Childcare funding in spotlight
Derren Hayes
Tuesday, November 27, 2018
Early years experts outline changes needed to ease financial pressures as parliamentary inquiry launched.
Pressure is growing on the government to address the worsening financial climate facing early years providers.
Recent analysis by the National Day Nurseries Association (NDNA) shows the childcare sector will be £437m worse off in 2019 as a result of October's Budget.
NDNA says increases in the national living wage will cost the average nursery an extra £42,000 a year, while the decision not to introduce business rate relief for nurseries will raise overheads further.
The Pre-school Learning Alliance is so concerned about the government's failure to address the issue in the Budget that it has written an open letter to children's minister Nadhim Zahawi calling for an urgent uplift in funding rates.
Meanwhile, research by Ceeda found that 44 per cent of childcare providers delivering 15 and 30 hours funded childcare have seen a real-terms fall in hourly rates since 2013/14.
The Professional Association of Childcare and Early Years (Pacey) has also warned that the closure of a business grants scheme will deter people wanting to become childminders.
Amid these growing concerns, the all-party parliamentary group for childcare and early years has launched an enquiry into funding of the sector.
Here, three experts outline what they think needs to happen to relieve funding pressures.
Provider view
By June O'Sullivan, chief executive, London Early Years Foundation
Running a business is difficult. It's made even more difficult when operating in a challenging economic and policy environment. The early years sector is mostly made up of small local nurseries, many of which are struggling. Indeed, the number of business closing is worrying especially given the negative impact on children.
It would help if the government looked at ways of reducing costs so nurseries retain more revenue to enable them to meet their overall responsibilities. Funding such as the childcare tax fund could be capped to a lower salary rate so there is more money to redistribute.
The government could cut direct business costs, such as capping business rates to a minimum, zero rate VAT so we can claim it back as schools, extend community asset transfers and expand other capital initiatives which would help investment in essentials such as training.
Much of the funding is directed at schools and while it's great schools have funds for training, the nursery sector also needs to be included.
We are seeing an increase in children with additional learning needs, especially communication disorders. We would benefit from a redirection of money to fund more immediate early intervention for these children, as well as more learning support staff and training for nursery staff.
Childminder view
By Liz Bayram, chief executive, Pacey
The Department for Education has decided to close the childcare business grant scheme in March, citing a lack of demand for funding. Prospective childcarers tell us the scheme plays a vital role, helping to support the large, upfront investment needed to establish their business.
Dig a little deeper and you see why demand may have reduced recently. New childminders tell us that registration with Ofsted has become fraught, and now takes around six months to secure. In some areas, this is compounded by delays to DBS checks. All of these hurdles need to be navigated before you can apply for the grant. No wonder so many give up.
Taking away financial support for these much-needed childcare providers is the wrong choice. Instead, the government should be working with local authorities, Ofsted and partners like Pacey to remove the barriers to starting up, and fund early education places sustainably for all childcare businesses.
The low rate of funding for the "free" entitlements in many areas is making it difficult for many established businesses to operate. Some are shutting their doors, while others are restricting the number of funded places.
Closing the grant scheme is likely to make the situation worse. We will see fewer new childcare businesses, especially childminders, at the same time as more leave the sector.
Local authority view
By Anntoinette Bramble, chair, Local Government Association children and young people board
Councils can step in and provide much needed support for young children from disadvantaged backgrounds to prosper and thrive. This important work is being undermined by reductions in funding and increases in workloads for council early years teams, poorer quality early education in areas of deprivation, the unintended consequences of the 30 hours free childcare policy and the new early years funding formula.
The 30 hours scheme was a bold initiative, however, we have repeatedly warned that the funding for this is insufficient, and we're concerned about negative impacts on the quality of provision and support for children with special needs, as providers struggle to balance budgets.
The new funding formula will also see the end of vital supplementary funding for maintained nursery schools, which are a major source of support for children with special needs. Our recent survey found many of those schools are likely to close if funding is not protected.
This is set against the wider backdrop of the challenges councils are experiencing in children's services, which face a £3bn funding gap by 2025, as a result of cuts in funding and increases in demand. Unless this is addressed by government, services such as early years support will face an extremely uncertain future.