Last year our prime minister wrote in the election manifesto that he would double free childcare for all parents of three and four-year-olds and 40% of the most deprived two year olds. In effect, he promised to provide 30 hours of free childcare. He said he would do this in tandem with a funding review to establish the real cost of the hourly rate in light of the continuing protests from the Early Years sector; that the hourly rate we currently get is insufficient. NDNA's Annual Nursery Survey 2016 found the average nursery made an annual loss of £34,000 on the funded places they currently provide.
He delegated the responsibility to translate this pledge into an operational plan to his minister, requesting that he develop the means of providing UK parents with free accessible, affordable and desirable childcare funded at a rate that providers could afford to deliver.
So far so good! The reality appears to be somewhat different. The minister and his advisers seem to be trying to find a myriad of ways to deliver the promise but on a low cost budget. The sector is being ignored and told that our costings are wrong. Essentially people who have never run a business (let alone a nursery business) are telling us that we are inefficient, we should cut costs on ratios and merge back office support. Our legitimate protests will be ignored however as parents will force our hand to deliver the 30 hours on the insufficient funds offered. Pardon me if I sound a little irritated!
So far the Early Years sector has not fully engaged parents in this debate and its time that we did so that they understand the difficulties we face. The majority of childcare providers want to deliver great childcare and education. Our whole motivation is to do business better so children and their families thrive. The majority of the sector is small and medium size groups have limited margins and frequently no buffer (because 77% to 80% of our costs are staff costs and the rest includes rent, food, resources, repairs and maintenance and staff training, development and research.) As someone who runs the largest childcare social enterprise in London, our whole business model is designed to run great community nurseries, providing as many supported places as possible for children who would otherwise be excluded. Really, excluded? The truth is that a recent NDNA survey shows that only 45% of private and voluntary nurseries are likely to offer 30 funded hours per week next year. We are also hearing that more local authorities are already reporting reduced availability for three and four-year-old places of the existing 15-hour entitlement.
If we focus on London, we have a unique set of issues which results in a reduction of settings including a 9% drop in childminders and higher childcare fees and it's not just me saying this. Reports by the Family and Childcare Trust and the annual Laing and Buisson confirm this.
Here is a flavour:
• The sector was asked to take part in a funding review which it duly did and a cursory average hourly rate was suggested from £4.56 to £4.88 for 3 and 4 year-olds which included the Early Years Pupil Premium which is the extra 53p an hour we get for those children with additional needs (the highest % of whom live in London.) So in effect a cut in London funding and no indication of what specific funds will be available for those children in need (given the original EYPP pot is distributed across the mean.) Costs in London are 25% higher than the rest of the country so an average funding fee won't really address this.
• The funding review also failed to include the estimated top slice costs that Local Authorities would take (our experience is that they can be vary between 10 and 40%) significant again for London where LA's are the most squeezed. A pilot has been agreed to roll out from September with Newham the only London borough leading in the pilot.
• Recruitment is more problematic as staff have higher housing costs. One in eight Londoners pay more than half their income on rent and one in ten struggle with debt. Putting childcare workers as a defined category on the housing keyworker system would be a good idea.
• We run 38 nurseries in inner London and recruiting nursery staff and chefs to work in zone 1 is getting increasingly more difficult because of the cost of transport.
• Against this backdrop, Mr Osborne has introduced the National Living wage, which is £7.20. He did not think to negotiate a phased entry or support low paid organisations to find a way of introducing it at speed.
• We have the highest proportion of poor children, we are seeing the lowest provision of 'free childcare' and we are also seeing two-tier services with separate provision for those children on the 'free offer.' Such behaviour is often summed up as the unintended consequences of poorly drafted policies.
• Some campaigners have argued that tax credits and the new Universal Credit should have a London weighting to reflect higher childcare costs. There is some precedence for regionally-weighted childcare support.
• Lack of space and complicated, expensive leases are a real problem for those of us keen to open nurseries in poor neighbourhoods, especially in inner London.
So how do we plug the funding gap? Parents fees is the only route left and so we are damned if we do and damned if we don't. Childcare in London is an infrastructure issue. It's core to enabling families work to keep a roof over their heads. It contributes significantly to the GDP, at LEYF alone we employ 670 staff in London (reducing the unemployment bill) and we bring money into many poor local economies.
David Cameron made a promise to deliver childcare. If he cannot afford to invest in this core infrastructure then he should say so. We will then need to rethink what we can offer and what would work. I hope the future London Mayor is prepared to listen to us...time will tell.