The report by Frontier Economics, published today, is based upon surveys of 1,717 providers, more than 3,000 parents registered for the 30 hours, along with in-depth interviews with 75 local authority staff, 136 childcare providers and 108 parents. Some of those involved in the research took part in the pilot of the 30 hours.
It finds that:
- 39 per cent of providers have seen a reduction to their profit or surplus due to the 30 hours.
- A quarter of providers (25 per cent) either moved from making a profit to breaking even, or from breakeven or profit into making a loss.
- More than 60 per cent of providers reported that their fees were higher than the funding rate.
- Over half of parents reported having to pay additional charges
- More than 45 per cent of parents said there were restrictions on when they could take up the hours.
The Pre-school Learning Alliance said the Government was being ‘irresponsible to the extreme’ for turning a blind eye to the challenges of the 30 hours.
The report says that ‘some’ [providers] believed the funding rate is not sustainable nor equitable, for example when a neighbouring local authority had a considerably higher rate.
It goes on to say that these providers believed if a fair funding rate could not be provided the word ‘free’ should be dropped from the policy name to avoid confusion, false expectations and awkward discussions with parents about charges associated with the extended offer.
The National Day Nurseries Association (NDNA) said nurseries would be really worried that a comprehensive evaluation of the 30 hours fails to mention the negative impact of rising delivery costs coupled with stagnating funding rates.
Charging for extras
According to the report, almost three-quarters of providers delivering the extended hours said they had not increased or introduced additional charges since starting to offer the 30 hours.
However, 56 per cent of parents said they had to pay charges for additional items or activities. On average (mean), they reported paying £24 a week. The payment was highest for private providers, who were more likely to be charging for extras, at £28 a week.
And other recent research from sector organisation has found a higher proportion of providers making extra charges.
The main type of charge that was increased or introduced was for meals, snacks or other refreshments.
Almost half of those delivering the extended hours reported that they found it challenging to charge for some items or activities. The main reason for this was that parents disliked paying more money. Other reasons included that it was difficult to only let some children benefit from the item or activity and that it involved too much administration.
In addition to increasing or introducing additional charges, 19 per cent of providers offering the 30 hours increased fees for hours outside the entitlement.
Restrictions on places
Nearly half of parents who took part in the research reported restrictions on when they could take-up the 30 hours.
For 27 per cent of places, there were some restrictions as to when the 30 hours could be taken up, while for 21 per cent of places, the hours had to be taken on the days and at the times specified by providers
Childminders were the most flexible with the hours and maintained providers the least flexible.
Impact on other funded places
The report states that all local authorities believed the 30 hours had not affected the availability of other funded places.
However, findings from providers showed the policy has marginally impacted upon places for disadvantaged two-year-olds.
Some local authorities raised concerns from providers about the future sufficiency of two-year-old places and the universal offer for three- and four-year-olds as they felt extended places were potentially ‘more attractive’ to deliver.
The report also reveals concerns among providers about the capacity of some local authorities to provide adequate help due to cutbacks. Some settings said it was increasingly hard to get advice and support from the local authority.
Childcare providers also remarked that local authority discretion in the interpretation of the DfE statutory guidance means some practices are allowed in some local authorities, but not others. They called for tighter guidance for a more consistent enforcement throughout the country.
The report indicates that it is less likely to be lower income families that are benefitting from the 30 hours policy, as previous research has shown.
It reveals that just under half of families (43 per cent) taking up the 30 hours had a gross annual household income of less than £40,000. Over one in ten (12 per cent) had an income of £80,000 or more. Most families (59 per cent) had at least one parent with a degree.
Higher income families were also more likely to report that they had more money to spend thanks to the policy, it says.
While an intended aim of the policy is to get parents back into work, the report finds that just 2 per cent of mothers had entered work as a result of the 30 hours. However, over a quarter (26 per cent) had increased their working hours.
For parents not taking up the 30 hours, one reason was that the system had put them off.
Some parents included in the research had tried for two terms to apply for the extended entitlement but had given up. Some parents believed they had successfully applied until they got their childcare bill, while others experienced problems with the reconfirmation process and lost their entitlement.
Others had successfully registered for the 30 hours only to discover that their setting was not offering the hours, while some parents did not apply because they had been told they could not take the offer at their setting.
One parent said, ‘I was really excited about it [30 hours], I knew I was eligible but the nurseries [in the area] are not allowing you to use it. It’s extremely frustrating to know you are finally eligible for something but you can’t use it.’
Some settings were offering a limited number of places, which meant some parents missed out.
Parents of children with special educational needs and disabilities also reported experiencing difficulties finding a 30-hour place.
Children’s minister response
Children and Families Minister Nadhim Zahawi said, ‘Every parent wants to give their child the best start in life and that’s why it’s great to see that the research published today confirms the story I hear so often from parents during my visits up and down the country.
‘More parents are increasing their working hours, able to work more flexibly, and spending less on childcare so they have spare cash to spend on their families.
Working families of every kind are reaping the benefits, including single mums and parents from lower-income backgrounds, who all told us their children’s development had come on leaps and bounds by spending time in free childcare.
‘In its first year, more than 340,000 three- and four-year-olds have benefited from a 30 hours place. Providers have stepped up to the plate to deliver the offer which is having a significant positive impact on families’ lives.’
Pre-school Learning Alliance
Neil Leitch, chief executive of the Pre-school Learning Alliance, said, ‘The Government's unwavering insistence that all is fine with the 30-hour offer in the face of overwhelming evidence to the contrary might be funny if it wasn’t so damaging.
‘Every week we are hearing about more and more nurseries, pre-schools and childminders being forced to shut their doors because they cannot make this policy work.
‘With so many parents having struggled with the cost of childcare over recent years, it's no surprise that so many have welcomed this scheme - but let's not forget that they too are starting to feel the effects of the Government's lack of adequate funding, with nearly half having already seen fees and charges rise as struggling providers try to bridge the funding gap. And of course, this means that, contrary to the government's rhetoric on social mobility, it is those lower incomes families, who cannot afford to pay above the odds for what the Government continues to promote as 'free childcare', that are the most likely to miss out.
‘This simply isn’t sustainable and for the Government to continue to insist that all is fine when study after study and survey after survey say otherwise is irresponsible to the extreme. It's time for ministers to face facts and start working with the sector to try and salvage this policy and ensure that it is, in fact, viable in the long term.’
Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA), said, ‘The Government wants to paint a rosy picture but this evaluation of its 30 hours policy highlights a number of alarming challenges, some of which work against the Government’s social mobility aims.
‘NDNA is extremely concerned that current childcare policy is extending the gap between disadvantaged children and their peers. Local authority teams have been reduced to ‘critically low levels’ and their budgets already inadequate to support children with SEND or assist low income families to take up the offer. Our members tell us that there is little or no support available to them locally for children who need the most help and for whom high-quality early years education is the most beneficial.’
She added, ‘Nurseries will be really worried that a comprehensive evaluation of the policy fails to mention the negative impact that rising delivery costs coupled with stagnating funding rates. If the funding is unsustainable then providers won’t be able to offer the places that the policy needs, putting the whole project at risk.
‘It’s crucial that the Government listens to our concerns and those of the people we represent or risk the policy failing completely.’
Liz Bayram, chief executive of the Professional Association for Childcare and Early Years (PACEY), said, ‘This early evaluation reinforces the challenges of the 30 hours policy, which PACEY has spent months highlighting to Government.
‘While parents are finding it easy to access a 30 hours place now, that is unlikely to remain the case in the future unless funding levels increase. The big question remains why do some local authorities have the resources needed to fund this initiative properly but others do not?
‘The evaluation also puts a spotlight on the wider impact of this flagship policy. It makes clear that fewer low-income and workless families have benefited to date. This issue and the lack of sustainable funding have to be addressed for this policy to be seen as a success for parents and providers.’
- The Frontier Economics report is available here