Making the announcement today about the funding review, which will be led by childcare minister Sam Gyimah, Prime Minister David Cameron also revealed the Government will be bringing forward its offer of 30 hours of free childcare a week, with some parents set to benefit from 2016 - a year earlier than planned.
Pilots of the 30 hours of free childcare will begin from September 2016.
However, while the Government has committed to increasing the average rate paid to providers, early years representatives have raised fears that any increase will fail to take into account the scale of the existing shorftall.
Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA), said, ‘It’s vital that the increase pledged by the Government is meaningful.
‘Nurseries need to be able to balance the books for the Government’s expansion ambitions to be achieved. The review must result in a substantial increase in funding for childcare providers.’
The Pre-School Learning Alliance agreed. Chief executive Neil Leitch said, ‘Simply raising funding rates by an arbitrary amount won’t be enough - it is absolutely crucial that the government ensures that the hourly rate of funding actually covers the cost of delivering funded places. Anything less risks destabilising a childcare system that is already struggling to stay afloat.
‘As with all things, the devil is in the detail. It is vital that this review is full, thorough and genuinely takes the views and experiences of early years providers into account. Given that the childcare extension plans have been costed at just £350m a year – a figure that our research suggests is around a quarter of what is actually needed – we are concerned that the government is still significantly underestimating the scale of the existing funding shortfall.’
Nursery World revealed last month that under the current 2014/15 rates of funding, a private, voluntary and independent setting loses £330 per 15-hour child per year. Under a 30-hour scheme costed at current rates, this would double to £660 per child per year, a gap of £250m across all PVIs.
Writing on Nursery World’s Linkedin group, Ken McArthur, owner of Polly Anna’s Nursery in York, said, ‘My fear it that the total lack of knowledge within the Government, its ministers and a vast number of MPs, will result in a botched review that will include a very small if any increase in funding rates.
‘I'm not worried about the increase to 30 hours as the PVI sector is very dynamic and will rise to meet the challenge of providing the change in demand. No my concern is two fold; one the level of funding for the free hours and two, the prospect of the ugly head of increased ratios to offset any increase in that funding.’
4Children also acknowledged the importance of the review in the delivery of the increased free hours.
The charity’s chief executive Imelda Redmond said, ‘The Government's review into how much childcare providers receive to deliver this entitlement will be an essential part of making sure this welcome policy can be delivered effectively.’
Mr Leitch went on to raise concerns about the practicalities of delivering the 30 hours of free childcare for some providers.
He said, ‘There are many practical considerations that must be addressed before the extension comes into effect, such as the restrictions many settings face in terms of capacity and use of premises, and how this will impact on their ability to offer 30 hours of funded provision to eligible families.’
The Professional Association for Childcare and Early Years expressed similar fears.
Its chief executive Liz Bayram said, ‘Although the Prime Minister has announced today that he will be bringing forward plans to extend the hours of free early education children receive, the government has to recognise that these plans are threatened.
‘Our recent survey reveals that almost 70 per cent of childcare providers say they have no plans to grow their businesses in the next year; over a quarter of providers are less confident in the future of their business than they were twelve months ago; and a fifth of home-based providers are uncertain as to whether they will still be working in childcare in twelve months time. These findings clearly suggest there is a major disparity between the Government’s ambitions and the sector being able to deliver on them.’
Early Education highlighted issues surrounding the quality and supply of places, saying that no dialogue as yet has taken place with the sector to ensure the policy would be workable.
Chief executive Beatrice Merrick said, ‘We have many unanswered questions about this policy. Who will qualify for the new entitlement, and will it be those in most need of support including those on zero-hours contracts and in unstable employment, or will this be a subsidy for those already in work which while welcome for those on tight budgets has a large dead-weight cost subsidising better off families?
‘Many local councils with a track record of providing 30-hour nursery places for the most vulnerable families are having to cut back as a result of austerity, yet not all of the families who have qualified on the basis of need will have all parents in work. Will this policy exclude those who could benefit most?
‘How many additional places are thought to be needed, and where? How will they be created with many schools already using every scrap of spare space to deal with a growing primary age cohort and two-year-olds, before contemplating an increase in nursery classes?
‘Most importantly of all, how will the government ensure that any new places will be in high quality provision, so that as well as helping families out of poverty, this policy can deliver the best possible early education to help close the achievement gap for the most disadvantaged children.’
The National Children's Bureau has called for considerable care to ensure children really benefit from the investment.
Chief executive Anna Feuchtwang said, ‘Research tells us that only high-quality early education is effective in improving children’s development, yet early years and childcare settings are facing considerable difficulties in recruiting well-qualified and experienced staff.
These problems are further compounded by inadequate funding that sees many early years settings running at a deficit when providing free childcare. These shortcomings require urgent attention, so it is right that the Government will initiate a review of funding before the summer. This must be a thorough review and look in particular at childcare for disabled children, where there are additional costs in meeting their needs.'
She added, 'With an ambitious timescale for introducing the expanded free childcare, we must ask whether providers will have both the number of staff and facilities needed to expand childcare to more children while retaining the quality needed to give young children the best start in life.’