Closures rise, as nurseries struggle with funding and admin

•  Closures up by 47 per cent
•  Shortfall in 30 hours funding now £2,166 a year per child
•  Nurseries limiting places or plan to
•  Nursery staff spend a day a week on 30 hours admin

The findings come from the National Day Nurseries Association 2018 Nursery Survey for England, released ahead of its annual conference in Coventry on Friday.

Shortfalls in Government funding have more than doubled in the past year so that strapped nurseries are struggling to pay even minimum wages for staff, the survey says.

According to the findings, for 87 per cent of nurseries the funding they receive for three-and four-year-olds does not cover their costs, up from 85 per cent last year.

One in five nurseries expect to make a loss this year and many fear that they will be forced to close. Just over four in ten nurseries expect to make a profit or surplus.

Since the 30 hours started in September, closures have risen by 47 per cent on last year.

The findings are based on responses from 700 nurseries in England.

The NDNA report makes three key recommendations: a rise to the hourly rates for funded places for two-, three- and four-year-olds; make nurseries in England exempt from business rates, in line witj business rates relief for nurseries in Scotland, and a similar scheme in Wales; and a complete overhaul of the childcare and early education funding system.

The organisation is calling for a 'childcare passport', a single parent-held account, which would bring together all childcare funding schemes, including funded early years entitlements, Tax-Free Childcare, childcare vouchers and tax credits/ universal credit.

The report says, 'A complex administrative system with ever increasing paperwork is taking qualified professionals away from their roles. Government needs to simplify the process.'

Launching the report, NDNA chief executive Purnima Tanuku, said, ‘It’s about time Government woke up to the full cost of delivering their 30 hours “free” childcare policy.

‘Nurseries are forced to alter the way they deliver funded hours, by restricting the amount of places they offer, holding back from hiring highly qualified staff or charging parents for extras to make up the funding shortfall. Neither parents nor nurseries want this to happen.

‘Doubling the amount of funded childcare from 15 hours to 30 has more than doubled nurseries’ average annual shortfall which, coupled with late payments from local authorities, is seriously undermining their cash flows.

‘Adding to these difficulties, nurseries are spending huge amounts of time supporting parents to understand the new system and reconciling payments. This is time which nursery staff should be spending with the children.

‘This is a terrible state of affairs in a sector which should be thriving as more children than ever before take up their funded places.’

Other key findings from the survey are:

• Just under a third of nurseries (31 per cent) surveyed said they are paid late by local authorities
• Nearly half of nurseries surveyed charge parents £10 a day for ‘extras’ to cover the shortfall
• Nearly three-quarters (71 per cent) of nurseries plan to increase their fees, by an average of 4.6 per cent
• Nearly one in five (19 per cent) expect to make a loss and just 43 per cent expect a profit or surplus

Ms Tanuku added, ‘We expect Government to respond by saying it has invested record amounts into early years – but the funding is insufficient to pay for high quality early years education that supports all children to achieve their best. Research shows that the earlier children access high quality early years education, the better their life chances and long-term outlook in adult life.

‘By not adequately funding this policy, Government is putting children’s life chances at risk.

‘The Government must act now. Echoing the Treasury Select Committee’s recommendations to government earlier this year, government, via local authorities, must pay providers the going rate which keeps pace with rising wages and other business costs. Let nurseries focus on what they do best, providing high quality learning experiences for children.’

The Federation of Small Businesses backed the call to fully-fund a new 100 per cent business rate relief scheme for childcare providers in England, a move it has previously recommended in its own report published in April.

Mike Cherry, FSB national chairman, said, 'The success of the 30 hours free entitlement depends on small childcare providers, which make up the majority of the marketplace, being able to provide an affordable, high-quality offer to parents.?

‘As is shown in both our and the NDNA's reports, the reality is many providers are struggling financially, hit by rising business rates, operating costs and staffing costs, driven inadvertently by different ministerial decisions. ?

‘The Government needs to recognise these specific pressures, and must urgently commit to reviewing the funding levels given to local authorities for the 30 hours scheme before the situation worsens.'

The Department for Education said that 45,000 providers were delivering its childcare entitlements.

In response, children and families minister Nadhim Zahawi said, ‘Almost 300,000 children are now benefiting from a free nursery place thanks to the roll out of our 30 hours offer. That means thousands of hardworking parents are saving an average of £5,000 a year on childcare.

‘Our research has shown that more than 80 per cent of providers are willing and able to offer places under this programme with a third saying that had managed to increase the number of places available and 40 per cent able to increase staffing hours.’

It said it was continuing to keep the 30 hours under review and had commissioned new research to ensure the policy was absolutely right.

The Government's first year evaluation of the 30 hours policy will be published in September.