Childcare system ‘facing meltdown due to underfunding’

Jun 1, 2015 by

Childcare providers warn the system is severely underfunded as plans double free provision for three and four-year-olds in England are sped up.

The childcare system in England is at “breaking point” due to underfunding and a plan to double free provision could send it into “meltdown”.

That warning – from industry body the Pre-School Learning Alliance – comes as ministers say trials of the new scheme are being brought forward to 2016.

It will double the entitlement for working parents of three and four-year-olds from the current 570 hours a year.

The government says it is committed to increasing funding.

Currently, all three and four-year olds in England are entitled to 570 hours of free early education or childcare a year, which works out as 15 hours each week for 38 weeks of the year.

The Childcare Bill, announced in last week’s Queen’s Speech, would double this for working parents with a household income of less than £150,000 – although it is not clear yet how many hours they will have to work in order to qualify.

The change had been due to come into force from September 2017, but some working parents will be entitled to the extra help when pilots begin in September next year.

‘Breaking point’

However, the Pre-School Learning Alliance – which represents 14,000 private, voluntary and independent groups – says the government grant to childcare providers for the existing 15 hours falls, on average, 20% short of the true cost.

Research for the alliance suggests private, voluntary and independent groups, which provide 60% of childcare places, could lose up to £661 a year for every three and four-year-old in the scheme, if the plan goes ahead at current rates.

The calculations, by specialist research group Ceeda, suggest the total cost to the sector will be approximately £1.95bn per year but funding at current rates totals £1.7bn, a potential shortfall of £250m.

The alliance said many groups were already having to charge parents extra for hours of childcare not included in the scheme to make ends meet.

“I think this is crunch time, I think there will be a meltdown. You will see more and more providers withdrawing from the system and that will undermine and just railroad the entire policy.” said chief executive Neil Leitch.

“While we of course welcome the drive to improve the availability of childcare in this country, these figures clearly show the government’s plan to extend funded childcare hours simply cannot work without a substantial increase in sector funding.

“The so-called ‘free’ childcare scheme is nothing of the sort. For years now, the initiative has been subsidised by providers and parents because of a lack of adequate government funding.”

He warned: “I think we are at breaking point with just the 15 hours. Extend that to 30 and you will see a different position altogether.

“There are many nurseries that can’t physically extend their number of hours. They may operate in a church hall or community centre. Nobody has considered whether in fact they will be able to offer the 30 hours.”

‘Fair funding’

Linda Symonds, owner of Kidz Kabin nursery in north London, said the shortfall to her business was about 50%.

“The way they have put it across to parents is very misleading. The government is pulling wool over all these families’ eyes if they tell them this childcare is free.

“At the moment we don’t even break even on what they pay us. Unless we make some profit we can’t invest and pay staff properly.”

Media caption Employment Minister Priti Patel: “This policy will benefit up to 600,000 households”

The bill is being introduced to Parliament on Monday and a consultation launched to gather opinions from childcare providers, parents and others on how the policy should work in practice.

Following its announcement in the Conservative manifesto, the cost to the Treasury was estimated at £350 million a year, but Employment Minister Priti Patel told the BBC the sums involved were yet to be finalised.

Ms Patel, who is the leading the task force charged with implementing the plans, said: “We are going to be consulting at the outset to ensure that the funding level is right – fair for the providers and also for the taxpayer.

“We are committed to increasing the funding because we recognise that when you increase the number of free hours the cost will also increase.”

Asked why households with a relatively high income would receive help, she added: “This isn’t about subsidising well-off people at all. This is about providing affordable childcare and increasing childcare provision for working families.”

Ministers say up to 600,000 families could benefit, saving as much as £5,000 a year.

In Scotland, three and four-year-olds are entitled to up to 600 hours of free early years education or childcare a year, while in Wales, provision is for a minimum of 10 hours a week.

In Northern Ireland, it is limited to four-year-olds only, for up to 12.5 hours a week.

Average weekly childcare costs by region
Region Nursery 25 hrs (aged 2+) Childminder 25 hrs (aged 2+) After-school club 15 hrs Childminder after-school pick-up
East of England £107.43 £120.43 £49.46 £57.87
East Midlands £107.74 £90.54 £48.20 £72.13
London £140.63 £144.27 £53.65 £89.94
North East £107.08 £95.48 £49.67 £62.01
North West £102.27 £89.94 £43.03 £52.11
South East £128.16 £112.67 £52.03 £65.63
South West £108.87 £101.1 £49.16 £60.53
West Midlands £110.20 £94.08 £43.18 £62.22
Yorkshire and Humberside £92.37 £88.83 £42.84 £64.14
England average £111.64 £104.15 £47.91 £65.18
Scotland average £99.93 £99.3 £49.03 £64.56
Wales average £103.44 £96.81 £49.74 £59.97

Source: Childcare system ‘facing meltdown due to underfunding’ – BBC News

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