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Government’s flagship free childcare scheme is already leading to nursery closures, sector warns

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Turner, Camilla
Publication Date: 
25 Jul 2017



The Government’s flagship free childcare scheme is already leading to nursery closures across the country, sector leaders have said, as they warn that many more will follow suit.  

This September, all working parents who earn less than £100,000 per year each will be eligible for 30 hours free childcare for three to four year olds – double the 15 hours they are currently entitled to. 

But leaders of the nursery school sector say that this will leave many facing closure, because the rate the Government offers is 39p below the actual hourly cost of childcare.

Under the existing 15 hours free childcare scheme, nurseries can make up for the shortfall in the Government rate by charging the parents more the rest of the time.

But when the number of free hours is doubled, nurseries who have signed up to the scheme will not be able to charge for additional hours since many families do not require more than 30 hours a week of childcare.

Some of the larger nurseries could increase their opening hours – but this is not an option for smaller nurseries which employ fewer staff.

Fidgety Fingers, a nursery school in Harlow, Essex which has been rated as “outstanding” by Ofsted, is among a handful of nurseries which have already announced that they are going to close down.

Under the Government's new scheme, nurseries cannot accept “fees” so would have to ask parents for “donations” to keep afloat. 

Kate Allaway, deputy manager at Fidgety Fingers, told The Daily Telegraph that the Government funding will not be enough to cover their costs, adding: "We can only ask for voluntary donations, and no business is able to run on donations.”

Anchors Nursery School in Rotherwick, Hampshire, closed this month, after 21 years with its principal Eve Wort blaming “the Government’s ill-thought-out 30 hour offer of free childcare”.

“I cannot afford to offer this and refuse to compromise on quality,” she said.

Other nurseries which are set to close include Rising Stars Preschool in Eastbourne,  Secret Garden Nursery in Skegness and Pip-Kins Day Nursery in Exeter.

Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA) said: "We have warned that nurseries will be pushed out of business by low hourly rates for ‘free’ places and it appears that this is now starting to happen.

“Our fears are that more will follow as expanded childcare is set to come into force in England in under two months.”

She added that the policy would be viable if there was an increased hourly rate and a change in the rules to allow nurseries to carry a compulsory charge for meals and other extras.

Neil Leitch, chief executive of the Pre-school Learning Alliance, said that many more nurseries across the country risk closing down due to the financial burden of implementing the new policy.

"The vast majority of providers predict that offering the 30-hours will hurt them financially, with most saying that funding rates still don't cover the cost of delivering places, and many are fearing closure,” he said.

Robert Goodwill, Minister for Children and Families, defended the hourly rate it has set, saying that it is “based on a comprehensive review of childcare costs”. 

"We are determined to support as many families as possible with access to high-quality, affordable childcare, which is why we are investing a record £6 billion every year by 2020 in childcare - more than ever before,” he said.

“This includes an additional £1 billion per year to pay for the free offers and to raise the total hourly funding rate to local authorities for three- and four-year-olds to £4.94 per hour. "This rate is based on a comprehensive review of childcare costs, which took into account current and future cost pressures.”

-reprinted from The Telegraph

Entered Date: 
26 Jul 2017
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