Moreover, during financial years 2011/12- 2016/17, childcare costs have risen by an average of 4.6 per cent each year.
The findings are revealed in Freedom of Information requests filed by the early years organisation, that also show that two-thirds of councils have not collected data on childcare delivery costs since 2011/12 (based on 124 responses from 152 local authorities.)
Local authorities currently use an Early Years Single Funding Formula to calculate local funding rates, which was introduced on the premise that councils would monitor provider delivery costs on an ongoing basis to ensure that funding remained adequate.
The most commonly cited reasons given by local authorities for not collecting this data were that funding from central government had not changed in this time and that there is no statutory requirement to collect this information.
The Alliance believes that local authorities are best placed to collect data on providers’ costs and that the Government should work with them to make sure this happens.
To this end, the Alliance is launching the Fair Future Funding campaign, which is calling on the Government to establish a system to monitor childcare delivery costs on a local level and ensure that funding increases to meet these costs when needed.
The Alliance’s FOI requests asked for average local early years funding rates in 2011/2012 and in 2016/2017.
Of the 107 local authorities who provided this information, 80 (74.8 per cent) reported that funding rates have failed to keep up with inflation over this five-year period. This included 23 (21.5 per cent) areas where funding has either been frozen (9.3 per cent), or actually decreased (12.1 per cent).
Chief executive Neil Leitch said, that the 30-hours would not work in the long term unless it was funded properly.
‘The only way the Government can achieve this is to understand how much it costs to deliver quality care and education and then ensure that funding levels match this,’ he said.
‘We know that Government previously attempted to gather data on delivery costs, but as a result of asking providers to give “any information they felt was relevant”, wasn’t able to use the responses received. We believe that local authorities are far better placed to collect this data, and that Government should work with them to ensure this information is collected.
‘Of course, the information in and of itself is of no use unless someone is willing to act on it. Ultimately, it’s the Government’s responsibility to ensure that it is meeting the full cost of the pledge it made.’
The Alliance is concerned that the Government is preparing to freeze average rates until 2019-20 after next year's increase.
Mr Leitch added, ‘The Government’s failure to ensure that funding for the so-called free childcare offer keeps up with the rising cost of delivering places is what has led to rising childcare costs over recent years. So it beggars belief that it thinks that a one-off increase in funding rates is enough to sustain the sector for the next three years.’
He pointed out that staff costs account for 70-80 per cent of overall costs for providers and that by 2020, the national living wage will have increased from £7.20 to £9 an hour.
‘If rising business costs aren’t matched by increases in funding, providers will once again have to choose between increasing the cost of paid-for hours or going out of business. Either way it will be parents or providers who end up paying for a promise that Government made.’
A Department for Education spokesperson said, ‘We are investing a record £6 billion per year on childcare by the end of this Parliament, including £300 million per year to raise the hourly funding rate for nurseries, playgroups and childminders.
‘As a result of our proposed changes – including allocating funding more fairly across the country and a requirement for local authorities to pass on 95 per cent of funding to the frontline – the vast majority of providers can expect to see their funding increase.
‘These changes will come into effect from April next year and are based on evidence that takes account of current and expected cost pressures.’
- Early years providers can find out more about the Fair Future Funding campaign, and sign up as a supporter, at www.pre-school.org.uk/fairfuturefunding