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.”
Update: It has now been announced that the budget will reveal a £2,000 tax break per child for working couples, not £1,200. This is on the first £10,000 spent on childcare, not £6,000. It will apply to all under-12’s within first year; it won’t be a seven year plan as originally proposed. This article has been updated to reflect the change.
This week’s budget announcement will unveil a £2,000 tax break per child for working couples to help with the cost of childcare.
A study by the Family and Childcare Trust (formerly the Daycare Trust) shows, for the first time, that part-time childcare is costing most families more than their mortgage or monthly food bill.
The figure is based on the amount a family with two children; one in a nursery part-time and one in after-school care. The average annual cost of this arrangement is £7549 – compared to the average mortgage payment of £7207 per year. This is twice the amount spent on food.
The report found that childcare costs have risen 27% in the last five years, with the average family now paying £1214 more.
Finding that childcare costs are rising is not new, but this report is the first to show that even part-time childcare is more of a burden to families than food and housing.
The report (available here) also looked into the supply of childcare and found that only 49% of authorities had enough childcare for working parents. The figure was lower for those with children aged 5-11, with only 33% of authorities providing sufficient care; even less than five years ago. 75% do not have enough care for disabled children.
Free early years places for two-year-olds was another area highlighted as a concern. 30,000 (26%) of the poorest children in this age bracket are missing out on free nursery education, with big differences between local authorities in the number of placements. London was mentioned as a particularly poor area for this.
What can the government do to reduce costs without putting any more pressure on childcare providers? Share your thoughts below.
Childcare costs rose by an average of 19% in 2013, according to Findababysitter.com’s annual report, which focuses primarily on childminders, nannies and other forms of home-based childcare.
The cost of nannies rose the most, from an average of £6.59 an hour in 2012 to £8.73 last year – a rise of 25%.
The website collected data from 231,000 nannies, childminders and other professionals, however the data fails to consider the free nursery places that the government funds.
Its chief executive, Tom Harrow, says paying for childcare is becoming “incrementally harder for parents each year”.
He believes the rise is a consequence of an increase in demand for childcare, while the supply is remaining broadly static.
Liz Bayram from PACEY says she doubts overall childcare costs have risen by as much as 19%, but that cost pressures on carers, such as higher energy and food prices, are having an impact.
“Childcarers are among the poorest-paid professionals,” she says, adding that “more current government funding should be delivered directly to families rather than getting lost in the system”.
Labour has claimed that the rising cost of childcare is harming the economy, with the shadow children’s minister, Lucy Powell, stating that childcare costs “lock parents who want to get back to work out of the jobs market”.
The Department for Education has also introduced tax-free childcare, under which “all eligible families receive up to £1,200 towards each child’s childcare costs”, and is “meeting up to 70 per cent of childcare costs for low and middle-income families through tax credits.”
Is the government doing enough?
• Over half (51%) of all parents in the UK think the government is not doing enough to support them when it comes to childcare (compared to 55% last year)
• This figure rises for stay at home parents – 60% said the government isn’t doing enough
Affording to work
• Almost 1 in 4 unemployed parents in the UK (24%) would prefer to work, but they say they can’t because of high childcare costs
• 38% of parents aged 18-24 would prefer to work, but say they can’t afford the high childcare costs
• The more children an unemployed parent has, the more childcare costs act as a barrier to seeking employment (35% for 3-4 children / 23% for 2 children)
• The top 5 cities where unemployed parents are struggling to afford childcare costs most are: Birmingham (37%) Bristol (32%) Oxford (25%) London (24%) Leeds (23%)
Findababysitter.com also says the childcare market is evolving, with a big increase in demand for nanny shares. There was a 226% increase in the use of the term “nanny share” on the search function of its website last year.
Read the full report on findababysitter.com Please comment below:
In his New Year Speech, Ed Miliband pledged to deal with the ‘rising cost of childcare’ if Labour win the general election next year. The labour leader made it clear that childcare was to play a major part in the election campaign messages, and is exploring whether the party can fund “a big offer” on childcare in its manifesto.
This could see a pledge to introduce universal state-funded childcare for all preschool-age children.
Labour will try to exploit the mistakes made by the Coalition government, in particular the embarrassing climb-down over plans by Liz Truss, the Tory education minister, to change early years ratios.
The party will quote official figures which show that only 66 per cent of mothers in the UK work, less than France (72 per cent), Denmark (86 per cent), the Netherlands (78 per cent) or Germany (69 per cent).
In his new-year message, Mr Miliband said Britain was “in the midst of the biggest cost-of-living crisis in a generation”.
He said: “People do not want the earth. They would much prefer some very specific promises, specific things about what a government will do – whether it’s freezing energy bills, taking action on pay day lenders, or tackling issues around childcare which lots of working parents face. All of this is adding up to a programme for how we can change things. It’s clearly costed, it’s credible and it’s real.”
He added: “Whether it’s people being unable to afford the weekly shop or worried about the gas and electric bill – or saying ‘I have always thought of myself as reasonably well off but I’m really having trouble making ends meet’.
“People are thinking they have made the sacrifices – and the Government keeps telling them that everything is fixed. But it does not seem fixed to them. Surely we can do better than this as a country.”
He continued: “We are going to show to people in 2014 how by standing up for the right people, by being willing to take on the powerful interests and make big changes in our economy, we can deal with the cost of living crisis both now and in the future so that we can earn and grow our way to a higher standard of living for people.”
A report from the Institute for Public Policy Research argued that a huge expansion of childcare would pay for itself over time by allowing mothers to go back to work, if there were more affordable childcare.
The IPPR suggested that attracting 280,000 women back into the labour market would save almost £1.5billion in extra tax revenue and lower spending on benefits and tax credits.
Do you agree with Mr Miliband? How would universal state funded childcare affect our industry? Let us know below.
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