- Question marks remain over the successful roll out of the Government's extended hours as early years providers await funding rates before committing to the scheme.
- The Government has dismissed any concerns with the roll-out, reassuring parents they will get a funded place.
- Some early years providers are withdrawing all funded places or planning on only offering places for twos and under due to underfunding of three- and four-year-olds.
With the Government’s expanded childcare scheme spinning into ‘chaos’, just months ahead of the roll-out of the first phase, early years providers have been warned that signing up to offer the places would be ‘financial suicide’.
The policy, which is due to be phased in from April, has been subject to criticism since it was first announced last April by the Chancellor, with sector organisations warning the expansion will be ‘just a pipe dream’ and it will ‘fail before it gets going’ without further Government action. Doubts were also raised over the short amount of time to prepare for the expansion through building the workforce and capacity.
As applications for the scheme opened to parents at the beginning of the month, it was revealed thousands had struggled to access a code for their two-year-old to give to their provider.
As a quick fix, the Government last week announced it would be sending temporary codes to parents who had experienced difficulties with the Childcare Service system, which has been plagued with technical difficulties since it was launched nearly seven years ago. Some providers on social media even compared the Government’s Childcare Service IT system to that of Fujitsu’s Horizon, which famously led to sub-postmasters being incorrectly accused of fraud.
It has also been revealed that the Department for Education (DfE) had miscalculated the cost of the first three terms of the under-twos places, starting from September, by an estimated £150 million. The DfE mistakenly assumed it would need to fund 22 weeks between autumn 2024 and spring 2025; however, it has come to light that some local authorities will have up to 26 funded weeks. The department subsequently committed to covering the additional cost for all local authorities.
On top of this, many early years providers are still in the dark about what funding rate they will be paid from April to deliver the extended entitlement. As such, Neil Leitch, chief executive of the Early Years Alliance, has warned providers that without knowing how much money they will get, it would be ‘financial suicide’ to commit to offering the places. He said, ‘You cannot run a business if you know what your costs are but have no idea what your revenue is likely to be.’
Staffing and costs
At the same time, the sector continues to be suffering from a recruitment and retention crisis and rising running costs.
Around 50,000 additional staff are estimated to be needed this year and again next year to maintain existing provision and offer the expanded entitlement, according to research by Leeds University for the Early Education and Childcare Coalition. The figures are based on current staff turnover rates and increased demand.
The YMCA recently pointed out that there was 20 months until the full roll-out of the extended hours, yet it takes 18 months for learners to achieve the necessary Level 3 early years qualification.
Any concerns among the sector and parents were dismissed by the children and families minister David Johnston last week, who said he was confident that the roll-out would be delivered as planned.
Responding to an urgent question in the House of Commons on the planned delivery of the scheme, tabled by the shadow education secretary Bridget Phillipson, the minister went on to imply he wasn’t concerned about there not being enough places to meet demand, as ‘only a small number’ of local authorities had reported an issue.
He also said that given councils have to pass on 95 per cent of the funding to providers, the latter have a ‘pretty good’ idea of what they will receive. The minister did, however, encourage local authorities not to wait until the 31 March deadline to tell providers their funding rates, and to do it ‘as early as possible’.
Nursery World understands that just a handful of local authorities have informed early years providers the rates they will receive to deliver the funded places from April when the first phase of the scheme is rolled out.
Due to this, some nurseries, pre-schools and childminders have yet to commit to providing the places, as findings from a survey by Pregnant Then Screwed earlier in the month highlighted. Over a third of parents that took part reported that their provider is currently unable to confirm whether they will accept the codes. Just 55 per cent of the 6,058 parents who responded had found a setting that would accept their code.
One mum, Alison, told Pregnant Then Screwed, ‘We love our nursery, we currently pay for my two-year-old daughter to go two afternoons a week (as that is all we can afford).
‘When asking [sic] the nursery manager about the funded hours, she said they weren’t sure if they will be accepting them yet as the council were due to have a meeting to discuss. The manager encouraged me to apply for the funded hours and she would let me know asap.
‘It is not just frustrating for parents waiting to find out, but also for the nurseries as they are so understaffed and underpaid already, they could have got a head start with paperwork and working out schedules if they were told sooner. The Government/councils knew this was coming but yet they are so unorganised as usual, not thinking about the bigger picture at all.’
Another parent, who recently lost her job, said she is having to pay £900 a month to keep her child at nursery so she doesn’t lose her place when the funding comes in and she starts a new job in March. However, the setting has yet to confirm it will be offering the funded places for two-year-olds.
Several threads on early years Facebook groups also suggest that parents taking up the expanded funded hours could end up paying more money to early years settings than what they expect.
They reveal that many providers considering offering the new funded entitlement are looking at introducing a charge for meals and consumables to all parents in receipt of the funded hours in order to cover any deficits across the setting.
Providers have reiterated that the Government needs to stop advertising the places as ‘free’.
Nursery World also understands that childminders who are set to receive a level of Government funding which is above what they currently charge, are considering increasing their fees to match this rate for paid-for hours during school holidays.
Withdrawing three- and four-year-old funded places
The expansion of the funded hours has also led some providers to withdraw, or consider withdrawing, three- and four-year-old places.
One parent who responded to Pregnant Then Screwed’s survey said her nursery had ‘dropped the bombshell’ that it cannot afford to continually take a hit on the deficit between its daily rate and what it receives from Government, even with charging for consumables, so it is opting out of the 15 and 30 hours from April.
Separately, a childminder on Facebook, reported she had stopped taking funded children last summer.
Joeli Brearley, chief executive and founder of Pregnant Then Screwed, told Nursery World, ‘We are pleased that the DfE has now fixed some of the problems parents have faced with the system.
‘However, there are still a number of challenges ahead. Many providers don’t have the information they need from the local authority to plan effectively, so they can’t confirm whether offering this benefit is feasible for their business.
‘We are also hearing from some parents that their childcare bill has increased significantly in the last few months to account for the gap in funding from the Government.
‘Some childcare settings are removing the funding for three- and four-year-olds, as well as not enrolling in the funding for two-year-olds.
‘We still have a very long way to go before our childcare system is affordable, accessible, high-quality and one which parents can truly rely on.’
CASE STUDY
Nursery World has heard from one childminder in Hampshire who, once the new funding comes in, will be giving notice to her three- and four-year-olds.
She said, ‘I’m looking at not keeping on the children who are three/four as the funding rate is under £5 per hour, per child. It makes no business sense to have children on such a low rate. My parents do pay for consumables/sustainability, but I still operate at a loss – approximately 40p per hour. If a child has 570 hours of funding per year, this loss equates to nearly £230 per child. I have nine three- and four-year-olds at the moment, so that’s a hell of a lot of money to swallow!
‘I am not looking forward to telling my existing three-year-olds I won’t be able to look after them and that they will need to secure a place elsewhere.’
She said she can’t understand why the Government hasn’t increased the funding rate forthree- and four-year-olds. According to Government figures, published in November, the average hourly rate for under-twos will be £11.22, £8.28 for two-year-olds and £5.88 for three- and four-year-olds from April. At the time, Purnima Tanuku, chief executive of the National Day Nurseries Association, which analysed the funding rates, warned that the new rates for three- and four-year-olds will ‘fall short of the needed 10 per cent increase to pay minimum wages from April’.
However, for two-year-olds, she said it was much more of a ‘mixed picture’.
The childminder also highlighted other challenges she faces operating under Hampshire County Council, which have meant all her ‘safety nets’ are no longer allowed, including:
Not being able to charge a deposit for funded children.
A no notice period for parents. This means parents can decide to remove their child at the last minute and the provider has to pay back any funding not used to the local authority.
She added, ‘I make a fantastic living from my childminding business, but I have to have a business head on at all times to ensure I get the maximum income. I also pay my staff over national living wage as they are so crucial to my business.
‘I want to be fair to my parents, but this funding has opened up a can of worms.’
