As the consultation on the Early Years National Funding Formula closes today (Thurs), professional childcare associations have revealed their stinging rebuke to the Department for Education (DfE), along with a set of radical suggestions for saving the plans.
'It’s time for the Government to come clean on 30 hours,' said Pre-school Learning Alliance chief executive Neil Leitch.
'Either it needs to fund the offer properly, at a rate that ensures that neither parents nor providers have to incur any additional costs, or it needs to admit that the scheme is not "free" at all, but rather subsidised, and promote it to parents accordingly.'
‘Enough is enough,’ he added. ‘It’s not the job of providers, or parents, to clean up the Government’s mess.'
The DfE, which says it is investing £300m to increase the average rate paid to free entitlement providers, claims the rates were calculated based on the 'most comprehensive analysis of the childcare market ever conducted’.
However, the associations believe the proposals, for three- and four- year-olds, fall far short of what is needed to cover many providers’ true costs and many families will be turned away.
While most councils are expected to see a rise in their hourly rates, a quarter of local authorities are facing cuts under the new formula.
Among the bodies’ suggestions for a better deal, are a repackaging of the pledge to parents as a subsidised offer, rather than ‘free’, allowing providers to charge for meals and other add-ons.
The Alliance has also suggested it would be fairer to cut the earnings cap of up to £200,000 per household, and diverting the savings to fund a real-costs hourly rate.
‘Given that government has stressed that there is limited funding available for the scheme, you have to question why this money is being used to pay for childcare for families with a total family income of up to £200,000,’ said Mr Leitch.
‘We believe that the DfE would do better to reduce this upper threshold and look to use the money saved to help plug the funding gap.’
NDNA chief executive Purnima Tanuku, said that the proposal can only work if providers are allowed flexibility with charges.
‘We need to stop thinking about these hours as "free" and refer to them as "funded".
'Most children of working parents attend nursery for up to ten hours each day.
'Nurseries could be allowed to offer, for example, seven funded hours per day and three paid-for at a more realistic rate.
'That could be the difference between success and closure for a nursery.
‘Parents, in receipt of Tax-Free Childcare, would still make a huge saving and the nursery would be able to balance its books.’
She added that, '30 free hours' was first 'mooted as a Conservative Party general election pledge early last year', but said that times have changed since then, with an extensive public consultation having passed and a new prime minister and ministerial team now in place.
‘Now it’s becoming clear that with tight public finances, investment is falling short and that many nurseries will face bigger losses on “free” places that must be made up in parental fees elsewhere.
‘The danger is that they will opt out of the scheme and families will be disappointed when they cannot find the places that the Government has promised them.’
Mr Leitch added that many providers had ‘pinned their hopes on this consultation’ but it has ‘fallen well short of expectations’.
'The consultation itself makes the argument that early years funding needs to be to two things: sufficient, and distributed efficiently.
'But while the Government is focusing on the latter point, the former still remains unresolved. If there’s not enough money in the pot, distributing it more effectively can only do so much, and many providers have told us that, at the rates projected by government, it simply won’t be financially viable for them to offer the 30 hours.’
Liz Bayram, Chief Executive, PACEY said, 'Without greater clarity for all settings about what they can additionally charge, the numbers don’t add. Childminders in particular will find little incentive to offer the 30 hours.
'According to the proposed funding formula, childminders in 26 local areas are expected to deliver childcare for under £4 per hour, which just isn’t feasible, even according to the government’s own funding review.
'The formula for two-year-old funding works well for most childminders, but there is little incentive for them to carry on caring for funded children who turn three, because they are penalised with a decrease in rate, unlike group settings. Basing the proposed area cost adjustment on staff costs and statutory ratio requirements for different settings (rather than business rates) would be one way to help incentivise settings with more restrictive ratios.
'PACEY believes that "free childcare" should be truly free – but given the pressure on public finances targeting funding at those disadvantaged children who would benefit the most – should be the priority.'
The DfE has received wide-ranging observations from the pubiic and will be publishing its response in the near future.
A DfE spokesperson said, 'We are investing a record £6 billion per year in childcare by 2020, including £300m to increase the average funding rate paid to providers for our two, three and four-year-old offers.
'This, together with our proposed fairer funding approach, means the rates paid to the vast majority of providers are set to increase.
'These proposals were informed by the most comprehensive analysis of the childcare market ever conducted.
We are clear that parents can be charged for discretionary items, such as food, or for trips – but this cannot be a condition of taking up a free place.'
