Nurseries keep down fees at expense of wages, NDNA finds

The snapshot research shows how the economic climate continues to have a mixed impact on private, voluntary and independent providers.

More than two-thirds of nurseries said that parents were struggling financially and just under half said that they had seen increasing levels of bad debt.

Sixty per cent of nurseries said they would freeze staff pay to keep fee increases down and childcare affordable for parents.

Although three in five nurseries said they were 'confident' about the future of their business, more than half said that it was a challenge to offer the free entitlement and keep their business sustainable.

Three-quarters said paying staff more for gaining qualifications was challenging. A number also said that they were cutting staff hours to save costs.

Claire Schofield, director of membership, policy and communications at the NDNA, said the research showed the impact of the recession for providers continued to be 'very mixed', but there was emerging evidence that the effect was delayed.

She said, 'While the freezing of pay is being seen across other sectors, settings must not start losing their staff. It is vital that Government consider increased direct support for salaries and that nurseries themselves look for ways to support staff, for example reviewing cost-savings in other areas so that rises in wages do not have to be passed to parents in full.'

She added, 'With bad debt continuing to affect cashflow, it is important that childcarers have the skills and knowledge to support parents who face difficulty with payments - for example, being able to advise about checking their entitlements for help with childcare costs.'

NDNA's recommendations to support providers in the recession are:

* Local authorities should actively promote the availability of support, such as money for training and sustainability

* The Government should reconsider abolishing tax relief for employer-supported childcare

* Press ahead with reforms for free entitlement funding and local authorities must promote the option that children can stay in existing settings for 25 hours from 2011.

The survey also showed that many nurseries suffer in September when children leave to go to nursery class or reception in school. More than half said they had lost 'lots' of children in September.

The NDNA said that it was vital that the option to stay on in nursery was highlighted to parents, given the Government's plan, outlined this week, that all children should start school following their fourth birthday from 2011.