Nurseries may 'opt out' of offering 30 hours free childcare, warn MPs

The House of Commons public account committee review of the expansion of free childcare concluded that nurseries may opt out of offering 30 hours because they will no longer be able to charge parents extra to offset lower funding rates paid by local authorities under the scheme.

It found that some settings currently charge parents more for the extra hours of care they purchase above the current 15-hour free entitlement.

The committee also said the Department for Education has not planned to ensure there will be enough qualified early years staff to provide high-quality childcare to meet future childcare demand.

After hearing evidence from early years organisations and providers, the committee has recommended that the DfE uses the eight areas piloting the 30 hours - which take place from this September this year - to test the sector's capacity to meet expected demand for the expanded entitlement, and implement any changes in time for the national rollout next year.

The committee's report found, however, that the government does not have concrete plans in place to publish any of the pilot's findings before September 2017. 

The government "will have little time to evaluate the results and implement any lessons learned before it rolls out the new entitlement", the report states.

The committee also found a lack of communication and data sharing between the DfE and local authorities.

The DfE does not know how local authorities ensure there are enough childcare places to meet local demand, the report states, and has no mechanism to intervene if the 30 hours affects providers, ability to provide places.

The committee found that the DfE does not know how much money allocated to local authorities to fund the scheme is passed on to providers. Some councils, the report states, keep as much as a third of the funding meant for providers to put towards other services.

MPs also heard of cases where parents were told by nurseries they could only receive their free entitlement if they also took up paid hours - in order to cross-subsidise for being under-funded.

DfE guidance prohibits settings from doing this, but has admitted it is aware it is happening. It states local authorities have a responsibility to step in where this happens - and the report has recommended the DfE reiterates this to local authorities.

Responding to the report findings, National Day Nurseries Association (NDNA) chief executive Purnima Tanuku said: "Nurseries want to be able to deliver this flagship policy which will benefit children and their families.

"However, this increase in funded hours will not be possible for many nurseries to deliver if they can't remain sustainable as businesses.

"Currently, 89 per cent of nurseries offering 15 free hours per week manage an average annual shortfall of £34,000 by charging parents more for additional hours or for younger children. The average three and four-year-old goes to nursery for 20 hours a week so there will be no additional hours for nurseries to cross-subsidise. A real consequence of this could be a sharp increase in fees for parents of under threes.

"Private, voluntary and independent nurseries make up the vast majority of providers for funded hours but our recent survey showed that only 45 per cent of nurseries said they were likely to offer 30 free hours. There is a real danger that unless nurseries are confident of receiving adequate funding for high-quality childcare, they won't be persuaded to participate."

Last week, childcare minister Sam Gyimah said he is confident there will be enough capacity for nurseries to offer the 30 hours.