The National Day Nurseries Association (NDNA) Cymru survey, which ran from 13 January to 13 February, received responses from 73 nurseries across Wales. Of these, 39 were single sites.
The vast majority of respondents, 88 per cent, said they either expect to make a loss or break even. A total of 90 per cent said this is because their funding rate for the Childcare Offer for Wales of £5 per hour, per child is not enough to cover their delivery costs. This is up from 69 per cent saying the funding rate isn’t enough in September 2021.
The Childcare Offer for Wales is made up of a minimum of 10 hours of early education a week and a maximum of 20 hours a week of childcare.
According to NDNA, the shortfall between funding for the offer and the actual cost of delivery per child attending nursery for 20 hours is £2,500 per year.
The findings also reveal:
- Nurseries are facing an average 15 per cent increase in staffing costs.
- 63 per cent of respondent said they only expect to break even.
- Just over 11 per cent of nurseries expect to be able to generate a surplus.
- The estimated funding shortfall for three- and 4 year-old places is £2.60 per hour. This compares to a shortfall of £1.46 in 2021.
Despite nursery’s financial challenges, the survey reveals many have managed to keep fee increases below inflation, with average fee increases of around 7 per cent.
'The Welsh Government needs to commit to reviewing their funding rate.'
NDNA’s chief executive Purnima Tanuku said, ‘With providers suffering such financial strain, the Welsh Government’s commitment to review their funding rates at least every three years is just not going to support the early years sector.
‘Inflation is still extremely high and minimum wages rise in April so the £5 funding rate is just not sustainable for most of our nurseries in Wales. The Welsh Government needs to commit to reviewing their funding rate for early education and the Childcare Offer on an annual basis instead to keep pace with rising costs.
‘Nurseries and other providers are really struggling to recruit and retain their staff because they can’t pay them the wage they deserve. Many are just leaving to join the public sector or leaving education altogether. If the Welsh Government is serious about expanding their offer to all two-year-olds, the funding rate must be fair and cover delivery costs.’
A Welsh Government spokesperson said, 'We understand the pressures childcare providers are currently facing due to the rise in costs. We have taken steps to support providers by increasing the hourly rate for our Childcare Offer by 11 per centsince last April and allowing settings to increase the amount they can charge for food and transport.
'We have extended the 100 per cent business rates relief for registered childcare premises, which is estimated to save providers £9.7m in overheads. In addition, we are making £70m available through our Childcare and Early Years Capital grant, to help with the cost of developing their settings.'
