New research: most nurseries offering 30 hours funded childcare limiting places or making charges to parents

National Day Nurseries Association (NDNA) has discovered that the vast majority of nurseries offering 30 hours can only do so if they make extra charges to parents.

And over half of these will also be restricting the number of places they can offer, which could leave thousands of parents unable to benefit from their funded entitlement.

From September, three and four-year-olds of working parents across England will be entitled to a further 15 hours on top of the current universal 15 ‘free’ hours.

But NDNA’s latest research shows that across England, 15% of nurseries who responded will not be offering the additional hours due to inadequate hourly funding rates which would lead to them making losses.

This figure increased above the national average among respondents in the North West (23%) and Outer London (19%).

Of the 85% of nurseries who plan to offer 30 hours places, 60% of these can only do so if they can charge parents for extras such as meals and activities. 

And more than half of these nurseries will be restricting the number of places on offer, some to as little as one or two children. 

Purnima Tanuku OBE, Chief Executive of National Day Nurseries Association, said: “This latest research echoes what we already knew from our earlier survey this year which showed that one in five nurseries were not planning to offer 30 hours because they just could not afford to do it.

“We have lobbied the government hard since 30 hours was first committed to by government in May 2015 to make sure sufficient funding was put in place to make this a success.

“This has simply not happened, average increases were just 40p per hour from previous research so now nurseries are put in an extremely difficult position. If they go ahead with the scheme, they risk their sustainability. If they don’t, they risk losing business as parents vote with their feet.

“There is a real danger that there simply won’t be enough places to meet demand and thousands of parents will end up disappointed.”

She continued: “We have offered a solution, which is to allow nurseries to charge parents for meals and other services as a condition of a place. Additional charges are allowed, but the Department for Education guidance says they can’t be a condition of accessing a place and providers must offer alternatives to parents who don’t wish to pay.

“Businesses cannot be run on voluntary payments and nurseries are no different.

“The majority of nurseries who answered our survey say they can only do so by charging parents. Parents are still benefiting from childcare at vastly reduced cost to regular fees.

“Until there is sufficient investment in this scheme, these hours are not going to be free, they are subsidised.”

The survey, carried out online in July, received 1147 responses. The survey also revealed that:

More respondents in East Midlands (91%), East of England (89%) and North East (88%) were planning to offer 30 hours 
Many providers can only offer 30 hours as a “stretched” entitlement – eg across 51 weeks of the year amounting to just over 20 hours per week
The most popular comment was that nurseries felt they had no choice but to offer 30 hours despite all the difficulties

Case studies:

Nicola Murphy, Owner of Early Days Nursery School Ltd, The Old School, Ipsden, Oxfordshire.

“Our setting has decided not to offer the 30 hours funding.  The stark reality is that £4.01 per hour would not make our business viable.  As a 25-year-old well-established business we have seen significant cuts in funding from Local Government over the last few years: 

no free training or monies to cover staff 
no free mandatory training such as Paediatric First Aid and Safeguarding 
no more local meetings to share information and keep up to date with OFSTED developments.

“We have had to establish our own group privately. We have significant increase in the ridiculous amount of paperwork we have to fill in for each child. 

“Our increasing wage bill has to be covered, as do significant increases in the amount of printing of forms from County and OFSTED and due to County staff cuts more administration is put on us. 

“Let alone the pure commercial increases in business rates, the introduction of the Workplace Pension, the need to have higher qualified staff who demand higher salaries (especially when you have local shops advertising an hourly rate of £9.75 for a behind-the-counter job). 
“No parent has left or reacted negatively to our decision – in fact they understand fully the economics of the situation.  People in this area have to pay over £10 an hour to get their dogs walked, yet we are supposed to look after a child for less than half of that. 

“It should also be noted that it is an ‘unfair’ system for parents who do night or weekend work – thus is discriminating against this group of workers.”

 Carol Medcalf, owner of Carol Jane Montessori Nursery School, Enfield

“The word 'free' suggests the consumer does not have to pay and that someone else has agreed to cover the cost. In regard to '30 free hours’, parents are to receive their childcare at no cost to them - the Government has agreed to pay, but on a 'one size fits all’ basis. 

“In practice this is never going to work, ergonomics alone suggest this is impractical and doomed to failure. Every setting has different overheads and business models. If I ran my setting for the free entitlement alone I would have to make so many cuts that I would rather not offer the service. 

“For me to take part, the Government needs to change the word 'free' to 'subsided', I then can't think of a reason why any early years setting would not take part. The government would be advertising the 'reality', parents would know what to expect and nurseries could charge according to their cost. Children would receive the quality they deserve. 

“I do understand that the Government may be worried that nurseries would increase fees but most people do not choose childcare as a vocation to get rich quick, we simply need to cover our costs to provide the right kind of childcare. We are all in business in a competitive market - charge too much and parents will choose someone else, allow us to charge a realistic cost to run our nurseries as we see fit and parents are offered a choice.

“I also do understand that we can charge for certain services and ask parents to pay for these, but if you advertise ‘free’, parents do and should expect ‘free’. If they choose not to take up additional services, which they are totally entitled to refuse, the shortfall cannot then be made up and the setting will suffer the financial loss.”

Sharon Rea, Owner and Manager, New View Nursery, North Heath Hall, Horsham, West Sussex

“I feel that neither the press nor the Government are giving the full picture to parents or allowing parents to make educated choices, the nursery sector are having to find creative ways to remain in business.

“The Government is promoting 30 hours ‘free childcare’ to most parents from September and this is a step in the right direction to support those who are working. Unfortunately, the Government has grossly miscalculated the true costs of childcare to Early Years providers and many could face possible closure in the future, there are several local providers that have closed this summer alone.   

“West Sussex have told us the hourly funded rate for the ‘Early Years Free Entitlement’ (EYFE) will be £4.42.  This hourly rate will not cover our delivery costs and I refuse to make cuts to staff ratios and the quality of our provision.

“Furthermore, this hourly rate will be fixed for the next 3 years, until 2020. Nurseries now face a critical dilemma, In the current climate we are facing increasing pressures from:

Workplace pensions
Business rates re-valuations
Consistent increases in the National Minimum Wage
Introduction of the National Living Wage and its aspirations
Pressure to employ a higher qualified workforce, including graduates.

“Nationwide, childcare providers are having to plan how they can best provide the funded places that the government has offered. The ‘free’ childcare policy restricts investment because the fixed price is too low, we are unable to plan for future investment to allow for development and enhancement of the nursery.  We have already advised West Sussex that New View Nursery is opting out as it is not cost-effective for us.  We will continue to offer the under-funded 15 hours’ free entitlement as a universal provider and will be asking families for a small amount per term for ‘additional services’ to enable New View Nursery to remain a viable business.”