Hedra Consulting, which was commissioned by the Government to look at the operation of the free entitlement in a number of local authorities, found that 'the free early years entitlement funding does not cover average hourly costs in certain parts of the country'.
While most nursery education providers receive more money in funding than their costs, the report found that in all but one of the local authorities, there were providers who had costs higher than the level of funding, and this applied to half the providers in local authorities in the south of England.
The report said that private, voluntary and independent (PVI) providers faced greater 'insecurity of revenue' than the maintained sector. It noted, 'If there was to be any imbalance in the levels of funding therefore, one might expect it to be in favour of the PVI sector in compensation for this additional level of revenue risk, but this does not appear to be generally the case.'
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