Cost and quality in disadvantaged areas

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Steve Scott, director of Happy Kids Childcare, talks about the Department for Education's new project and operating a nursery business in deprived communities.


Any initiative that can raise the quality of childcare provision in areas of high deprivation is welcomed. 

The fact that the DfE have recognised this as an issue is both positive in that they appear to be trying to address this, and negative in that it is saying that the capital funding for local authorities linked to the expansion of the two-year-old entitlement didn't achieve the outcomes intended i.e. to create sufficient high quality settings in areas of high deprivation where the greatest prevalence of eligible two-year-olds live. 

From our experience across a number of local authorities, some did use that capital funding for its intended purpose, others however used it to ease the pressure on schools admissions by building extra classrooms.

To achieve sustainable high-quality provision, settings will need to maximise income and minimise costs without compromising quality. In areas of high deprivation the bulk of the income comes from early education funding for two-, three- and four-year-olds. 

There has been much coverage of the funding gap between the cost to deliver early education for three- and four-year-olds and the income received. However little has been mentioned about the gap for two-year-olds.  The biggest cost to any nursery or pre-school is in staffing.  If you need twice as many staff to care for two-year-olds on a 1:4 ratio than you do for three- and four-year-olds on a 1:8 ratio, but the income level is not twice the rate, then the gap to provide that care must be greater. 

The DfE has recently published the rates it will be funding local authorities for the two-year-old entitlement in 2015/16 and the basis for it (participation rates rather than number eligible). One local authority we operate within is currently consulting on reducing the funding rate to providers for the delivery of the places down to £4.75 per hour, creating greater financial pressures and decreasing sustainability. 

It would be good if through this project the rates for early education places were re-looked at and a review undertaken of the single funding formula local authorities apply.

From our perspective we minimise staffing costs through using our network of settings to create pools of staff. We can also deploy full-time staff across any setting within the network (geographical zones).  This means that we don't need to use expensive agency staff and can be certain of the quality of teaching.

We have also created and continue to modify our own systems which enable all staff, including managers, to be included within ratios as much as possible. This means they can deliver the greatest benefit to our children through their teaching, and not sat behind a desk.

It will be interesting to see how the Early Years Pupil Premium is used by providers taking part in the DfE project. My hope is that innovative ways of improving the quality of teaching will result; my fear is that it will be used to sustain the settings.

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