Small nurseries could go to the wall over 30 hours

Small nurseries are not likely to survive the introduction of the 30 hours of funded childcare, leading sector figures have warned.

At a London Assembly hearing on the viability of delivering the 30 hours free entitlement yesterday, local authorities predicted that some small settings would have to close as a result.

Allison Jones, service manager, early years, from Merton Council said, ‘I think we will see a change in the provider base. Small providers will struggle to offer it. Parents will vote with their feet and we will see some of the smaller providers closing.’

Penny Kenway, head of early years at Islington Council added, ‘In inner London to be viable and sustainable you need to have a 60-place nursery. A lot of small nurseries are not very sustainably financially.’

The panel was questioned on the Government’s plans to expand the current 15 hours of funded childcare that parents receive for three and four-year-olds to 30 from 2017.

Pre-School Learning Alliance’s press and public affairs director Shannon Hawthorne said that ‘most people would agree that the 15 hours was underfunded’, and that the name was ‘misleading’ because ‘the cost isn’t covered and it isn’t free. Someone has to pay for it.’

Claire Schofield, NDNA’s director of membership, policy and communications,said that ‘small providers will have invested their life savings and mortgages to start a nursery’ but that nurseries ‘were making a loss on every funded place they provide. The model is critically underfunded.’ She added that this has been formally recognised by the House of Lords who voted last year for an independent review of the funding ahead of the 30 hours being introduced.

Jill Rutter, head of policy, Family and Childcare Trust, said that the nursery sector ‘is quite economically inefficient’. She said, ‘There are a lot of small providers. I think it would be a good idea if there were more mergers and business collaboration to share back office costs.’

She added that ‘the reality … is that even after 2017 we will gave children receiving 15 hours in a state nursery and then going 15 hours elsewhere.

‘We have seen a 9 per cent decline in the number of childminders working in London between 2013 and 2015. We need to nurture childminders.’ She added that those local authorities who are doing that are seeing less of a decline in their numbers.

Stephen Knight, deputy chair of the London Assembly’s economy committee, which held the meeting, said ‘the Government has suggested providers can save money by changing the ratios – how realistic is that?'

Ms Hawthorne said, ‘It is unrealistic,’ adding ‘We are a bit baffled by the Government as for many years the sector has been underfunded – [are they saying] it is because they haven’t realised they can work to these ratios?’

She added she was also very concerned that the eligibility criteria for parents claiming the full 30 hours had changed. Now parents of three- and four-year-olds have to work the equivalent of 16 hours per week at national minimum wage after the hours threshold was raised from eight.

She said, ‘If someone is working at 15 hours per week at minimum wage and going to evening classes they won’t be eligible because education doesn’t count.’

Kit Malthouse MP said that I think ‘we would all agree’ that [30 hours] ‘is a good thing’ and asked if people would agree that ‘we are talking about how to make a good thing better’. Claire Schofield replied, ‘I think we are talking about how to make a good thing work.’

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