Birmingham providers forced to pay 'living wage' to retain childcare funding

Under proposals put forward by Birmingham City Council, nurseries in the private, voluntary and independent (PVI) sectors will be required to sign the Birmingham Business Charter for Social Responsibility if they wish to contract with it and continue to receive funding to deliver the free childcare scheme from April 2015.

The council requires all signatories to the charter to pay their employees the living wage – an independent rate set annually by the Centre for Research in Social Policy at Loughborough University on behalf of the Living Wage Foundation.

The current national living wage is set at £7.65 an hour (£8.80 in London) and the minimum wage at £6.31, meaning some PVI nurseries will be forced to increase staff wages – potentially by raising childcare fees – in order to retain their free childcare funding allocation.

Under a government scheme, all disadvantaged two-, three- and four-year-olds are entitled to up to 15 hours of free childcare from a local provider, with funding for the initiative allocated to nurseries through local authorities.

A private nursery owner told CYP Now that managers were made aware of the Birmingham plan during a series of meetings held last week to discuss the provision of childcare places for disadvantaged two-year-olds.

He said the announcement, which was “slipped in” at the end of the meeting, has caused uproar.

He said: “Under their social policy, if you’re taking two-, three- or four-year-old funding off the council, you are effectively being treated as a supplier.

“Under the Business Charter for Social Responsibility, they’re now trying to dictate that the private sector would have to pay the living wage to all staff.

“It’s not an issue for me because I’m in an affluent area but there isn’t any reason I would want to do that any more [deliver the government scheme] if I wasn’t.

“It just seems ridiculous when they’re trying to increase places.”

A spokesman has defended the move and said the aim is to improve conditions for nursery staff.

He said: “The proposed changes will put our relationship with PVI providers on a sounder footing as we will be introducing formal contracts between the council and providers – something that has not been the case in the past.

“Any organisation entering in a contractual arrangement with the city council will be subject to the Birmingham Business Charter for Responsibility, which is designed to raise standards across all aspects of business operations in the city.

“One requirement of the charter is the payment of the living wage to employees, to ensure they receive a fair day’s pay for a fair day’s work.

“We recognise that in the broader social care agenda this is an issue, so we will later this year be carrying out a consultation on how this will be achieved.”

Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA), agreed that practitioners deserve a decent wage but believes there is an issue of sustainability.

She said: "NDNA and nurseries want a well-rewarded early years workforce with pay that reflects their commitment, expertise and qualifications.

"However, the current level of local authority funding for two-, three- and four-year-old places in PVI nurseries is one of the major factors in the low pay we see in the sector.

"For many nurseries, paying the living wage as a minimum to all staff would only be sustainable if it went hand-in-hand with radically increased funding – both from their local authority and also from parents.

"Imposing wage controls risks both inflating the costs of childcare for paid-for places and reducing supply of funded places as providers will be unable to comply and pull out of providing places."