Under the initiative, childcare providers receive some capital funding and three years' revenue funding covering, on a sliding scale, 50 per cent, 30 per cent and 10 per cent of costs incurred in providing the new places.
Potential providers, fearful about what happens when the funding runs out, are tending to shy away from taking on new-build projects under the scheme and have gone instead for offering NNI places in existing settings.
Taking part in the scheme is Michael Ruaux, managing director of Crofters Park Nursery in Bolton. His 81,260 NNI grant will part fund a 530,000 extension to the 89-place nursery in a deprived part of the town, adding 50 NNI places to the nursery and services such as a sensory room and artist's workshop. He will also receive a total of 270,000 in revenue funding. For him, NNI offers an opportunity to 'promote wider social inclusion and provide more flexible models of childcare'.
For others considering getting involved in the scheme, he warns, 'There is no quick way through the paper work and there are no short cuts on the building and design work if public money is involved. Your capital project will have to be run professionally and will be expensive.
As for the finance, he adds, 'The grant doesn't come close to funding the capital costs. You need a specialist lender that understands the sector and offers a good package. A good project should be able to get funding over 20 years, an 18-month capital repayment moratorium and interest rates around 1.5 to 1.75 per cent over base. You need contingency funding and reserves.
And be prepared for substantial losses in the initial 12-18 months trading period.'
