General election: Tory early years pledge ‘would push childcare funding deficit to £800m’
Joe Lepper
Wednesday, December 4, 2019
The Conservative Party’s childcare manifesto could increase the early years funding deficit to £824m, a new report has warned.
A cost analysis of early years pledges from all main political parties by independent research agency Ceeda shows all plans will leave nurseries facing a funding shortfall.
But, Conservative Party promises will leave early years providers with the biggest bill, says the analysis.
Earlier this year Ceeda said that the early years funding shortfall had risen by almost £50m in the past year to £662m. As many as one in five nurseries in deprived areas of England are facing closure due to this shortfall.
The research released this week by the agency estimates that if the Conservative Party win the 12 December general election the deficit could rise to at least £824m.
This is because no further funding has been promised by the Conservatives for current "free hours" entitlements, with any new money instead focusing on holiday care.
This substantial rise in the shortfall is based on current take-up trends of free hours as well as an increase in outgoings through a promised rise in the National Living Wage.
Commitments from the Labour Party and the Liberal Democrats also leave a shortfall but significantly less than the current deficit, found Ceeda.
In Labour’s case the shortfall is likely to be just a tenth of the deficit providers are expected to face through the Conservatives' plans.
Labour is looking to provide full-time free early education to two- to four-year olds regardless of family income as well as raise funding rates. The rate for two-year-olds would increase from £5.30 to £7.57 an hour and the three- to four-year-old rate rise from £4.49 to £5.19.
“This would leave providers with a significantly smaller shortfall of £80m in 2020/21,” states Ceeda’s analysis.
The Liberal Democrats early years promises are described as “ambitious” by Ceeda, but would leave providers facing a deficit of £314m once their plans have been fully rolled out.
The party has promised 35 hours of free early years education to two- to four-year-olds regardless of family income for 48 weeks a year. It has also pledged to extend free childcare to working parents of children aged nine months up to two years old, as well as boosting hourly funding rates.
“The party has pledged large funding increases, committed to an annual review of rates and plans the expansion of offers on a phased basis,” states the report.
“Assuming full delivery of the offer at pledged 2020/21 rates, nurseries and pre-schools would face an estimated deficit of £314m.”
Ceeda managing director Jo Verill adds that a phased roll out could reduce the bill providers would face through Liberal Democrat plans.
“This analysis of party pledges and sector operating costs throws into sharp relief the challenges which lie ahead for the sector whoever wins the election,” she said.
“A new Conservative administration would continue the funding freeze and seriously threaten the sector’s sustainability, particularly in deprived areas. In contrast, the Labour proposals appear well-costed, with significantly lower shortfalls.
“The Liberal Democrat commitment is the most radical and would need a careful, phased rollout tied to annual fee increases if large funding deficits and major staff shortages are to be avoided.”
Early Years Alliance chief executive Neil Leitch wants all parties to “be honest about the true cost of ‘free childcare’” for providers.
He added: “No other business sector is expected to deliver a flagship government promise without adequate funding – why should childcare be any different?
“More of the same is not good enough: we need to ensure funding covers the true cost of delivering quality childcare because anything less will continue to hit parents in the pocket and lead to many thousands more provider closures.”
