Equalities minister announces 2m start-up grant for childminders and nurseries

In a speech today, women and equalities minister Maria Miller will say that from April 2013 £2m will be available to support up to 6,000 new childcare businesses.

The money is expected to be used to help pay for legal and insurance costs, health and safety training, equipment and for example for childminders to adapt their homes.

A childminder would be eligible to apply for £250 and £500 will be on offer for larger businesses caring for more than six children, which the Department for Culture, Media and Sport said could help to pay towards the deposit on a new premises.

Although the drive behind the announcement is to encourage more women back into the workforce to drive economic growth, and boost the number of childcare places, a spokesperson from the DCMS confirmed that men would also be able to apply for the start-up funding.

Specially tailored start-up advice and support, including mentoring, will also be available through the Government’s Business in You scheme.

The funding is for England only and will be paid for by savings from the Government Equalities Office budget.

Mrs Miller will say, ‘There are more women in work than ever before and they are playing a vital role in our economic recovery. But good quality, affordable and reliable childcare is the key to even more women being able to work. More childcare options mean more women can take up jobs, help support their families and realise their own career ambitions.

‘The childcare industry is already a major employer of women, and this scheme will provide huge opportunities for female entrepreneurs to start up and run their own businesses. This is an injection of cash designed to stimulate the sector in tough times, the new scheme will provide more childcare places, but will also help get up to 6,000 new childcare businesses off the ground.’

There will be a tender process for a third-party to manage the scheme, and more details of how to apply will be revealed early next year.

The National Day Nurseries Association welcomed the proposals but stressed that the long-term sustainability of new and existing businesses should also be taken into account.

The NDNA’s June 2012 business performance survey found that average nursery occupancy was 74 per cent, indicating that many childcare providers had places available. The same survey revealed that three-quarters of nurseries did not receive sufficient funding for providing funded places for three-and four-year-olds, with an average annual shortfall of £500 per child.

Chief executive Purnima Tanuku said, ‘The £500 bursary will be helpful but it should be acknowledged that this will only cover a fraction of the start-up costs childcare providers incur. Start-up costs for nurseries include, buying or leasing premises, building and conversion costs, fixtures and fittings (e.g. a kitchen, toilets etc.), buying equipment such as furniture and toys, initial recruitment costs, marketing spend insurance, Ofsted registration, training costs and consumables such as food and drink, nappies and milk.’

‘If the Government wishes to encourage an increase in the number childcare providers, funding of free childcare places must cover costs if these new businesses are to be sustainable.'

Deborah Lawson, General Secretary of Voice: the union for education professionals, and a former local authority childcare market commissioning manager, said,'Such small grants won’t go very far in terms of recruiting, training or employing staff, or in setting up a nursery. The real issue for parents is affordability, rather than availability, of provision. If parents cannot afford to pay the fees that nurseries need to recruit and retain high quality, professional staff, then who will?

'The childcare sector cannot be expanded without more professional childcarers and they must be well trained, highly qualified and paid accordingly. We cannot increase the number of children in childcare while reducing the number or quality of staff who look after them or paying those staff such low wages that many leave the sector to work elsewhere.To recruit and retain a highly qualified workforce, there must be a robust career, training and salary structure.

'Using a third party to administer the system, when there are local authorities that have the experience and capacity to undertake this, seems ridiculous – especially when local authorities still have a duty to administer the local childcare market. This could have a destabilising effect on the local childcare market.

'We remain concerned about the possible deregulation of the childcare system and the impact that this will have on quality.'

Neil Leitch, chief executive of the Pre-School Learning Alliance, said, 'The £2m allocated to 6,000 new businesses in the form of grants of between £250 for childminders and £500 for day nurseries may just about cover insurance costs alone, never mind covering the cost of purchasing equipment, toys, books, rent and rates, salaries and other core expenses. Ultimately, a small capital injection is no substitute for a long-term viable proposition.

'In her previous roles as Work and Pensions Minister and co-chair of the Government’s Childcare Commission, Maria Miller had several interviews with early years providers so there is no doubt that she too is aware of the long-running problem of underfunding in the sector. For the Government then to announce plans to give money to new start-up schemes but not to those currently working in the sector is quite frankly a slap in the face to existing providers.

'We trust that the Government will ensure the sustainability of these new businesses and existing childcare businesses by making sure that all those taking part in the free early years entitlement scheme receive enough funding to cover the cost of providing these places for two, three and four year olds. Otherwise this will be a waste of taxpayers’ money at a time when money needs to be spent wisely and sensibly.'