Nursery World has learned of at least one private daycare provider who will not take part as the funding stands, because it threatens the survival of their nursery.
Early years settings in York will receive an average of £3.66 per hour if they take part in the 30-hour childcare pilot.
However, there are indications from 20 nurseries in York that they are unwilling to get involved unless the funding is at least £4.50 per hour.
The York early implementer pilot, one of eight local authority trials due to start in September, is seen as crucial because it involves all eligible children and is open to all childcare settings, including day nurseries, childminders, playgroups and schools with nurseries in the city.
City of York Council has confirmed that York nurseries will receive £3.95 to offer the extra 15 hours in the pilot from September, but that the current funding rate of £3.38 for the first 15 hours will not increase. This rate has been frozen for four years.
This means that the average combined funding rate for providers taking part in the 30-hour pilot will be £3.66 an hour, per child, more than £1 lower than the £4.88 average promised by childcare minister Sam Gyimah.
Ken McArthur, owner of Polly Anna’s nursery in Haxby, York, told Nursery World that he would not be taking part in the pilot as it stands.
‘I’m out,’ he said. ‘I’m definitely not going to [take part]. I will not be offering the additional 15 hours to my parents.’
The 50-place nursery graded outstanding is due to celebrate its 20th anniversary next year. Mr McArthur said he was already losing £20,000 a year offering the 15 hours, and he was not prepared to put his business at further risk.
Most of the parents that attend his nursery would be eligible for the free 30 hours, he said, and it was a difficult decision. ‘But I would prefer to be in business in two years’ time. I’m so disappointed. We were enthusiastic – we were rising to the challenge. We were really keen to do it - and then wallop!’
He added, ‘It’s a disappointment for families coming to the nursery, but there’s no way I can do it. It’s a sad state of affairs. I’m not prepared to compromise on quality and safety.’
Mr McArthur said he would be emailing parents to let them know why he had made the decision.
As the early years representative on the schools forum, Mr McArthur said he had been told over the phone about the new funding rates on Monday (26 April).
Separately, as chair of the National Day Nurseries Association network in his area, he has canvassed opinion from local daycare providers, both single site and multiple operators, about the minimum funding rates that settings would accept for the 30 hours.
Around 20 nurseries were present at a meeting two weeks ago, he said, and the consensus was that ‘they would not be interested in taking part in the 30 hours pilot for anything less than £4.50 an hour.’
He added, ‘If the majority of daycare providers are not involved, it’s not much of a pilot.’
Mr McArthur accused the Government of ‘making a false promise to parents’ about the 30 hours of free childcare.
‘Why should I take a loss? It’s like turkeys voting for Christmas! The people that will be hurt will be the children and parents. They were promised it in an election that it was free, and it’s not free.’
Helen Gration, founder of Yorkshire Montessori Nursery, said, 'Only last month, the Government acknowledged an average hourly rate should be £4.88. So how can the offered £3.95 be justified, especially when we are left with a very tight four months of intense administration for a new system of extra funding, which cannot be afforded here for the city's providers of childcare, who are already losing money on every funded hour they provide.
'We hope there is serious thought given to how we can recuperate costs on top of each "free" hour. For such an important trial, providers in York are left asking if this city was chosen because it was a cheap option. For the quality education and care we provide the youngest of our children, don't we deserve a justifiable rate?'
Mr McArthur has now called an NDNA Network meeting for providers in York on 4 May.
'There's a very strong feeling against doing the pilot,' he said. 'We're asking people to make their own business decisions. If they got an accountant in they would find they could lose a substantial amount of money. I cannot afford to increase my losses.'
Purnima Tanuku, chief executive of NDNA, said, ‘It is very disappointing if childcare providers in York are put into a position where they are unable to take part in the pilot due to low funding rates.
She said that the average of £3.66 per funded place fell ‘way short’ of the average £4.88 promised by the Department for Education.
‘The pilot scheme in York is crucial, as it is the only one which includes all eligible children within the local authority in all types of childcare. It would be a real shame if the rate was too low for childcare providers to take part in such an important pilot scheme,’ she said.
‘The Government said that providers don’t have to take part in offering 30 funded hours and this is exactly the choice they may be forced to make if the rate continues to be unfair and unsustainable for nurseries. We have warned the Government that if they don’t get the rate and funding formula right at this early stage, then the sector won’t have any faith or confidence in delivering this flagship policy from 2017.
‘It is in the interests of national government, local government, childcare providers and parents that this pilot scheme goes ahead so we can learn how best to deliver the 30 funded hours ahead of the full roll-out next year. York parents will be expecting to benefit from this in September. This can only happen if providers are paid a fair rate for taking part so they can remain sustainable while delivering high-quality, flexible places.’
A Department for Education spokesperson said, 'This is not a reflection of the final funding rate providers will get to deliver our 30 hour offer from next September – this interim funding rate is specifically for areas that are starting to deliver our offer earlier for the additional hours. This is backed up by our record investment of £6 billion into the childcare sector per year by 2020.'