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.”
Yesterday afternoon, at 3.45pm, Elizabeth Truss offered more clarity on her proposals for the UK childcare industry, following the Government u-turn on ratios.
She stated, “This is a matter of pressing need, and we are taking forward the following proposals: introducing early-years educator and early-years teacher qualifications; introducing tax-free child care; ensuring that more money for child care goes to the front line; increasing the supply of childminders through the establishment of childminder agencies; and making it easier for schools to take two-year-olds in their nurseries.”
She then came under fire from several other ministers, including Sharon Hodgson, Labour MP for Washington and Sunderland West, who stated, “The Government have got themselves into a complete shambles. With every passing week, it becomes more and more apparent that Ministers do not have a credible plan to tackle the child care crisis they have created. Under this Government, parents are facing a triple whammy: costs are rising faster than wages and even general inflation, with the average cost having risen by almost 20% since 2010; support from the Government for those on tax credits has been cut, meaning that some families are up to £1,500 a year worse off; and there is a real struggle to find places in some areas owing to the cuts in supply-side subsidies and direct provision, such as through children’s centres. Since the election, we have lost almost 900 nurseries and more than 1,500 child minders, and there are 500 fewer Sure Start children’s centres.”
Meg Hillier, Labour MP for Hackney South and Shoreditch, sought clarity on the proposal for ‘Tax-free Childcare’ asking, “On new clause 10, the Minister made great play of introducing tax-free child care, but she should be clearer in her closing remarks about what exactly that means, as I fear she is misdescribing something. What she seems to be proposing is that after people have passed through many hoops, including having both parents working and receiving certain levels of income, 20% is paid, which is not tax-free for the higher rate taxpayer. I want her to clarify this point: she talked about those paying additional tax not qualifying, so will she explain what tax threshold this will and will not apply to, so people who might be affected can know about that?”
In response, Liz Truss stated, “We have had a wide-ranging debate on the various child care issues, but one point that I think we can all agree on is that there is an urgent need for high-quality, affordable child care in this country. At the moment, many working families are struggling to afford their child care, and I can assure the House that the Government are fully committed to improving the situation. Tax-free child care, which is the key policy that we have been promoting in the Bill, will contribute to that.
I would particularly like to thank Dan Rogerson for his very constructive comments, particularly on the point about our tax-free child care scheme. I want to reassure Meg Hillier that “tax-free” refers to the 20% that parents will benefit by. The critical point is that it is open to many more families.”
Read the full debate here
National Day Nurseries Association (NDNA) today responded to the Government’s Comprehensive Spending Review (CSR). Whilst NDNA welcomes the commitment to children in their earliest years, the organisation highlights that the reduction in the percentage of costs working parents can claim back for childcare will have implications for the affordability of childcare.
NDNA said the move to reduce the amount of childcare costs covered and the increase in working hours would affect parents’ ability to work, particularly those on the lowest incomes.
The Chancellor George Osborne announced that funding for the 15-hour free entitlement for all three and four year olds will continue, during his speech on the Government’s Comprehensive Spending Review today.
The Chancellor revealed that further support will be given for the early years of our children, with additional attention towards disadvantaged two year olds.