In a report analysing the responses, the DfE said that the ‘quality and completeness’ of the evidence was wide-ranging.
As Nursery World has reported, nursery owners have criticised the process for being confusing and flawed.
No specific questions were asked, leaving nurseries unclear as to what detailed information was required.
The Government’s analysis of the responses has found that this lack of detail means that the DfE is still unclear as to the true cost to providers of offering the places.
While most responses listed factors viewed by providers as the main areas of expenditure, the report said, ‘these were often not supported by figures. This means that we have been unable to understand which costs are a result of delivering the entitlement and which are not. This may indicate a lack of clarity around what Government funding should pay for.’
Some providers gave more detailed accounts of their outgoings, opening hours, number of entitlement hours provided, while others reported their ‘perceived funding shortfall when comparing their local authority’s funding rates with the price they charged parents,’ the report said.
‘While we have been able to identify what providers perceive to be their main areas of expenditure, we were unable to determine from the responses what providers’ unit costs were. It is also important to note that the areas which providers perceive to be the main areas of expenditure might not necessarily be the areas where they incur most of their costs.’
Staff costs
However there was consistency among key categories for expenditure, with staff related costs and running costs (excluding salaries) mentioned most.
Eighty-three per cent of respondents highlighted staff costs, and listed the most common areas of expenditure within this as: wages, staff training and development, pension contributions, the impact on wages of administrative tasks, holiday pay, sick pay and national insurance contributions.
The five key categories of expenditure were: staff-related costs, running costs (excluding salaries), consumables, costs incurred as a result of Government policy and costs resulting from the provision for children with additional needs, including children with special education needs and disability.
Staff wages, food, and educational equipment (including IT) were mentioned the most across all five categories.
The funding review led by the DfE with a team of consultants from Deloitte will report in the Autumn and will form the basis for funding decisions that will be taken as part of the Spending Review, to be published on the 25 November.
More than 2,000 responses were received largely from early years and childcare providers to the call for evidence.
The report said that ‘a significant volume of published evidence’ from academic and research studies as well as that from sector organisations is also being reviewed.
‘Understanding what factors drive providers’ costs and the characteristics of the childcare market are key strands of the review,’ the report said.
The majority of responses were from private, voluntary and independent providers (42 per cent) and by childminders (37 per cent). Just 3 per cent of local authorities responded.
Of those respondents that gave an address, just under one in five were from the South-East, with the next highest proportion from the South West (9 per cent).
The report said this could be ‘indicative of where funding challenges are felt the most.’
The analysis of responses to the call for evidence on the cost of providing childcare had been published alongside the Childcare Bill: Policy statement.
Both documents have been produced for the House of Lords as the Childcare Bill reached the report stage.
Sector response
Neil Leitch, chief executive of the Pre-school Learning Alliance, said, that the fault lay with the Government's call for evidence, rather than with providers.
‘We are disappointed, but not surprised, that this consultation seems to have been an exercise in futility,’ he said. ‘As we warned at the time, the scope of the consultation was far too broad, and likely to result in responses of limited practical value. The DfE has complained that responses "were often not supported by figures" when it did not ask for figures in the original call for evidence – instead, it simply instructed providers to give “any information” they wished to provide.
‘As a result, the conclusions drawn from the call for evidence – that staff, rents, utilities and equipment account for a significant proportion of provider costs – are nothing new, and are likely to be of limited value to peers as they debate the Childcare Bill at report stage.
‘With the overall funding review still underway, we hope the DfE will continue to work with the Alliance to ensure that any further discussions on childcare funding are underpinned by a detailed understanding of delivery costs and that, crucially, this progress is not unduly rushed in a bid to push the bill through as soon as possible.’
National Day Nurseries Association’s chief executive Purnima Tanuku said, ‘The Department for Education’s initial analysis shows the overwhelming response to its call for evidence on the cost of providing childcare. There has been a clear message from the sector on the financial challenges of providing high-quality childcare sustainably and it is welcome that Government has committed to increasing the funding rate received by childcarers.’
- The Analysis of responses to the call for evidence on the cost of providing childcare and the Childcare Bill: Policy Statement can be found here
