The Blog

There Is No Such Thing As A Free Nursery Hour

Because if nurseries feel they have to walk away from extended funded childcare - and more than ever are talking about this - the real losers will be the families who voted this Government in on the promise of free childcare.

'30 free hours' has been the biggest talking point in the nursery world for 18 months now.

But we really need to stop calling this scheme '30 free hours' and start thinking of it as '30 funded hours'.

The ambitious policy was first unveiled as a Conservative general election pledge in the spring of last year.

Now with under a year to go until full roll-out of extended childcare for three and four-year-olds of working parents across England, time is running out to make it happen successfully.

After extensive public consultation, during which the sector has repeatedly appealed for fair funding, it's clear that nurseries' expectations that they will be able to balance their books are not going to be met in many geographical areas.

Provisional hourly rates of Government money channelled through local authorities will fall way short of the true cost unless the Treasury steps in with more funds.

For many families and childcare providers, they will NOT be free. Good quality places can't be done at bargain basement prices, and at the moment, it looks unlikely that the Government will pick up the whole of the tab.

So who will cover the shortfall, if nurseries do decide to offer the 30 hours that 600,000 eligible families are keen to take up?

Let's be clear. No nursery has to offer funded places. But owners and managers are really keen to be able to give families the help that the Government is offering.

A total of 89% of nurseries currently offering 15 free hours to all three and four-year-olds make an average loss of £1.68 per hour, per child, according to NDNA's Annual Nursery Survey 2016.

That equates to about £900 per year for most childcare providers, which must be made up elsewhere - usually through fees for paying parents who take more than 15 hours, or whose children are younger and therefore don't quality for funding.

Bigger losses generated by more funded hours are not an option - they will threaten nurseries' whole ability to stay in business.

However, in the absence of extra funding, more flexibility for nurseries could bridge the gap.

NDNA believes that 30 free hours can work in all local authority areas only if childcare providers are allowed flexibility to make add-on charges - for food or additional activities such as language or dance sessions - a condition of a place.

We are also calling for flexibility over how many hours of the nursery day are offered as funded.

Most children of working parents attend nursery for up to 10 hours each day. Nurseries could be allowed to offer, for example, seven funded hours per day and require three paid-for at a more realistic rate.

That could be the difference between success and closure for a nursery.

Parents, in receipt of Tax Free Childcare, would still make a huge saving and the nursery would be able to balance its books without raising fees for other families.

If I were Theresa May, I would be asking myself, is it time we rethought these old promises made by my predecessor, David Cameron, in what now seems a world away?

NDNA's consultation with members points to requiring charging for add-ons and/or pair-for hours wrapped around free sessions, as the practical way forward, if the 30 hours are to happen at all.

This would mean the Government's admission to parents that places are not completely free - but very well subsidised.

Anything over and above a basic childcare offer should be chargeable.

In some cases the provisional hourly rates from local authorities are less than nurseries already receive. It is also clear that with funding front-loaded in the first year, they will not keep up with inflation and increasing pay roll costs linked to National Living Wage - set to rise ahead of inflation up to 2020.

While most providers can expect uplifts in funding, the increases are too small to meet this funding gap, with a national average increase of about 60p per hour.

In order to meet demand, nursery owners should now be recruiting more staff rather than facing the threat of closure.

If 30 hours is successful, the outcome will be sunny for children, the nursery sector, parents and employers alike. Let's stay optimistic and work together to find the best solution.

Because if nurseries feel they have to walk away from extended funded childcare - and more than ever are talking about this - the real losers will be the families who voted this Government in on the promise of free childcare.