Free childcare plan risks higher care fees, new survey warns

Parents could face higher fees and extra charges in childcare.
Parents could face higher fees and extra charges in childcare.
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Parents could face higher fees and extra charges for childcare as a result of Government plans to double the number of free childcare hours, providers have warned.

From September, three and four-year-olds in England will be entitled to 30 free hours of care a week in term time, up from the current 15 hours.

But a poll by the Pre-school Learning Alliance has indicated that nurseries and childminders will struggle to cover the costs of providing these places due to a lack of funding.

The Alliance’s latest survey of childcare providers found that less than half of those polled (44.2 per cent) said they plan to offer the 30-hour free entitlement, while more than a third (36.5 per cent) were unsure and almost a fifth (19.3 per cent) said they would not be bringing it in.

In comparison, 95.2 per cent said they currently offer families 15 free hours for three and four-year-olds. More than half (58.3 per cent) of those who said they would not be providing 30 free hours said that the funding rate is not high enough, and 18.3 per cent said it would mean reducing places. Just over two in five (42.6 per cent) said they are not open for 30 hours a week.

The report comes after a North Yorkshire nursery announced it was closing after 30 years due to the impending changes.

Coppice Park Nursery, in Harrogate, has welcomed 800 children since doors first opened in 2003, but financial pressures are forcing it to shut this summer.

Managers say they are “bitter and angry” about the closure and have warned that other nurseries won’t be able to cover costs.

The poll asked those nurseries and childminders who said they expected the extended offer to have a negative impact on their business how they will recoup any losses from offering 30 free hours. More than half (53.1 per cent) said they will increase fees for any additional hours, more than a third (37.2 per cent) said they would increase fees for children of other ages and nearly half (47.9 per cent) plan to charge for goods and services that they previously provided for free. Two fifths (40 per cent) said they would restrict the days and times when funded places can be accessed.

Josy Thompson, who owns three nurseries in Harrogate, said: “The new survey is absolutely spot on – this is just the beginning.

“We are going to pilot the scheme, but we will be charging for additional services. It won’t be entirely free at our nurseries and I think everyone who is going to trial the scheme is of the same mind.

“The companies starting to fold are the ones who have no opportunity to charge.

“Over the next few months we will start to see a few more casualties.”

More than half (59.7 per cent) said they were confident that they will have the capacity to meet the demand for places under the 30-hour offer, while 40.4 per cent said they were not confident about this.

Neil Leitch, chief executive of the Pre-school Learning Alliance, said: “With so few providers currently committed to delivering the 30 hours, and so many forced to consider limiting places, raising fees or introducing extra charges in order to remain sustainable if they do offer it, many parents expecting easy access to a ‘free’ 30-hours place in September are likely to be disappointed.”

The Department for Education says it is investing a record £6bn per year by 2020 and its new fairer funding formula will mean the majority of providers receive increased funding rates.