Providers introduce charges to make 30 hours free childcare viable

The survey by the Pre-school Learning Alliance of 1,662 childcare providers, found that 37 per cent of settings said they had introduced charges for additional goods or services such as meals or snacks as a result of the 30-hour offer being introduced.

In addition, two thirds (66 per cent) of respondents said they planned to make changes to how they offered 30 hours in the next year mainly by increasing fees and charges.

Under the scheme, providers are not allowed to charge for the care they provide but can charge for extra costs incurred such as providing meals and nappies.

More than half (55 per cent) of respondents said their funding rate is both less than their hourly parental fee rate, and less than the hourly cost of delivering a place. As a result of this financial pressure, 40 per cent of providers said they were considering ending their involvement in the scheme next year.

The survey results also indicated further childcare provider closures could happen as a fifth of respondents said they did not consider their business would be sustainable in a year's time due to a lack of government funding.

The survey found that just 35 per cent of respondents were able to provide 30 hours places completely free to all parents in the first term of the initiative. A further 36 per cent said they are delivering fully free places to some, but not all, parents and 28 per cent of providers are delivering no fully free places.

One childcare provider who shared their experience of the scheme's first term said their running cost was £5.05 per child but that they only received £3.77 per child to deliver a 30 hours place.

"The funding rate has not increased for the seventh year, coupled with the cost of increased pension contributions and an increase in living wage and minimum wage. We are seriously concerned about our future survival in the next few years," another childcare provider said.

Many providers said increasing their fees was the only option to counteract the effects of the shortfall in funding from the government.

Others said they would be forced to limit the number of free 30 hours places they could offer to parents.

Neil Leitch, chief executive of the alliance, said the findings showed the government's "flagship childcare policy" was failing both providers and parents.

"Respondents have laid out in black and white that the 30 hours policy is simply not working, with a continued lack of adequate funding leaving many with no option but to pass the funding shortfall on to parents," he said.

"This has left parents to pay the price for government underfunding through often unexpected charges for things like nappies, food and trips, while the government continues to claim that it's delivering on its promise of ‘free' childcare," he added.

Purnima Tanuku, chief executive of National Day Nurseries Association said the findings echoed research carried out by her own organisation.

"The government needs to be honest with providers and parents that 30 hours funded childcare is not ‘free'. There is a significant shortfall between government funding rates and the cost to nurseries of providing childcare," she said.

"With a rise of six per cent in staffing costs taking place in April, it is now crucial that the government takes note of all this evidence and increases the hourly rate to providers to make this scheme sustainable," she added.