Scottish nurseries losing £40,000 a year, NDNA survey finds

According to the annual survey, the average nursery offering 35 funded places for three- and four-year-olds has to absorb a shortfall of £39,480 every year.

All parties in Scotland have pledged to increase the number of free hours for parents, including the SNP, which plans to increase funded hours from 600 to 1,140 a year by 2020.

However, according to the survey only half of the nurseries that responded are ‘likely’ to increase the number of funded places they offer, and one in five are ‘unlikely’ or ‘very unlikely’ to do so.

This survey also found that demand for places in PVI settings is high - a quarter of nurseries in Scotland have waiting lists for funded places, with an average of nine children on the list.

At the same time some just under a third of private and voluntary sector nurseries working in partnership with their local authority reported restrictions on the number of funded hours that they could offer.

Underfunding also means that PVI nurseries cannot match the pay and conditions paid by the maintained sector, with around four in ten providers saying that this is an issue.

Nurseries in Scotland receive £3.56 an hour for three- and four-year-old places, but over a year this equates to a loss of £1,128 per place.

NDNA chief executive Purnima Tanuku said, ‘This enormous shortfall is a huge burden on private and third sector nurseries.

‘They have no choice but to try to absorb these costs themselves or pass them onto parents by increasing fees for additional hours or for younger children.

‘Their main concern is that if free early learning and childcare is expanded, far fewer parents will need any additional hours, so they will struggle to make up this shortfall, especially with the National Living Wage being introduced next month.

‘The vast majority of nurseries are small businesses and can’t afford these losses. They want to offer parents these free hours, but at the same time they have to be sustainable. Almost half of the nurseries who responded expected only to break even, with 11 per cent expecting a loss.

‘This is why fewer feel confident in offering more funded hours to support the next Scottish Government in fulfilling free childcare pledges.’

The NDNA has launched a childcare challenge ahead of the Scottish elections in May, calling for the incoming Scottish government to carry out a funding review to ensure that nurseries can expand provision without losing money.