In a report published yesterday (Wednesday), the NDNAhighlights the problems experienced by many nurseries across the country. It has written to children's minister Beverley Hughes proposing a four-point action plan.
Measures include extra funding for local authorities or an interim amnesty allowing nurseries to charge top-up fees.
Last week, in a letter sent to local authority chief executives, the Government reiterated its commitment to ban nurseries from charging top-up fees.
The crux of the problem, the NDNA said, is under-funding. It also accused local authorities of over-regulation, effectively 'gold-plating' the Code of Practice by imposing 'time-consuming requirements' on nurseries.
NDNAchief executive Purnima Tanuku said, 'We need a clear picture of how local authorities are allocating the funding - is it fairly across the board, and if not, why not? We're fully in agreement with the free entitlement, but the issue is how that works in reality. The Government needs to take a close look at how the money is being distributed and ask why local authority funding is not covering the cost.'
Funding for the nursery education grant (NEG) is part of the Dedicated Schools Grant. The report said that for 2006-07 the DSG average guaranteed unit of funding per authority is 3,640. The NDNA said its findings suggest that local authorities are paying around 8 per two-and-a-half hour session, which averages over 38 weeks and 12.5 hours a week at 1,520.
The report said, 'Inevitably, some funding will go towards scheme administration, employing advisory staff and training programmes. For these overheads to absorb over 2,000 per unit seems excessive, which implies local authorities could be directing extra funds into childcare in schools.'
It is not just stand-alone nurseries or small chains, nor nurseries in the south-east, that are suffering financial consequences.
Liz Richardson, childcare and education director at Asquith Nurseries, which has 115 settings and is the UK's second biggest nursery chain, said the majority of its nurseries do not receive sufficient NEG funding. 'If a significant number of our nurseries are affected we make a loss across the whole group.'
She said the Government needed to come up with 'a realistic figure' to meet the costs of providing high-quality nursery education. 'High quality doesn't come cheap. There is a push for graduates, but the Government is not paying the amount to make free early education viable.'
Case studies: The nursery education grant nationwide
* In Bolton, providers were given just one week to examine new nursery education contracts. Unannounced inspections can be made by the local authority up to three times a year.
* A Brighton nursery has 84 children claiming the NEG, a 99 per cent occupancy rate, five qualified teachers on its staff and a long waiting list. The funding shortfall of 600 per child equates to a loss of 50,000 a year and the nursery has had to restructure fees to stay open. The nursery director told Nursery World, 'The ramifications are enormous. Last month I had to borrow money on my home to keep the nursery going.'
* A Bradford day nursery providing childcare for 85 families will have to either sack staff or pull out of the NEG. It receives 8.50 per 2.5-hour session, but the real cost is 14.50.
NDNA action plan:
1. The Government to provide added funding for local authorities or sanction an interim amnesty for top-ups.
2. DfES to survey local authorities on how many are following the code's advice that each child's entitlement be funded at the same rate in maintained and non-maintained settings.
3. DfES investigation into the real cost of childcare and day nursery overheads.
4. Feed the inquiry's findings into the Comprehensive Spending Review in 2007 and the first statutory guidance on local authorities securing free entitlement, due in 2008.
