An investigation into local authority provider payments by the National Day Nurseries Association (NDNA), reveals of the 66 councils that responded to a Freedom of Information (FOI) request and pay providers monthly and/or offer a choice, just 5 per cent pay providers upfront. The remaining 56 councils that responded, pay providers in arrears, and of these, 45 per cent don’t make payments until week three or week four of the month.
The NDNA sent a FOI request to 151 local authorities in England asking if they paid early education and care providers on a monthly or termly basis for the funded childcare offer. A total of 122 councils responded.
According to the data, over the past two years, the majority of councils have not spoken to providers about funding. When asked if they had consulted with providers, only 56 of the 122 local authorities that responded said they had consulted with providers.
Nursery closures
Separate research by NDNA suggests 199 nurseries were forced to close between September 2023 to the start of this academic year.
The findings are based upon information shared by NDNA’s members and closures captured from media coverage across the UK.
Just under four in ten of the closures (38 per cent) are based within the 30 per cent most deprived areas of the country including parts of London, Birmingham, Liverpool and Leeds.
It comes at a time when the number of childcare places needs to grow to meet demand for the full rollout of the 30 hours offer by September 2025.
'Councils can do more to help cashflow in early years settings'.
Purnima Tanuku, chief executive of NDNA, said, ‘We have been very carefully monitoring nursery closures since 2017 when 30 hours of funded childcare was first brought in. We’ve seen a trend of nursery closures and this year’s findings show that this is not slowing down.
‘A lot of this comes down to chronic underfunding, particularly for three and four-year-olds. Earlier this year providers told us that their staffing costs alone were increasing by around 15 per cent but the rate paid for places only went up by 4.6 per cent. By next year, 80 per cent of an early years setting’s income will come from Government-paid hours and if those rates aren’t right, more will face closure.
‘There’s more that the Government can do; like addressing underfunding, supporting nurseries to expand with capital grants and easing financial burdens by removing unfair business rates. Our research also shows that councils can do more to help cashflow in early years settings by paying funding early and working with providers to co-design a funding system that truly works.’
