40p-per-hour increase is totally inadequate to make 30 hours viable for many nurseries, says NDNA

Nurseries hoping to offer 30 ‘free’ hours in September will receive only 40p more per hour on average, according to shock research by National Day Nurseries Association (NDNA) published today.

The latest funding update incorporates data from a total of 128 local authorities in England responding to a Freedom of Information request. 

NDNA says the rise is way too low, meaning nurseries will see BIGGER losses on funded places and causing some providers to opt out of expanded free childcare.

Three and four-year-olds of working parents will be entitled to 30 ‘free’ hours’ childcare, double the current allocation of 15 hours - but many will struggle to find places as low funding means nurseries may not take part.

The meagre average hourly rate of £4.37, up from £3.97 in 2016/7, will be more than absorbed by rising business costs that will continue to go up as funding stands still.

NDNA presents the sobering figures today to hundreds of members at its annual conference in Manchester today. Chief Executive Purnima Tanuku is pictured left during a live broadcast from the conference of BBC Radio Four's You and Yours programme. 

NDNA is calling for an increased hourly rate that continues to rise in line with business costs and a change in the rules to allow nurseries to make mandatory charges for meals and other extras to help balance their books. 

The charity also recommends the Government delay the 30 hours scheme if necessary for a revision and rethink.

Purnima Tanuku OBE, Chief Executive of National Day Nurseries Association (NDNA), said: “We hope the new minister Robert Goodwill MP is up for the challenge as the urgent matter of funding for 30 hours must be a priority.

“Despite repeated Government assurances that enough money would be made available for nurseries and talk of ‘record’ funding, the reality is that the average nursery will receive just a few pence more per hour, less than the price of a second class stamp. It’s totally inadequate.

“More funded hours will mean greater losses. The average nursery is short of delivery costs for the current 15 hours by almost £1,000 per child per year. 

“An average increase in funding for 15 hours is £228. That is only a quarter of the current shortfall, never mind bigger losses caused by twice as many free hours.

“National Living Wage is due to rise by 20% reaching towards £9 per hour in 2020 and average rateable values of nurseries have gone up 24% this year, with Business Rates increasing accordingly, yet nursery funding is fixed until 2020.

“The Government said it would be investing an unprecedented £6bn into early years by 2020 but there is nowhere near enough money in the system to allow nurseries to offer 30 hours and survive as businesses. It is now crunch time.”

The survey also revealed:  

* Average hourly funding rates for eligible two-year-old places have only increased by 17p from £5.13 to £5.30 across England and just 2p in London

* Seven local authorities that responded are giving average rates for 3 and 4-year-olds of less than £4, despite the DfE pledge that local authorities would be able to pay providers an average of “at least £4 per hour”

* Biggest losers are providers in Liverpool who are receiving on average 53p less per hour for 3 and 4-year-olds than last year 

* Camden and Wandsworth are retaining more than the allowed 7% of central funding having applied for an exemption; but half of all local authorities who responded are passing 95% of funding or more to providers with one third retaining less than 5%

* More than half of local authorities are using the government’s Model Agreement, with a third still considering its use.