From September 2017 the Government will increase the free childcare entitlement for three and four year olds from 15 to 30 hours a week for families who meet certain criteria. There's no doubt that doubling the entitlement will make it easier for parents who want to work to be able to do so. But at what cost to the childcare sector?
Eight local authorities, 'early implementers', started piloting the extended offer this September. And, within just days, some settings had pulled out claiming it was insufficiently funded and therefore unsustainable. Hardly surprising when you consider recent research. The National Day Nurseries Association (NDNA) claims the average nursery is currently absorbing a loss of about £34,000 a year due to a shortfall in Government funding and 89 percent are making a loss on free places. And this is BEFORE the extended free entitlement is rolled out nationally.
The survey undertaken by the association also found only 45 percent of the 485 nurseries questioned in England were likely to extend the number of free hours on offer. Meanwhile, an online survey by the Pre-school Learning Alliance (PLA) found almost half (49 percent) of the 1,500 childcare providers who responded fear they could be forced to close as a result of the new free entitlement offer. And 58 percent expect it to have a negative financial impact on their business.
What's more, 48 percent said they would offer less places to children of other ages if they did deliver the extended entitlement. The upshot is that only 19 percent were planning to offer the 30 hours, while a further 51 percent weren't sure. With insufficient Government funding along with rising business costs to cover rent, utility bills and staffing - including new pension requirements - already putting significant pressure on early years providers, extending entitlement will only compound the financial pressures. Although the Government has promised an increase in the hourly rate for the 30 hours offer, the details are not yet finalised.
However, it seems likely nurseries will have to look at ways to plug the gap if finance from fees and Government funding does not match outgoings. This may mean charging more for places offered to one and two year olds - effectively subsidising the children who receive 'free' childcare - charging extra for items which had previously been included, such as meals, or even asking for voluntary contributions. And then there is the question of how childcare settings will staff the increased opening hours necessary to accommodate the extended entitlement. As I highlighted in a previous blog, the requirement for nursery staff to have GCSEs is exacerbating existing recruitment and retention issues.
I foresee doubling free childcare entitlement is only going to further highlight the absurdity of this stipulation when nurseries struggle to find additional staff to deliver the high quality Early Years education parents and children deserve. It's an uncertain time for the childcare sector and we will have to wait until next July, when a report on how the pilot areas have performed are made public, to get a clearer picture of what the future may hold for the sector.