Nurseries have criticised the Government’s childcare plan with some opting out as the first parents in England now benefit from 15 hours of taxpayer-funded care for two-year-olds.
Early years providers warn they could have to close or increase prices for parents because the funding is merely a ‘subsidy’ and does not cover their rising costs.
The Government has been accused of ‘rushing’ providers into the plans without proper consultation – and some have even opted out because it will cost too much.
Rishi Sunak said the plan would ‘build a brighter future for families and help to grow our economy’, but Labour has warned families will struggle to access places.
Officials expect the number of parents taking up places to be in the ‘thousands’ initially but that is expected to grow by ‘tens of thousands’ over the coming weeks.
The policy, which came into effect yesterday, is the first phase of a plan from the Conservatives to dramatically expand funded childcare for working parents.
The offer will be extended to working parents of all children older than nine months from September this year, before the full rollout of 30 hours a week to all eligible families a year later – but nurseries fear the plans are ‘not fully costed’.
Labour published a dossier about ‘childcare chaos’ including testimonials from nurseries across England, with one warning that it could be ‘forced to go bust’.
Prime Minister Rishi Sunak paints at the Busy Bees nursery in Harrogate on August 21 last year
Lou Simmons, owner and co-founder of Abbotswood Pre-School and Day Nursery in Romsey, Hampshire, has opted out of the scheme offering 15 hours of free childcare a week for two-year-olds.
She told Sky News: ‘We’ve rushed into this scheme. I’ve actually opted out of this scheme, but here we are in this week and nurseries are still asking is the funding rate going to be increased over the next three or five years, and where is the sector going to be after rolling out all this additional free childcare?’
Asked why she had opted out, Ms Simmons said: ‘If you look at how the three-year-old funding has been (rolled) out, we haven’t been offered proper or adequate funding over the past seven years that the three-year-olds have been able to access funding, so it hasn’t matched national minimum wage contributions, it hasn’t gone up with inflation and I’ve had to pay out and cover the cost.
‘Not just me – parents are massively having to cover the cost. It’s not free.’
Claire Richmond, manager at Goslings Nursery in Coventry, said she felt ‘really angry’ about the plans and complained of a lack of consultation by the Government.
She said recently published rates in her area were ‘actually OK right now for those aged two and under, but warned it ‘won’t be a favourable rate for long’.
This is because the minimum wage has gone up by 10 per cent from £10.42 to £11.44 an hour this month, and Ms Richmond said wages make up nearly 70 per cent of most nurseries’ overhead costs.
She added that funding for three and four-year-old covers roughly 70 per cent of the ‘true costs of delivering the funded hours’, since its inception eight years ago.
Ms Richmond continued: ‘Funded places are essentially price fixing the majority of a nursery’s chargeable hours and immediately puts a ceiling on what we can deliver quality wise.
‘As a provider, your creativity to break the mould and do something amazing for the young people in our care is capped by the Government’s lack of vision.’
She gave an example of having attracted and retained two full-time early years teachers to the nursery, saying salaries for teachers are £35,000 to £39,000 and ‘we need to remain competitive in our salary offers with schools, to retain this quality provision in-house’.
Ms Richmond added: ‘We do so at present by charging under-threes more than it really costs to help deliver teachers for our preschool provision.
The phased policy is a plan to dramatically expand funded childcare for working parents
‘With many more hours price fixed once under-twos are funded, it would be impossible to continue with this level of service and high quality education.’
READ MORE Rishi Sunak insists he’s delivering on his childcare pledge as first parents benefit from 15 hours of free care – but Labour claim the sector has been left in ‘chaos’ with huge waiting lists and nurseries warning they could go bust
She called on the UK’s Competition and Markets Authority to ‘look into this’.
Ms Richmond said: ‘My biggest concern is that the fact our rates are fixed by the local authority. Once we can no longer deliver it, we are essentially forced to go bust.’
Her nursery was established in 1990 and employs 17 staff – ten of which have more than 20 years’ experience in early years each.
And she warned: ‘If we go bust, those excellent practitioners are lost to the sector forever.’
The Government is confident that the childcare sector is ready to deliver the offer and make sure parents have the childcare they need.
And Gerry Garvey, owner of the Muddy Boots Nursery in Cumbria, said the offer of funded places for two-year-old children was a ‘really good idea’.
But he added: ‘The idea has not been fully costed or thought through and has not taken in account the views of the sector or the recommendations that they have provided.’
Mr Garvey said the rollout in April will see ‘a lot of disappointed parents unable to claim as there are a lack of nursery places, due to systemic underfunding and lack of staff to provide the places’.
He also called for more thought to be given in ‘how initiatives are introduced to keep staff in the sector, which would enable settings to provide more places, the current offer of getting staff into the sector is unrealistic and an insult to existing practitioners’.
Lou Simmons, owner and co-founder of Abbotswood Pre-School and Day Nursery in Romsey, has opted out of the scheme offering 15 hours of free childcare a week for two-year-olds
Labour pointed to an analysis of Ofsted data that suggests the number of childcare places fell by more than 1,000 between March and December last year, ahead of the anticipated increase in demand for places.
‘It could displace places intended for disadvantaged two-year-olds’
Nicola Rahman-Knight, the operations director of Zizus Day Care in Middlesbrough, is concerned about a ‘lack of foresight’ for when the nine-month-old funded hours start this September.
She said: ‘This may result in working families, who have not traditionally utilised childcare services, occupying available spaces.
‘Consequently, the organic flow through the nursery system could potentially displace places intended for disadvantaged two-year-olds.’
Ms Rahman-Knight citied research suggesting that an additional 60,000 to 100,000 places will be required by September 2025.
She added: ‘With nursery spaces already limited, this additional influx of children will adversely affect those that arguably need access to childcare the most.’
Sandra Roles, of Dimples Day Nursery in Dartford, Kent, said the Government’s idea to increase ‘free places’ for babies from nine months old ‘sounds great but it is underfunded, admin heavy and is actually causing some nurseries to close as they can’t make ends meet’.
She added: ‘Ninety per cent of a child’s brain develops from conception to the age of five years, therefore a child’s early years are the most important and formative years of their lives.
‘There are more children in childcare than ever before, therefore, nursery experiences are literally building the brains of the future.’
‘To do this well, we need highly-qualified, loving, caring, playful and nurturing practitioners. These skilled staff need to be paid appropriately, have a good working environment and be valued for the amazing work that they do.’
She also cited ‘absurd’ changes to ratios so that nurseries can save money on staffing because they can employ less staff.
Ms Roles continued: ‘Children need quality interactions where they can play, take risks, make attachments, learn to self-regulate and more.
‘This needs support and role modelling by skilled adults so having less adults lessens these quality interactions. We certainly won’t be changing our ratios.’
She backed a national recruitment campaign for more staff but said that ‘unless wages and working conditions change at more nurseries, this is just hot air’.
Labour has published a dossier about ‘childcare chaos’ including testimonials from parents and nurseries across England.
Some parents complained of high costs and extra fees to pay, while others reported 18-month waiting lists at some nurseries, the dossier found.
Valerie and Duncan Wells run First Steps Day Nursery, a provider in Great Wilbraham, Cambridgeshire, with 42 places and 20 staff.
Claire Richmond, manager at Goslings Nursery in Coventry, said she felt ‘really angry’ about the plans and complained of a lack of consultation by the Government
They said: ‘The problem with the funding, which has not been thought through and is therefore misleading to parents is that it’s not free.
‘The funding is for 38 weeks only and for 15 hours a week and was originally set up for term time only pre-schools.
READ MORE 90,000 more children may need childcare places this year – with over 11,000 nursery staff needed to look after them
‘Full time nurseries have running costs for, generally, 51 weeks of the year, 52.5 hours a week. The funding at best is a subsidy and should, to keep things simple, be paid directly to the parents.
‘This is all based on the 30 hours currently for three-plus age children, with 15 hours being introduced from April for two-year-olds and a further roll out for babies from nine months in September.’
They said this would create ‘heavier workload to organise’, adding: ‘The whole system is outdated and in future the government need to consult with those that actually know the industry before introducing poorly thought out and unsustainable policies.’
The Wells added that increased wages, national insurance contributions and pension payments will cost the nursery £30,000 a year.
And they said: ‘Fees will have to (go) up but there comes a point when it is not fair to expect parents to cover ill thought-out Government policies. They will withdraw their children from nurseries and the whole industry will collapse.
‘It is always said how important the industry is to the future of the economy but we are treated as poorly paid, undervalued babysitters.’
Meanwhile Lydia Wright, managing director of Little Pearls Nursery in Exeter, Devon, told how her centre was ‘already having significant capacity issues’.
She said that this has most recently seen the site ‘not being able to accommodate younger siblings of current children in the nursery due to the increase in enquiries and bookings’.
Gerry Garvey, owner of Muddy Boots Nursery in Cumbria, said the offer of funded places for two-year-olds was a ‘really good idea’ but ‘has not been fully costed or thought through’
Ms Wright added: ‘With no space to expand we are unfortunately now beginning to turn families away, let alone increase hours for families already with us.’
Claire Dimpfl and Francesca Short from Tadpoles Nursery Group in London, blasted the ‘unbelievable mess’ of funding levels and how it is delivered to early years providers, saying it was ‘absolutely atrocious’.
‘Sustainability of the sector feels precarious’
Laura Gapski, director of Bright Sparks Private Day Nursery in Mansfield, said funding rates in Nottinghamshire for the childcare expansion for under-threes are ‘welcome and realistic’.
She said she was grateful for recognition that the ‘provision of outstanding provision from a well-trained and respected workforce needs strong financial backing’.
But Ms Gapski continued: ‘Regrettably, providers will rely on a proportion of this income to sustain three to four-year-old children, for whom the funding rate continues to result in a financial loss for providers.
‘Without adequate funding models across each age group, the sustainability of the sector still feels precarious.’
She added that concerns were growing about the expansion of wraparound care as councils ‘prepare to spend £289million on ensuring that there is sufficient wraparound care for all primary school aged pupils by September 2024’.
Ms Gapski also said: ‘We are already in the thick of a recruitment and retention crisis arising from years of chronic underfunding and now the pool of willing job seekers will be further diluted as councils advertise more lucrative employment opportunities across much shorter terms than our own.
‘Parents will be waiting a very long time for their places unless the issues of recruitment and retention and funding – including sufficient financial support for children with SEN (special educational needs) – are addressed before expansion.’
They added that rents and rates in their area are some of the highest nationwide and funding levels being provided ‘would not cover a yearly wage for an unqualified, part time babysitter let alone a highly qualified and experienced teaching practitioner’.
Ms Dimpfl and Ms Short also pointed out the costs of the basic ground rent of a setting along with ‘essential equipment, utilities, safeguarding, health and safety costs etc’.
They said that they receive funding at a dictated level of £7.47 per hour for the three-years-old Free Early Education Entitlement (FEEE), or £9.98 per hour for the two-year-old eligibility.
Ms Dimpfl and Ms Short added that this is then taxed as part of the business income, and so ‘the actual level of funding we are receiving for each child is far, far lower’.
They called on the Government to stop calling the provision ‘free’, adding: ‘It is not ‘free’ – on no level is this free, call it what it is, plain and simply a ‘subsidy’.
‘If the children of this nation are given what they need to celebrate them, ensure their lives are enriched at a young age – think of what the future of our nation could look like.’
Katryn Bennett, of Acorn Nursery in Somerton, Somerset, has warned it is becoming ‘harder to break even let alone stay sustainable or profitable’.
She said the hourly funded rate has increased 5 per cent, which is well below the minimum wage increase of at least 10 per cent.
Ms Bennett told BBC News : ‘There is a gap between what it costs us as a provider and what we receive from the government.’
She also pointed out that while the government subsidy is £5.25, the nursery needs between £7.50 to £8 per hour just to break even.
Merita Selaci, manager of Marsham Street Nursery in London, said getting enough staff was a major problem for the early years industry.
She told BBC News : ‘We all have issues with staffing, we had a crisis with staffing.
‘It’s so difficult not only to get them but also to retain the staff because of the cost of living.’
Katie George, owner of Georgie Porgie’s Pre-school in Coventry, said she could be forced to shut after her gas bill increased from £400 a month to £1,200.
She also told BBC News : ‘It’s not just that, the food has increased massively, water rates have increased massively, rent has increased.
‘Staff salaries have increased, rightly so, but if the funding isn’t increasing very much… it doesn’t calculate.’
Lydia Wright, managing director of Little Pearls Nursery in Exeter, Devon, told how her centre was ‘already having significant capacity issues’
Chris McCandless, chief executive of Busy Bees Nurseries based in Stratford-Upon-Avon, was quoted in the Government’s press release today, backing the scheme.
He said: ‘We welcome the Government’s continued commitment to expanding support for early years education.
‘The increase in funded hours will help working families and give more children the best start in life, and we’re really pleased that the rollout has been accompanied by the clarity on future funding rates we needed to invest in creating the additional capacity required in our centres.
‘No thought for implications on childcare providers’
Diane Gregory, from Childsplay Claremont Nursery Cooperative in Newcastle upon Tyne, said the childcare expansion was ‘great news for parents’ and ‘very welcomed’.
But she added that the implications on the provider to operate and manage the scheme ‘has clearly not been given any thought’.
Ms Gregory also said: ‘The expansion to other age groups has greatly increased the numbers of families entitled for all early years providers like ourselves.’
‘We’ve already seen a significant increase in interest in our nursery places in recent months from parents looking to make use of the funded hours, and expect to welcome more children to our nurseries this year and in subsequent years as the scheme expands further.’
Jo Turley, managing director of Ashbourne Day Nurseries which operates 32 settings across England, was also quoted in the Government’s press release.
She said: ‘We welcome the extension of government funding in early years childcare and education as a positive step forward.
‘Quality early years education is foundational in shaping a child’s future, and we eagerly anticipate any benefits this extended funding will bring to families across our nurseries and the broader community.’
In a statement today, the Prime Minister said: ‘Last year we promised the biggest ever expansion in childcare provision this country has ever seen, and today we are delivering on our plan with 15 hours of free childcare for parents with two-year-olds.
‘We want to give working families the peace of mind that they will be supported and our full expansion will save parents £6,900 a year, helping to build a brighter future for families and help to grow our economy.’
Education Secretary Gillian Keegan said the Government was ‘on track for more than 150,000 children to take up government-funded places’.
She added: ‘Support with childcare costs has an enormous ripple effect, freeing up parents to increase their hours at work and put more money in their pockets, or giving them the security to try out a new career or passion. It also contributes to economic growth and opens up new career opportunities in a hugely rewarding sector.’
But shadow education secretary Bridget Phillipson said: ‘After 14 years of Tory failure, it will be Labour who get on with the job and finally deliver the much-needed childcare for parents.’
Neil Leitch, chief executive of the Early Years Alliance, said: ‘If there is one thing that the first phase of the entitlement expansion has shown, it’s that simply promising ‘more free childcare’ is meaningless if you’re not willing to invest in the infrastructure needed to deliver it.’
He added that many nurseries, childminders and pre-schools have had ‘no choice’ but to limit the number of new funded places they offer and it was unsurprising that many parents accessing a place for the first time have found it ‘difficult, if not impossible’.
Meanwhile Lord Willetts, president of the Resolution Foundation and a former Conservative Party MP for Havant, urged the Chancellor to focus on helping younger generations to capture older voters.
He told the BBC Radio 4 Today programme: ‘In the last two financial statements, Jeremy Hunt has cut national insurance for employees, not income tax, and that targets younger workers.
‘And now we have got this extra help for childcare, so, yes, anything that focuses on younger people is great.
‘But I would add there is also some evidence that a significant number of older voters are so worried about the financial prospects for their children and other close relatives that they report that their voting intentions will be affected by help for younger people. It looks like this is about 20 per cent of people over 60.’
It comes after Labour accused the Tories of having a ‘childcare pledge without a plan’.
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