A recent independent research study has shown that the proposed increase in free child care could create £350m funding gap because hours paid for by Government are underfunded. The Conservatives will accelerate the proposals to increase free care from 15 to 30 hours a week for three and four-years-olds, with pilot schemes beginning from January 2017. They claim the gap could end up being covered by other parents whose rates would go up to subsidise the new scheme. David Cameron has already pledged to bring forward his plans to double free childcare a year early – although a leading group of nurseries and other providers has warned that the scheme could end up costing many parents more. The Prime Minister will accelerate the proposals to increase free care from 15 to 30 hours a week for three and four-year-olds, from September 2016.
Campaigners say the current offer of 15 hours of free childcare a week is underfunded, and the Conservatives plans to double this could put the whole sector at risk. The research found that the Government currently underfunds childcare providers, meaning that many have to subsidise their full cost by charging the children of other families higher hourly rates or finding efficiencies by working with their educational resource supplier, such as GLS Education Supplies.
The Department for Education’s official line is that the extension to 30 hours a week – worth around £5,000 a year – would help families with childcare costs, as well as allowing providers to expand and encouraging new ones to open.
The study found private nurseries would lose £660 a year for each child taking up the extended entitlement, if government funding remained at current levels.
The total cost to private providers, after the extension to 30 hours, is estimated to be £1.95bn each year – but government funding only covers £1.7bn, leaving a shortfall of £250m. Private day-carers also face a shortfall of more than £100m on the Government’s existing offer of free childcare to some two-year-olds.
The research also suggests the Conservatives underestimated the potential costs of the new policy. Instead of the £350m extra spending that the party claimed during the election campaign, the researchers estimate that at current rates the policy would cost £1.5bn, if each eligible child took their extra 15 hours.
Andrew Parmenter, senior marketing manager at Findel Education (school brands), commented: “The increase in pressure on the early years and nursery sectors has been compounded by the forthcoming change in increased free child hours from 15 to 30. This leads to two choices for the establishments, either increase pricing for other paid services and full paying families or reduce their overall costs by consolidating their suppliers to increase discounts.
“GLS Educational Supplies will continue to work with individual nurseries to ensure they are gaining best value for their commodity resource requirements.”
Will the change in Government funding affect your establishment? Does it matter to you that the scheme has been put back until 2017? Share your comments below.