Childcare experts raise fears that Birmingham pay plans are unviable
Laura McCardle
Monday, May 26, 2014
Early years providers are sceptical that Birmingham City Council's living wage plans are workable.
Enhancing wages for early years practitioners is an issue that the childcare sector has been grappling with for some time. For many early years providers struggling to keep costs down so that childcare remains affordable, raising practitioners' pay above minimum wage levels is a hard circle to square.
It is for this reason that many early years providers have criticised proposals put forward recently by Birmingham City Council that would require all local nurseries in the private, voluntary and independent (PVI) sectors to sign the Birmingham City Business Charter for Social Responsibility if they wish to contract with it and continue to receive funding to deliver the government's free childcare scheme.
Controversially, it 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.
Originally, nursery owners were told they would lose their funding unless they signed the charter and fulfilled the requirement by April 2015, but the council has now delayed the living wage element until September 2015 following a backlash from the sector.
The proposal - thought to be the first of its kind - attracted criticism from Neil Leitch, chief executive of the Pre-school Learning Alliance, who said the authority would be in breach of government guidelines if it were to go ahead with the plan.
His view is supported by the Department for Education, whose spokesman said councils must automatically fund "good" and "outstanding" settings, and only withdraw funding amid safety concerns. The DfE has since launched an investigation into the proposals.
But a letter sent to PVI nurseries following the backlash reveals the authority will take steps to ensure that all providers retain their funding allocations under the plans.
The letter explains that an independent analysis of the "actual cost and impact" of the policy on providers and users will be carried out before the council decides whether to approve the proposal.
"This will allow for the conclusion of the Early Years Review, which will include a review of the overall level of early education entitlement funding that is available and whether or not the hourly rates to providers should be adjusted," the letter states.
A council spokesman has confirmed that the authority would consider increasing the amount of funding it pays to PVI nurseries to deliver the government scheme - through the Dedicated Schools Grant - to help them fund enhanced staff wages if that is recommended by the independent analysis.
Leitch has welcomed the news, but it has not allayed his concerns. "The council's suggestion that all providers be required to pay the living wage would require a substantial increase - as such, it is important that it fully consults with providers and develops a clear understanding of the true cost of providing free places before making any decisions as to what would constitute an adequate funding rise," he says.
"We also remain concerned that the council's approach still appears to be at odds with the DfE's assertion that local authorities cannot place any additional requirements on providers, assuming they are rated good or outstanding, unless there are safety concerns."
Ryan Shorthouse, childcare expert and director of think-tank Bright Blue, says: "Since nurseries have to comply with staff-to-child ratios, it could be that an effective mandatory living wage harms the profitability and thus the sustainability of providers, especially when they report they are not given ample funding from local authorities to deliver the free entitlement.
"The living wage is laudable, and nurseries need to be able to pay higher wages to attract and retain better qualified staff."
The Birmingham Plans
- The council wants all private, voluntary and independent nurseries to sign up to a social responsibility charter for business
- Signatories to the charter are required to pay the living wage
- The current national living wage is set at £7.65 an hour (£8.80 in London) and the minimum wage £6.31
- The council is to consult on the plans
- At the same time, an independent analysis will consider the financial implications of the policy
- The authority will introduce formal contracts for providers as part of its commissioning of free childcare scheme places in September