The Blog

Nurseries in Scotland and Wales are Struggling - A Big Vote for Childcare Is Needed at National Elections

While they are keen to help families with the cost of childcare, providers are worried that offering more funded hours will simply mean bigger losses, threatening their whole business model.

NDNA has just released major surveys detailing the state of the very different nursery sectors in Scotland and Wales.

As I wrote in EYE magazine this month, our Annual Nursery Surveys 2016 reveal childcare providers in Scotland suffering the most acute free hours funding shortfall in the whole of the UK - an annual average of nearly £40,000 for a nursery offering 35 places.

Meanwhile, many nurseries in Wales are struggling to stay in business due to increasing costs and a worrying dip in occupancy.

As the Welsh and Scottish government elections on May 5 approach, we need real changes to benefit children and families.

More free hours are almost certain to be on the horizon, whatever party or parties come to power, following England's forthcoming 30 free hours per week for three and four-year-olds of working parents.

But private, voluntary and independent nurseries can only deliver more free hours if they are paid properly.

In Scotland, 77% of nurseries currently sustain a loss on the free hours for three and four-year-olds they currently provide, £1.88 per hour of care on average, adding up to £1,128 per funded place per year.

In Wales, the corresponding figure is 88%, or £2.27 per child per hour, and £863 annually, per place. This figure is lower because parents are entitled to fewer funded hours for their children.

While they are keen to help families with the cost of childcare, providers are worried that offering more funded hours will simply mean bigger losses, threatening their whole business model.

These fears loom particularly large in the light of the newly-implemented National Living Wage involving immediate pay roll increases of 7% in Scotland and 13% in Wales, as well as steeper percentages to follow as the National Living Wage continues to rise until it reaches its forecasted £9 per hour in 2019.

Of course nurseries want to reward their hardworking staff but low funding rates mean the sums just aren't adding up.

In Wales, the average nursery received £3.13 per hour to deliver Foundation Stage for three and four-year-olds. In Scotland, the figure is £3.56 when in both countries the real cost of high-quality care, according to survey respondents, is more than £5 per hour.

This is why NDNA has launched a Childcare Challenge to the next Governments of Scotland and Wales to make a difference on the choice, quality and cost of childcare.

First and foremost, we're imploring politicians to take a long, hard look at the nursery funding puzzle and come up with a better way of getting money to the frontline of early years care and education.

We anticipate that will include radical changes to the ways in which funding flows through local authorities to providers, as well as an uplift in amounts allocated centrally.

Funding levels must rise, ahead of any expansion offer. If they don't, fees will continue to rise for paying parents and providers may not be able to offer enough places to make more free hours a success.

In both Scotland and Wales, roughly half of respondent nurseries said they were unlikely or unsure they would offer additional free hours.

As a result, families could find it difficult to take up their free hours and be faced with a more limited choice of providers at the very time when their childcare options should be opening up.

As part of this challenge, we're also calling for restrictions on nurseries' chance to offer free hours to be lifted, to protect and enhance parents' choice of provision.

This is an issue particularly in Wales where fewer than half of survey respondents (47%) were commissioned by councils to deliver Foundation Phase places for three and four-year-olds.

Many more good-quality settings would like to deliver free places, subject to funding levels, but are not given the option in some areas where schools and maintained settings are allocated the majority of places.

We also want private, voluntary and independent nurseries to be able to access funding for building projects, to help create more space to meet demand.

And finally, we believe all childcare providers should receive 100% relief on business rates and make VAT on childcare zero-rated.

We're calling for the next Governments to step up and meet our challenge.

Only then can we confidently and sustainably meet their challenge of providing more free childcare.

We can make it happen if we work together.