INVESTIGATION: How viable is the government’s 30 hours a week free childcare policy? An investigative report:

Report first published in the Western Morning News, August 2017

The viability of the government’s key election pledge to introduce 30 hours of free child care a week for eligible pre-school children has been called into question ahead of it coming into effect in a fortnight’s time.

Critics, including the Shadow Secretary of State for Education Angela Rayner MP, have raised a raft of concerns about the scheme including the potential of the creation of a two-tier system of childcare and the threat it could pose to childcare businesses.

But while industry professionals call out the workability of the scheme, the Minister for Children and Families Robert Goodwill MP has defended the government’s commitment to affordable childcare.

The government’s pledge in June 2015 to double the free hours available to working parents of pre-school children from 15 hours to 30 hours came as a welcome surprise, particularly to low income working parents whose monthly childcare bills eat up a huge percentage of their income. So in theory, the extra funded hours are a godsend to families through enabling more parents to work.

But in reality there appear to be cracks in the system which, experts fear, may force childcare providers out of business, and drive down standards, ultimately impacting negatively on the children. And if it proves undeliverable, it could leave parents feeling misled and disappointed.

The Department for Education has set out an hourly rate that will be paid to councils who are required to pass on at least 93 per cent to childcare providers in the first year and at least 95 per cent in the second year.

In Devon, Torbay and Cornwall the local authorities will receive £4.30 per child per hour; Devon County Council is passing on £3.98 to childcare providers with Cornwall passing on an average of £4.16. Meanwhile, Plymouth City Council is receiving £4.57 and passing on £4.03 to £4.81.Additional supplements are awarded to providers in areas of deprivation or those caring for children with special educational needs.

However, experts and childcare providers say that this hourly rate falls far short of the real cost of providing quality childcare so businesses that provide the funded hours may start running at a loss if they cannot find other ways to generate revenue.

The scheme is voluntary so childcare providers do not have to offer the funded places. So another concern is that parents may be forced to split the 30 hours a week between providers who can only offer 15, or take their children away from their chosen provider completely.

The formal headcount is in September, but so far, in Devon around 80 per cent of childcare providers have signed up to the scheme, with around 60 per cent in Cornwall.

But the Pre-School Learning Alliance, which has long expressed “serious” concerns about the viability of the scheme, has said that although anecdotal evidence suggests that nationally around 70 per cent of childcare providers will be offering the 30 hours provision in a fortnight, this number should be taken with a pinch of salt because several factors are “skewing” the figures making the scheme appear more successful than it really is. For example:

  • Providers that offer just one child the 30 hours provision will be counted in the overall tally of those partaking in the scheme.
  • Provision is for 30 hours a week for 38 weeks (term time weeks), so some providers may opt for the “stretched offer” approach whereby 22 hours a week are offered over 52 weeks.
  • If a parent is splitting their 30 hours provision between two nurseries, although each nursery is only providing 15 hours, both settings will be counted as partaking in the scheme.

Neil Leitch, Alliance chief executive, said: “Unless the scheme is funded properly, it is not going to work in practice.”

Paul Burgess, chair of the Devon Childminding Association said although the majority of his members had signed up for the extra hours, he has “serious concerns” about the workability of the scheme.

“I have serious concerns about the financial future of childcare providers and that standards will drop,” he said. “And if standards drop it doesn’t take a genius to work out that the children could suffer.

“The current system is unviable and what will happen is the creation of a two tier system whereby there will be those providers who offer the 30 hours but can only afford to provide the bare minimum.

“The government is quibbling over paying providers a decent rate and all that’s going to happen is children are going to lose out as without enhanced care, some children will get left behind.

“It’s going to open an unbelievable can of worms; the range of childcare facilities will dramatically reduce which could result in parents being penalised, but most importantly, children being penalised.”

Outstanding rated Trinity School in Teignmouth, Devon, made the decision to stop providing nursery care for under threes, after almost two decades, due to “economic pressures”, including the government’s extension of free child care from 15 to 30 hours.

Rachel Eaton-Jones, head of prep, said: “The model is not financially viable; government funding is inadequate for us to provide the outstanding level of care we want to continue providing.

”The introduction of the 30 hours coincides with rising the living wage, which means we will have to raise wages across the board, so this is about the whole equation; the sums don’t add up.”

In other areas of the country, nurseries have closed as a direct result of the 30 hours scheme, such outstanding rated Anchors Nursery School in Hampshire which was run by Eve Wort for two decades.

Local authorities have been advising childcare providers to think of other ways they can generate funds. In Devon, the council has discussed with providers options for charging for extras they currently cover such as nappies and sun cream, with some nurseries elsewhere in the country claiming suggestions have included providing an ironing or takeaway meal service.

Angie Williams from Exmouth, has worked in childcare for 20 years and is a director of Ottertots nursery and pre-school. Her nursery is offering the 30 hours, but she believes the scheme may threaten the ability of nurseries and childminders to provide the highest level of care.

“We’re offering the provision primarily because of parental pressure, because at the end of the day, it’s not the parents fault,” she said. “But the hourly rate being offered nowhere near covers our costs, in fact we’ll be losing money. So what we’re having to put in place is a charge system for extras, like snacks, nappies and forest school for those getting the free hours, that were offered free before.

“Because we have to do something otherwise it’s not financially viable and otherwise quality is going to be compromised, for example be at the moment we have a one to eight carer-child ratio but this may go down to one to 13. And we have a lot of highly trained staff but may only be able to take on apprentices.

“It should have been brought in correctly by the government, but it’s been very misleading.”

Angie said the implementation of the scheme has been chaotic since the getgo with some parents whose children turn three after September who are therefore eligible after January, being issued with codes for this September. And she said some parents who were issued codes in the spring, have now found the codes to be defunct.

Registered childminder Anthea McCoy, who runs a business near Kingsbridge has been in the industry for 30 years and said she cannot offer any funded places. “It just doesn’t make financial sense,” she said. “I run a business not a charity. The whole situation is absolutely ridiculous.

“The government has childcare providers over a barrel, because some will feel they have to make it work in the short term for fear of losing parents and damaging their reputation. But in the long term this is not viable.”

Katie O’Sullivan, from Exmouth, is mum to two-year-old Isabelle. She said that the government’s offer of 30 free hours a week of childcare is a huge benefit both financially and circumstantially to her family, particularly as her husband is a Royal Marine and is sometimes away for months at a time. “Without the 30 hours provision that we’ll be eligible for in a year’s time, I wouldn’t be able to increase my hours at work,” she said. “So to hear it may not be sustainable is very worrying.”

The Champagne Nurseries, Lemonade Funding campaign which has 16,700 members on Facebook was founded last year by Lynne Stanley and Donna Row to oppose the Government’s policies on the free entitlement scheme, which they believe will force nurseries out of business, and provide a platform for childcare providers to voice their concerns.

Jo Morris, group spokesperson, said: “The government has completely misled parents from the start and that has put childcare providers in a really difficult position, although parents are being very supportive of their providers.

“There’s been a total lack of understanding from the Government about how the sector operates.”

Angela Raynor MP, added: “From start to finish the government’s policy of 30 hours free childcare has run into problems.

“As the roll out begins there’s still not enough money and parents trying to access the hours are being blocked from the government website.

“This is no way to run a childcare system. The Tories have left a mess in the early years’ system which is leaving providers at risk of closure and children not being able to access their entitlement.”

Minister for Children and Families Robert Goodwill, added: “We are determined to support as many families as possible with access to high-quality, affordable childcare, which is why we are investing a record £6 billion every year by 2020 in childcare – more than ever before. This includes an additional £1 billion per year to pay for the free offers and to raise the national hourly funding rate to local authorities for three- and four-year-olds to £4.94 per hour.

“This rate is based on a comprehensive review of childcare costs, which took into account current and future cost pressures. They are also far higher than the average hourly cost of providing childcare for three- and four-year-olds, which recent research has found to be £3.72.

“Our early delivery programme has already been a huge success – including in the areas using our increased funding rates – and many thousands of hardworking parents are seeing the benefits of access to 30 hours of free childcare.”

Fact file

  • As of this September, free childcare for eligible three and four year olds will increase from 15 to 30 hours a week, for 38 weeks of the year, so if a parents wants the hours spread out over 52 weeks of the year, this equates to 22 hours a week.
  • To be eligible, parents must earn the equivalent of 16 hours at National Minimum or Living Wage over the coming three months; this equates to £120 a week. So a parent earning £30 an hour for three hours a week will be eligible.
  • Each parent must not earn more than £100,000 each to qualify for the hours.
  • The scheme is voluntary so childcare providers do not have to offer the funded places, however those that don’t risk losing children to those that do.
  • The Department for Education is offering childcare providers an hourly rate per eligible child, which many claim is not enough for them to cover their costs; as a result, many settings are having to look at others ways to increase revenue in order for them to make ends meet such as charging for previously free extras such as nappies, trips and snacks.

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