Capital faces free childcare shortfall

A report commissioned by London Councils found 24,100 new places are needed in the capital to meet the government’s pledge to offer 15 hours of free childcare to the 20 per cent most disadvantaged two-year-olds from September next year.

According to a survey by the Daycare Trust, the capital’s 33 local authorities believe the shortage will rise to almost 32,000 places, when the entitlement is extended to 40 per cent of disadvantaged two-year-olds from 2014.

London Councils said high levels of poverty, the increasing birth rate and property costs contributed to the high demand for places in London.

But it said the greatest barrier was a lack of government funding for the scheme, since providers would need £8 an hour to cover the cost of care for two-year-olds rather than the £5.71 rate announced in November.

“The shortage is mainly because providers are saying they wouldn’t want to offer the entitlement because it’s not financially viable for them,” said Caroline Dawes, head of children and young people at London Councils.

“The good and outstanding providers that can charge slightly more find it particularly challenging as being offered only £5.71 an hour simply wouldn’t cover their costs.”

As well as investing more revenue funding to address the shortage – which would cost the government an extra £48m – Dawes said London Councils wants ministers to give local authorities and providers more flexibility around delivering the entitlement.

She said some local authorities were trialling alternative models, such as in Greenwich where children’s centres were supplying ten hours of childcare per week and five hours of family support services.

“They’re bringing in the parents as well as the two-year-olds, which they’re finding more effective in terms of improving longer-term outcomes,” said Dawes.

“If there’s more flexibility in the system, it’s easier for providers to deliver the entitlement and we think that model would be more effective for overall family support.”

The chair of London Councils Jules Pipe said authorities in London were thinking “innovatively” about how to meet the places demand, but that the demographic challenges in the capital meant it required extra support.

His warning was backed by Anand Shukla, chief executive of the Daycare Trust, who said the “shortfall in day-to-day funding, for providers and for local authorities, risks compromising this ambitious policy”.