survey commissioned by the Department for Education to establish the true cost of childcare, which only received 284 responses.

CNLF’s action comes in the wake of a recent survey of councils in England by the Family and Childcare Trust which found that over half (54%) said they did not know if they would have enough childcare available for eligible pre-schoolers using the 30 hours.

A spokesperson for the CNLF campaign group, said:

“We looked at various ways to challenge the Government on the issue of underfunding in Early Years. This route is a direct way of getting the legislation around funding investigated. 

“As private businesses, PVI’s (private, voluntary and independent childcare providers) have been absorbing and trying to manage the costs associated with delivering the ‘free’ Early Years Education since its introduction. The extension to 30 hours for working families brings with it the real threat of closure for some settings who simply can’t absorb or manage further losses.

“As providers, we fully support the Government helping families with childcare costs, however, the policies around funding mean that we have no choice but to cross-subsidise by charging inflated fees for hours outside of funded hours and charging for additional services for things that the Government say should not be provided within the funding. 

“This is not something we want to do and not something we feel parents should be faced with. It is a consequence of a policy which the Government has not funded properly and which childcare providers cannot afford to subsidise but know that they run the risk of being forced out of the market if they do not offer the funded hours.

“Research showed that only 51% of nurseries in England were expecting to make a profit in 2016, with the average nursery losing an astonishing £957 per child, per year on the 15 hour offer. 

“This level of loss on 15 hours of funding means that the increase to 30 hours is simply untenable for the whole sector at the current funding rates, the only way to ensure the ongoing viability of the whole sector is to remove the word free and allow the funding to be used as a subsidy.

“We are confident that the CMA will carry out a thorough investigation and we await their response.”



Early Years: The cost of extending free childcare

Early Years: The cost of extending free childcare

Free Childcare entitlement

How much is free childcare costing you?

All three- and four-year-olds in England will be entitled to 15 hours of free childcare a week from 1 September. Ross Watson, CYPNow, asks what providing an extra 2.5 hours of free childcare will mean for parents and providers.

Two-and-a-half hours of free childcare a day is not enough time to get anything done, according to Belle Kaur, whose three-year-old son Jason currently attends the nursery at Fox Hollies Children’s Centre in Acocks Green, Birmingham, each morning. “It is hell doing the day-to-day essentials like shopping. He has tantrums in the car and in the shopping centres,” she says.

Like every other three and four-year-old in England, Jason is currently eligible for 12.5 hours of childcare a week under the government’s free entitlement scheme. Kaur uses her free hours over five days, paying extra for Jason to stay longer on Wednesdays and Fridays.

But from 1 September the Kaurs will be eligible for an extra 2.5 hours of childcare a week under government plans to extend the free entitlement to 15 hours a week for all three and four-year-olds. The new rules are also more flexible, allowing parents to use all their hours over a minimum of three days if they wish. Local authorities are also encouraged to work around the needs of individual families, even allowing parents to use their free childcare allowance for up to 10 hours a day.

Nurseries charge for free childcare

Nurseries charge for free childcare

Nurseries charging for free childcareNurseries are charging parents for government-funded childcare and reimbursing them at a later date, despite a legal duty to provide care free at the point of delivery, CYP Now has learned.

Currently, all three- and four-year-olds are entitled to 12.5 hours of free childcare every week, but this is set to increase to 15 hours from September.

Parents have begun to complain that they are being charged for free childcare, and refunded only at the end of the month or term.

Government presses ahead with nursery education code of practice and Early Years Single Funding Formula

Government presses ahead with nursery education code of practice and Early Years Single Funding Formula

The Code of Practice on the free entitlement to nursery education will be implemented from September, the Government has confirmed, despite pre-election promises by the Conservatives to suspend it.

The news will come as a blow to some nursery owners who were hoping the Tories would fulfil their pledge to postpone the Code and allow settings to charge top-up fees.

A Government spokesperson said, ‘The new Code of Practice will come into force in September, to ensure that local authorities are working to a clear common framework in implementing the extension to 15 hours. However, we will be looking to streamline this guidance next year.’


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