Nurseries need funding boost to meet demand for places, charity says

Nurseries need more money in the upcoming Spring Budget as most providers are unsure they can meet the demand of the Government’s free childcare plans, a charity has said.

Working parents of two-year-olds in England will be able to access 15 hours of free childcare from April.

However, a National Day Nurseries Association (NDNA) survey of 448 private, voluntary and independent nursery owners, conducted in January, found 54% said they were unlikely to offer any additional places to two-year-olds or were still not sure if they could.

More than 55% said they could not meet local demand for places, meaning eligible families may miss out on the offer.

The NDNA has called for a boost in funding and an end to business rates for nurseries ahead of the Government’s Spring Budget on March 6.

Purnima Tanuku, chief executive of NDNA said: “We have taken the temperature of the early years sector at this crucial time and found it needs a boost in the Budget to help them deliver on the Government’s ambitious promises.

“A year ago when the Chancellor announced his expansion plans, the key aim was to bolster up the economy by supporting working parents.

“But a week before this year’s Budget, we now know that the majority of early years settings cannot commit to offering additional two-year-old places.

“We have been calling for the Government to address underfunding for years. We can clearly see that increasing hourly rates can have a positive impact, with the numbers of providers saying they cannot cover their costs falling.

“However, for the vast majority the hourly rates are still not keeping pace with rising costs.”

Survey respondents reported wage bill increases of 14.4% from this April compared with a 4.6% average increase in funding at the same time, the NDNA said.

This has led to 83% of nurseries saying their costs are higher than the funding for three and four-year-old places. Their average shortfall is £2.36 per hour per child or £1,345 over the year for a 15-hour place.

Chancellor Jeremy Hunt announced in March last year that eligible families of children as young as nine months will be able to claim 30 hours of free childcare a week by 2025.

As part of a staggered rollout of the policy, working parents of two-year-olds will be able to access 15 hours of free childcare from April.

This will be extended to working parents of all children older than nine months from September.

From September 2025, working parents of children under five will be entitled to 30 hours’ free childcare per week.

A Department for Education spokesperson said: “We are confident in the strength of our childcare market to deliver the largest ever expansion in childcare in England’s history, and we are already seeing providers looking to expand their placements across the country.

“Last year the Institute for Fiscal Studies independently reported that the national average funding rates paid by government for the new entitlements were projected to be substantially higher than the average market rate paid by parents last year.

“We will continue to support providers to deliver each stage of the rollout through increases to the rates we pay, our national recruitment campaign and establishing more qualification routes into the sector.”

Helen Hayes, Labour’s shadow children and early years minister, said: “With just a month to go, the Government’s childcare promises have completely fallen apart.

“Providers are clear that they have not had the plan or support they need to prepare for the expanded offer.

“The Chancellor was forced into a pledge without any plan to deliver, once again leaving parents across the country let down.”