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.”
Despite the Government’s pledge to offer nursery care to 260,000 of England’s most disadvantaged two-year-olds from September, a report last week highlighted that there is insufficient “good quality provision” to provide the places.
The report, commissioned by the Sutton Trust and conducted by Oxford University, highlighted a shortfall of places for the current 92,000 children that already qualify for the funding, before the increase of 168,000 children planned for later this year. As a result, the government are being urged to delay the roll out until the number of Good or Outstanding nursery places increases.
This is set amongst a backdrop of falling Ofsted grades across the industry.
The report states, “The importance of ensuring good quality provision cannot be overstated. Worryingly, our review suggests that much current provision is not yet fit for purpose, risking the success of the programme in achieving its stated aims.”
The Government requirements insist that only places in nurseries rated by Ofsted as “good” or “outstanding” should be offered under the scheme, however if there is a shortfall, places at nurseries with lower ratings can be used.
But the Sutton Trust education charity advised the Government to wait until it could guarantee good-quality care.
“Delaying the rollout would enable current good-quality provision to focus on catering for the most deprived 20 per cent of two-year-olds whilst allowing the time and funding to ensure that sufficient good-quality provision is available to meet the needs of the 40 per cent before this is offered as a legal entitlement.”
Liz Truss, the children’s minister, has said that the Government is taking steps to raise the quality, including developing an improved inspection protocol with Ofsted for nurseries.
“Support to disadvantaged parents and their young children is the cheapest and most important investment we can make in our society. Achievement gaps between rich and poor children are visible in children as young as 18 months, according to a Stanford University study. By the age of two, there’s a six-month gap in achievement. By the time a poor child is five, he or she will be two years behind wealthier classmates in terms of language development.
Investment in nursery care and other early intervention programmes like Sure Start doesn’t guarantee improved academic achievement, but the life skills promoted by quality early care last, and lead to lower rates of young offenders, and higher rates of staying in education.
I hope that when the Government looks at the Sutton report, it thinks big. Paying for mediocre childcare won’t bring about the changes we need. We need to invest in the future of our young people now if we are to avoid paying for their neglect later; I’d far rather fund nursery places now than beds in prison in a dozen or so years.”
The squeeze on nursery places is set to tighten as the Government opens up free childcare for thousands more 2-year-olds. Deputy Prime Minister Nick Clegg is widening the scheme to families earning less than £16,000 and receiving working tax credits, with a budget of £755m for 2014. This is expected to provide funding for around 40% of 2 year olds by September next year.
Mr Clegg hopes to double the number of 2-year-olds getting free nursery time, saying it will give more disadvantaged children the chance to start school on an equal footing with their peers.
But Fiona Onasanya, Labour’s spokeswoman for children on Cambridgeshire County Council, said although increasing numbers of children entitled to free early years provision “can only be a good thing”, it comes when there are huge cuts to other areas of children’s services.
She said: “The Government is giving with one hand and taking away with the other. It’s like removing someone’s teeth and then asking them to chew.
“We are already struggling to meet the need for places for 3 and 4-year-olds and it is bound to be a real challenge to ensure high quality nursery provision in the right places for 2-year-olds as well.”
The Pre-School Learning Alliance has raised concerns that the Government will continue to pay nurseries at the national average rate of £5.09 per hour to provide the childcare for increased number of disadvantaged two-year-olds.
Neil Leitch, Chief Executive, said: “We are extremely disappointed to see that there has been no increase in the average rate of funding announced last year, despite annual inflation of around three per cent and the fact that providers have repeatedly stated that this figure in no way reflects the true cost of the delivery of this provision.
“Alliance members are already facing enormous challenges. Many indicate that they are subsidising year-on-year increases in costs to enable them to continue to deliver the right kind of individual and specialist support to children in their care – particularly those with more complex needs.
“Quality provision simply cannot be provided on the cheap. It is unfair – and frankly, unfeasible – to expect providers to continue to absorb the additional costs associated with delivering quality care. If the government continues to provide an inadequate level of funding for this scheme, it is inevitable that we will continue to see a decline in the overall quality of early years provision in the long term.”
Purnima Tanuku, National Day Nurseries Association chief executive raised similar concerns in a statement: “The announcement of a £755m funding pot for local authorities to deliver the next raft of two-year-old places must be passed on in full to the early years providers to ensure we have enough high quality places.
“Thanks to a more transparent system announced along with this funding, local authorities and childcare providers will be able to see how many two-year-olds in their catchment area are eligible for funded places.
“Ministers have recently been urging local authorities to pass on the free place funding in full and we would ask them to take notice and listen.
“NDNA’s latest nursery survey showed the rates around 50 per cent of providers were receiving for a two-year-old place was less than the amount it cost to provide the care. In order for the system to be sustainable and provide quality early education and care, funding must meet costs.”
How do you feel about the announcement? Is it positive for the industry or another example of the government asking too much without enough funding? Share your thoughts by commenting below.
Since September, 130,000 two-year-olds have been entitled to 15 hours of free childcare. Children are chosen from those meeting a range of means-tested criteria or in Local Authority care, and are only offered in settings with good or outstanding Ofsted grades.
The latest Department for Education statistics show that whilst 92,000 children have found free places, 38,000 eligible children are not yet claiming their entitlement.
Neil Leitch, chief executive of the Pre-School Learning Alliance, stated that many providers were still underfunded for the existing free nursery place scheme for all three- and four-year-olds, it was vital that the government makes sure this scheme for two-year-olds is adequately funded.
“This will determine the success of the initiative and the positive impact for generations to come.
“While the latest take-up figure is extremely positive, we need to ensure that there is a long term strategy of continuous support in place to ensure that all participating providers are able to offer high quality, appropriate care and education.”
The average rate of funding, £5.12 per hour, is widely considered so low the work providers are asked to provide for these disadvantaged children would effectively be free-of-charge. Costs of provision are often inflated as children are younger and often highly troubled, requiring more care.
Commenting on the shortfall in take-up, the Department for Education has said the funding for the places will in future be on a “use it or lose it basis”.
“The number of participating children will determine the amount of funding they get,” it said.
“Where parents are not taking up these place, local authorities will get less money.”
The department is due to expand the scheme to 260,000 children in England next September.
Childcare workers association Pacey, which represents many childminders, welcomed the fact that, so far, 70% of eligible families had signed up to receive the free entitlement for childcare.
However, the association was concerned that in some areas there are not have enough providers, rated good or outstanding, to provide for all the children entitled to the two-year-old offer, and the Government would have to use providers graded as requiring improvement.
Chief executive, Liz Bayram, said: “This is of even more concern given the emerging evidence that individual childminders are struggling to access funding through this scheme, as local authorities seem to show a preference for nursery settings to deliver this care, even if those settings might not be good or outstanding.
“Many families benefit from the flexible home-based service that childminders offer, so ensuring parents can make a real choice about the type of childcare that is right for them could only help increase uptake even further.”
Today sees the start of free childcare for 130,000 2 year olds, and the government has announced that this figure will double by September next year for families that earn less than £16,910 a year and receive working tax credits
Children who are in care, adopted, disabled or have a disability or special educational needs will also benefit from next year.
Mr Clegg gave details in a speech today, stressing that the government is helping more children achieve a ‘brighter start in life’
He stated: ‘All the evidence shows that if you take two children – two five-year-olds hanging up their coats next to each other on the first day of school – the poorer child will already be behind their better off classmate before a single lesson has been taught.
‘Without this help, children suffer and the whole class suffers as teachers have to focus more of their efforts on children who are frustrated and left behind through no fault of their own.
‘I believe that every British family, whatever its structure, background and circumstances, should be able to get on in life.’
Ten trial regions were introduced last year including Blackpool, Cornwall, Greenwich, Kent, Lambeth and Newcastle, affecting almost 1,000 two-year-olds.
Mr Clegg decided that parents would be given the option to spread their free nursery place over two days, rather than three, and to use the free hours between 7am and 7pm rather than 8am to 6pm. This was intended to make it easier to fit the childcare around working lives.
There are, however, concerns that the budget will not increase to meet the demand as the Government will spend £534m on the scheme this year but only £760m in 2014.
The Pre-school Learning Alliance has voiced concerns, and Chief executive Neil Leitch said: “This is a tremendous initiative that will help to support young children who statistically run the risk of being marginalised throughout their entire life.”
He warned: “Our fear is that should this well-intentioned initiative be grossly under-funded, the Deputy Prime Minister will not achieve the brighter start in life for these children that he wants.”
Anand Shukla, Chief Executive of the Family and Childcare Trust, shared concerns, and pointed out that nursery closures could impact the delivery of free childcare.
“We are concerned that loss of nursery provision in children’s centres is impacting on local authorities’ ability to find sufficient places for the offer. New research by the Family and Childcare Trust, to be published later this month, indicates that a minimum of 108 nurseries across England have closed or were never commissioned as they were supposed to be,” he said.
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