How private, voluntary and independent (PVI) providers work with local authorities - seek to influence them, gain access to funding and ensure their expertise to further the childcare strategy - has become a perennial issue for the early years sector.
Since the PVI sector accounts for 80 per cent of daycare provision, it seems well-placed to benefit from the new duties on local councils under the Childcare Act 2006 to ensure sufficient supply of childcare. But the problems of delivering affordability, quality and investment in a highly-trained workforce remain.
Few quibble with the overall size of the Government's financial commitment to early years, but there is deep concern about whether money handed to local authorities will reach childcare providers, or fall victim to other priorities.
Under new funding arrangements announced last summer, the Government unveiled £4bn in three-year allocations to local authorities, divided into three blocks, to cover the growth of children's centres to 3,500; support for improved early years outcomes, quality and inclusion; and childcare sufficiency and access.
Money questions
Steve Alexander, chief executive of the Pre-School Learning Alliance, welcomes the financial commitment from central government, but questions whether the £4bn is entirely new money, or funding that has been 'recycled'. He says that he has concerns over the removal of ring-fencing, but argues that the 'rejuvenated investment and direction via the Children's Plan is to be applauded'.
Purnima Tanuku, chief excutive of the National Day Nurseries Association (NDNA), welcomes the three-block funding for local authorities and notes that 'quite a lot of that is capital funding to support the PVI sector to extend the free nursery entitlement to 15 hours'. But she is also concerned about the removal of ring-fencing, and wants strong guidance to ensure that sustainability and sufficiency money reaches the providers who most need it.
She fears that some local authorities are 'not quite there yet, in terms of their market management role'. She says that councils were supposed to conduct needs assessments when children's centres were first rolled out, but that did not prevent duplication of provision.
Sufficiency assessed
Many councils have now produced drafts of their childcare sufficiency assessments and have put them out for consultation among key stakeholders, providers and parents. Josie Ebanks, manager of the Family Information Service in Sandwell in the West Midlands, says the process had been 'onerous'. She says some questions need to be rephrased to obtain more in-depth information and she would have preferred more face-to-face interviews with parents and providers.
However, from initial feedback from the consultation, Ms Ebanks believes the assessment has provided an accurate picture of childcare need, confirming that parents want greater flexibility and more provision for children with disabilities. Last year the Government earmarked £340m for childcare for disabled children. She adds, 'If they want to remain sustainable, it will be up to providers to meet the needs of parents and work to fill vacancies.'
Nottinghamshire County Council identified a need for 2,100 new childcare places as a result of its sufficiency assessment. Nurseries, childminders and pre-schools on its Early Years and Childcare Preferred Provider List will be invited to tender.
To get on the list, providers have to show that they have an inclusive ethos, and the council checks their Ofsted reports and financial arrangements. So far 60 providers are on the list and a further 160 have applied to be included.
Free entitlement
Sarah Clover, childcare manager in Wiltshire, said the county's sufficiency assessment included a survey of parents, which brought 'an unusually high response' with more than 3,300 replies. She says that in order to fill gaps in provision, the council will work with the PVI sector as well as informal childcare providers such as activity groups and those on the voluntary childcare register.
But undoubtedly the biggest beef that the PVI sector has with Government remains what it insists is the unfair way in which nursery education grant funding is administered. Recent figures on the DCSF's own website showed the clear disparities in funding levels between the maintained and PVI sectors.
Purnima Tanuku says that while the Government has promised reform of the system, the cost analysis being undertaken has been 'a very quick exercise' and a far more thorough process is required. The NDNA is offering training sessions so providers can be aware of what needs to be taken into consideration when establishing the real costs of the free entitlement.
A measure of the growing rebellion over NEG is shown by the number of providers in different geographical areas who have followed the lead of their colleagues in Kent and set up their own associations to spearhead resistance. Darrell King, chair of the Kent Association of Private, Voluntary and Independent Providers, says, 'We have been saying all along that the Government did not do a regulatory impact assessment, that their argument always was that the impact was not on us but on local authorities, which is ludicrous.'
Ms King says that Kent County Council has admitted to her association that 40 per cent of providers are funded at levels which do not cover their costs. There are similar campaigning associations of private providers now in Oxfordshire, Hertfordshire, Hampshire, Surrey, the West Midlands, Richmond, Wiltshire, Berkshire and Enfield.
'A triple whammy'
With providers under pressure over occupancy levels and the turmoil around the nursery education grant, Steve Alexander says the Government's decision to impose draconian rises in Ofsted registration fees 'beggars belief'. Daycare providers will see their registration costs rise from £120 this year to £450 by 2010, with childminders facing an increase from £20 to £100.
For Amanda Squires, who runs the Learning Ladder pre-school offering full daycare and two out-of-school clubs in Mansfield, Nottinghamshire, the fee increases mean a 'triple whammy'. She currently pays £120 for each setting, but is bracing herself for a trebling of her costs by 2010. 'I don't see why I should have to pay Ofsted all this money, as they don't actually do anything for us,' she says. 'If I had to pay all this money now I would not be able to afford it.'
Market prices
Meanwhile, at the other end of the daycare scale, all eyes are on Busy Bees and its Australian-based parent company ABC Learning Centres. Six months ago it seemed that nothing could stop its all-conquering progress. But then at the end of February this year its shares slumped dramatically and there is now a question mark hanging over the future direction of the UK business.
Another major chain player in the sector, Asquith, was bought by two financial groups, Dawnay Day Principal Investments and Swordfish Investments, for £95m - a price which appeared surprisingly high to many in the early years sector.
Busy Bees managing director John Woodward remains upbeat. He says, 'We have an ambition to acquire a number of larger, smaller or stand-alone nurseries and build some new ones. We are only going to build where we can develop sustainable childcare.
'Everything in the UK is of interest to us, not at knockdown but at sensible prices.'
But Steve Alexander voices concern that 'respected private providers are being sold at less than their market value'. He says this should indicate to the Government that private providers cannot generate profits and are 'voting with their feet'.
He adds, 'This should alert the Government to the state of the market and that there should be supply-side funding and more active, genuine partnership with the PVI sector.' With sustainability issues hanging over the sector, he also argues that there should be a review of targets set for children's centres.
The pluses
- Funding: The Government has outlined what it will give local authorities over a three-year period, enabling them and the providers they commission to plan ahead with more certainty
- Children's Fund The Government extended its 'life' by three years last summer with a pledge of £396m over that period, giving vital preventative services a reprieve so that children's trusts could develop commissioning processes
- Nursery education funding The Government says it plans to level the playing field between maintained and PVI providers and local authorities are undertaking a cost analysis
- Childcare sufficiency assessments Local authorities are identifying gaps in provision, and special attention is being paid to services for the most disadvantaged and children with disabilities
- Graduate Leader Fund The Government has realised the Transformation Fund was too inflexible. Councils will be able to use the Graduate Leader Fund in a flexible way, providing bursaries to support access to higher level qualifications, with the aim that every full PVI daycare setting should have an Early Years Professional leading practice by 2015, with two in areas of disadvantage
- Children's centres The programme to have 3,500 centres up and running by 2010 is forging ahead with a new emphasis on outreach work to help the most disadvantaged
- Health issues The Government's anti-obesity drive has been given a higher profile
THE MINUSES
- Funding: Much of it is being channelled through local authorities but not being ring-fenced, leading to fears that money may be diverted elsewhere. Children's Fund projects will have to tender to keep providing services through children's trusts
- Nursery education funding: A recent report from consultants Hedra found that only 65 per cent of providers are getting enough to cover their costs
- Ofsted registration fees: By 2010 providers will be expected to pay nearly 25 per cent of the inspection service's costs, with fees rising for daycare providers to £450 a year
- Childcare sufficiency assessments: While they may provide a useful snapshot of supply and demand, there are doubts whether they will really help local authorities in their market manager role
- Graduate Leader Fund: There are wide disparities between the amounts being given to local authorities in the first year
- Children's centres: Demands for a review of their targets, particularly those relating to childcare places, are growing because existing PVI providers fear they will become unsustainable
- Health issues: A recent Government report on nutrition focused on children of school age and ignored the early years sector
- Polarisation on pay: Graduate-level early years professionals do not have a national pay rate. Smaller providers are finding that rises in the minimum wage mean that differentials are being eroded between new and more experienced staff are being eroded
CASE STUDY
When Sarah Steel left the army and needed to find childcare, her quest led her to set up her first nursery - and now five years later she has a thriving chain of 11 providing full daycare, called The Old Station nurseries.
Finding the right niche - five of her nurseries are at RAF bases or army camps - and ensuring quality provision are the keys to success. She says, 'It's a question of surveying the market and making sure that people are out there and want the kind of hours you can offer. The days are gone when nurseries can just say to parents that they can only have a whole day. I prefer to have someone on a 9am to 3pm contract than to insist on full-time and not get anyone.'
Sarah was invited by the DCSF to represent the PVI sector on its review of the national childcare strategy and also sat on the nought-to-seven group working on the Children's Plan.
She insists that the real key is to keep overheads as low as possible and, since 70 per cent of revenue goes on salaries, that means matching the salary bill to the number of children. She explains, 'You could only be 60 per cent full, but as long as you are staffed for that level of occupancy you should be okay. It does mean often having a combination of part-time staff and an element of flexible working.'
CASE STUDY
For Linda Mills, who runs the Laurels day nursery in Barnsley, too much provision, particularly through the ill-considered location of children's centres, and a general lack of communication at local authority level are threatening the survival of private providers.
Occupancy at her nursery now stands at 32 per cent and she has to dig into her own savings each month to keep it afloat. She says two friends were forced to close their nurseries recently.
In the Royston area where her nursery is located, there is already a Sure Start facility and the Learning and Skills Council is building a new training development in the area for adults which will have its own day nursery. Linda says she was never consulted and only heard about it when she read her local paper. 'So there will be four nurseries in Royston alone, which is ridiculous,' she says.
'The children's centre programme needs to be stopped. We need local authorities to communicate with providers. They have dangled carrots in our faces and we started taking bites with the opportunity of opening day nurseries under the Neighbourhood Nursery Initiative. They realised how successful it was and decided to take the whole of the carrot themselves and keep it.'
