Funded placesCoins

The issue of funded places continues to dominate nursery sector media with the changes to entitlement across England, Scotland and Wales. View our guidance below to ensure you are in-the-know.

Free early learning is good for children and supports parents. It should be free to the family and free to the early years provider.

At the moment most nurseries are subsidising free places for two, three and four-year-olds, because the funding they get doesn’t cover their costs. This pushes up the cost of the extra hours parents pay for as nurseries have to balance their books. 

NDNA is clear – free places should be free to the parent and free to the nursery.

UK updates

Treasury Select Committee inquiry into childcare policy and its influence on the economy

In its response to this inquiry, NDNA outlined the central role that high quality, accessible, flexible and affordable childcare plays in child development and supporting working families. Childcare is a major employer supporting  250,000 jobs in the UK, mostly for women. It is particularly crucial in deprived communities where good quality employment opportunities may be at a premium.

The introduction of 30 hours funded early years entitlement has directly threatened the business viability of nurseries in England due to chronic insufficient funding from central government. Hourly funding rates should be increased substantially to reflect delivery costs. Nurseries should be given the flexibility to make mandatory charges to parents to ensure the ongoing viability and sustainability of their business models and control how and when they deliver their funded offer.

Staffing makes up the lion’s share of costs facing nurseries. Increases in the National Living Wage and national insurance and pension contributions are expected to increase staffing costs by 6% from April 2018. The UK Government should make private nurseries exempt from business rates, following the lead of the Scottish government who are bringing in exemption from April 2018 and the Welsh Government who are significantly increasing the rateable value for nurseries to £20,500. To keep pace with inflation and protect viability and quality of childcare an annual Living Wage Factor increment must be added to early years funding allocations.

The sector is struggling to recruit qualified staff, largely due to low pay caused by underfunding. Nursery staff need to be adequately remunerated for their work to ensure they are productive members of the workforce and to ensure nurseries have a reasonable level of staff retention.  

Key points

  • Currently, all three and four-year-olds and some two-year-olds in the UK are entitled to funded childcare
  • In England, the allocation has risen from 15 to 30 hours per week in term time or 1140 hours per year for three and four-year-olds of working parents
  • Similar entitlements will follow in Wales and Scotland by 2020 with pilots currently ongoing across both countries
  • Nurseries do not have to provide funded hours and it’s still unclear whether enough childcare providers will opt in to make enough places available for all families who want them. 
    • Many nursery businesses tell us they struggling to offer 30 hours because funding rates in many local authority areas fall short of the true cost of delivery and could lead to bigger losses, so 31% plan to limit places in future view our 2018 survey results here 
At present, NDNA research shows that an average nursery makes a loss on each 15 hour funded place of £900 per year. This pushes fees up for other parents. NDNA lobby and campaign for better funding rates.

The Department for Education has published this guidance to local authorities in England allowing voluntary charges for extras such as food, special sessions such as dance or language classes, and trips out. NDNA is campaigning for nurseries to be able to make mandatory charges as a condition of a place. 




NDNA statement on funded entitlement for member nurseries
To help members explain their policy on 30 hours, we’ve produced an NDNA statement to use when communicating with parents. This has been developed with input from the board of trustees and we suggest that members use it along with their admissions policies and parental agreements. It sets out the funding issues nurseries face, key points of the guidance on delivery of places and the responsibilities of providers and signposts parents to information on support with costs.

Download it here


Childcare Offer for Wales

Get involved – together we are stronger!

Our shared voice is vital to influence change. You can get involved in lots of ways:     

  • Invite your local MP, MSP or AM and councillors to visit your nursery. Show them the good work you do and how you are affected by funding problems
  • Talk to parents about the issue and encourage them to support you
  • Ensure you are involved in your local NDNA nursery network to make sure your voice is heard – find out more
  • Speak out - join our media database – we are often asked for real-life case studies and for nurseries that journalists can speak to - email

Keep up-to-date with communication from NDNA, such as the email bulletin, Nursery News, Twitter @NDNAtalk and FacebookJoin us to access a wealth of advice, support and help with free early education issues to keep you in the know.