Campaigners lodge complaint against Government on 30 hours 'price fixing'

The campaign group Champagne Nurseries on Lemonade Funding (CNLF), which has nearly 7,000 members, has made a complaint to the Competition and Markets Authority (CMA) about the Government’s abuse of its legislative powers to fix childcare costs below market value.

If the CMA, a non-ministerial Government department responsible for strengthening business competition and preventing and reducing anti-competitive activities, finds this to be the case, it will launch an in-depth investigation, which could last up to 24 weeks.

The group’s complaint to the CMA states that the ‘price fixing of both the purchase and sales price is an abuse of market control'.

It goes on to say that the childcare sector is already in jeopardy due to factors such as the introduction of workplace pensions, re-valuations of business rates and consistent increases in the National Minimum and Living Wages.

Despite this, the ‘Government has ploughed on with its political agenda based on non-representative data from a Department for Education survey on childcare costs, which received just 284 responses.’

The CNLF warns that the shortfall between the true cost of providing the free hours and the deficit in funding from the Government, will mean many childcare settings will become unsustainable and forced to close. It says this is in direct opposition to the Government’s aim of providing more childcare for working families.

From September, working families of three- and four-year-olds will be entitled to 30 hours of free childcare.

The CMA now has 10 working days to confirm it has received the complaint from the CNLF campaign group.

A spokesperson for the group said, ‘We looked at various ways to challenge the Government on the issue of underfunding in early years. This route is a direct way of getting the legislation around funding investigated. 

‘As private businesses, PVI's (private, voluntary and independent childcare providers) have been absorbing and trying to manage the costs associated with delivering the 'free' early years education places since their introduction. The extension to 30 hours for working families brings with it the real threat of closure for some settings who simply can't absorb or manage further losses.

‘As providers, we fully support the Government helping families with childcare costs, however, the policies around funding mean that we have no choice but to cross-subsidise by charging inflated fees for hours outside of funded hours and charging for additional services for things that the Government say should not be provided within the funding. 

‘This is not something we want to do and not something we feel parents should be faced with. It is a consequence of a policy which the Government has not funded properly and which childcare providers cannot afford to subsidise but know that they run the risk of being forced out of the market if they do not offer the funded hours.

'Data from the National Day Nurseries Association’s Annual Nursery Survey 2016 showed that only 51 per cent of nurseries in England expected to make a profit in 2016, with the average nursery losing an astonishing £957 per child, per year on the 15-hour offer. 

‘This level of loss on 15 hours of funding means that the increase to 30 hours is simply untenable for the whole sector at the current funding rates, the only way to ensure the ongoing viability of the whole sector is to remove the word free and allow the funding to be used as a subsidy.

‘We are confident that the CMA will carry out a thorough investigation and we await their response.’