Opinion: Editor's view - Early years settings cannot continue tosubsidise the NEG

It failed to find a single respondent who thought the NEG Code of Practice should stay unchanged. Nurseries from all over the country were struggling with receiving an average of £3.64 an hour per child, against a cost of providing the early years entitlement of £4.69 an hour. The FSB is warning that many nurseries may be about to decide whether to pull out of the scheme, as they would have to give a term's notice to parents before the start of the next financial year.

Some local authorities have been ignoring Code guidelines that parents should not be charged any extra for the 12.5 hours and advising settings on ways round this. They may feel they have no alternative - their duty is to make sure there is a sufficient supply of places, but this is one they are unlikely to fulfil if nurseries and pre-schools in their area abandon the scheme.

The Government cannot continue to insist that there is enough money to provide high-quality nursery education for every three- and four-year-old if this means private and voluntary settings are subsidising the scheme out of their own pockets. Nurseries can carry on with the NEG, but may have to cut back on well-qualified staff or resources; they can withdraw and concentrate on birth to threes, or hope that parents will keep their children where they are and pay the commercial rate. None of these are desirable options.