Council announces £1.5m emergency funding to save childcare places

Birmingham City Council said the additional cash will be used to increase the rate nursery providers receive to offer free places for the period up to April 2016.

The move comes after a study by accountants KPMG found that private, voluntary and independent providers in the city were underfunded, and many risked closure.

The report found that a "significant number" of the 550 early years providers in the city would "withdraw their provision" for financial reasons.

Brigid Jones, lead member for children’s services at Birmingham Council, said it costs many childcare providers more to provide 15-hours of free early education each week for two-, three- and four-year-olds than they get in funding.

"If we don’t provide this vital extra support there is a real danger that many of these places could go out of business, and children would lose out," she said.

"So it is absolutely right that we take this step to support these places that provide such an important service. We need to ensure that our youngest children have the best possible care at such an important stage in their development."

A report on the proposals, which are set to be considered by Birmingham Council's cabinet on 8 December, states that if places are withdrawn, the council will be unable to meet its statutory duty to provide sufficient early years and childcare places.

It said currently 50 per cent of all three-year-olds and 98 per cent of the current two-year-olds taking up their early education entitlement are in private, voluntary or independent settings.

Under the plans Birmingham Council will increase rates by 27p to £3.86 per hour for three- and four-year-old places and by 35p to £5.24 per hour for two-year-old places. Payments will be backdated to September this year.

National Day Nurseries Association (NDNA), who contributed to the research, described the in-year emergency increase in funding as a “very unusual step”.

NDNA’s chief executive Purnima Tanuku said the move reflects the importance of supporting providers to deliver free places.

But she stressed the need for more fundamental reform of the way providers are funded, highlighting the potential impact of the introduction of the national living wage in April 2016 and the doubling of funded places the following year to 30 hours.

"This is the first step in the right direction, but not the end of the story,” she said.