Harrogate businesswoman warns of '˜major flaws' over new free nursery care scheme

Until now three and four-year-olds were eligible for 15 hours of free nursery care per week.

Now that will double to 30 hours per week if both parents work and earn less than £100,000 a year.

As every working parent knows, the cost of childcare can be substantial - with the average nursery place costing as much as £6,000 a year.

The new initiative represents a long-held ambition for the Government – it was a flagship Conservative pledge in the 2015 election.

The Department of Education says that by 2020 it will be spending a record £6 billion on childcare, including an extra £1 billion on the free hours.

Minister for Children and Families, Robert Goodwill, has also boasted that pilots of the scheme had proved “a huge success” and the government was “determined to support as many families as possible with access to high-quality, affordable childcare.”

Undoubtedly, many families will benefit from the 30 hours scheme now being introduced nationwide and many will save thousands of pounds annually.

But last week was also a notable for one Harrogate couple, a couple who run three of the town’s most popular existing childcare centres.

For they were visited in their hometown by the BBC and ended up on both BBC Radio 4’s Today programme and BBC Six O’Clock News on TV.

And the reason for the visit?

Having built up Funcare Harrogate, their award-winning small chain of nurseries in the town since 2000, Josy and Ian Thompson say parents may not get exactly what they were promised from the new initiative.

They claim funding arrangements for the new child care scheme leave providers like themselves facing a dilemma - offer the new hours and risk going out of business or withdraw from the scheme and survive.

Josy Thompson says she very much welcomes the principle of 30 hours per week but says, in practice, it may be a “killer blow” for many nurseries.

She said: “It’s a bit of a disaster. The way the Government is funding it leaves us between a rock and a hard place.

“If we don’t take part in the new scheme, we will be letting down parents but, if we do, we will go bust.

“It’s an absolutely wonderful idea and we don’t want it scrapped but it’s being chronically underfunded.”

A spokesperson for the Department of Education said that by 2020 it would be spending a record £6bn on childcare, including an extra £1bn on the free hours.

By its calculations, the funding provided to councils should allow them to pass about £4 per hour to nurseries for each childcare place.

The spokesperson argued that that this rate was “higher than the average hourly cost of providing childcare” which recent independent research had put at only £3.72 per hour.

Formerly a sales and marketing manager for Unilver and a management consultant, respectively, Josy and Ian have four children aged 9, 14, 21 and 22.

They set up Funcare to provide high quality care in a town they have lived in for 25 years.

The company now employs more than 100 staff and looks after more than 500 children a day - including their own offspring sometimes - at Woodlands Day Nursery, Little Dragons Day Nursery and Play Away Day Nursery.

Josy argues the situation on the ground for a family-run child care business is far from as rosy or simple as Government figures would have you believed.

She says the North Yorkshire funding rate of £3.90 per hour of child care simply fails to meet the business’s hourly fee to parents of £4.70.

Different areas of England are receiving different levels of financial support but last November North Yorkshire found itself ranked as one of the cheapest places in the UK to provide child care which had an impact on funding.Josy said: “The 30 hours a week only applies to term-time so, in effect, it’s really 22 hours per week if you consider that working parents do so for 12 months a year.

“The only way we can stretch that through the holidays is to charge parents for additional services for their children such as meals, nappies and baby wipes or make an additional charge for parents who want an ‘early start’ for their child in the morning.

“Firstly, that means the ‘free childcare’ isn’t free and, secondly, we are only allowed to ask parents to pay an £8 per day extra charge on a voluntary basis.

“We’ve had parents refusing to pay already. The Government doesn’t pay us a fee for what we do or the increased administration it all involves. And we don’t slice off any of the funding for ourselves.

“It shouldn’t be called free child care. It’s a subsidised system, one subsidised by businesses.”

It’s not as if Josy and Ian aren’t trying to make the new 30 hours per week child care system work.

In fact, they’ve been doing so for the last year.

Before being launched, the new scheme was piloted in eight areas of England from last September, including Harrogate.

But by the end of last year, the BBC was already reporting that 90s% of providers in Harrogate were saying they would not be offering 30 hours free child care unless the funding arrangements were changed.

Nationwide, it has been a similar picture.

Ron Perry, chairman of the Local Government Association’s children and young people board, said councils were right behind the idea but added there were doubts about its implementation.

He said councils were working closely with providers to deliver the extra free hours, as the scheme represented “a great opportunity to provide support for parents as well as early education for children to help them get ready to start school”.

But he also said: “Councils remain concerned that the proposed increase in funding will not be enough to secure enough high quality provision for everyone who wants it.”

The National Day Nurseries Association claims that only 20% of full daycare nurseries will offer 30 hours per week. It reports nursery operators saying the money allocated before had not covered their costs - and the decision to double the hours would worsen matters.

Until now, they had been able to offset the shortfall by charging more to families who pay for extra hours over the 15.

But this source of income would dry up once families were eligible for 30 free hours.

Meanwhile, higher business rates and the planned rise in the national living wage to £9 in 2020 will mean higher costs for most nurseries.

Josy and Ian Thompson are proud to have a successful Harrogate business and proud of its high standards.

But they insist something will have to give if ‘free’ child care for everyone is not to become a myth.

Josy said: “The bigger chains like Kindercare may be able to absorb the extra costs and I know some nurseries have lower costs than others and so may suffer a smaller financial shortfall than others from the 30 hours system.

“We have deliberately kept our business local, as it ensures we have a strong motivation to maintain a great reputation and keep quality high.

“We have won Mumbler awards for favourite day nursery and preschool, and I won the Mumpreneur one a couple of years ago.”

Josy and Ian have raised their concerns with both local politicians and the Government without, they say, much of a response.

Josy says the word “efficiencies” had been mentioned but feared this meant lower standards and hiring less qualified staff, something she refuses point blank to even consider.

“Parents in Harrogate expect high quality child care. Our staff are great and deserve to be paid a living wage rather than moving to zero hours contracts.

“We’ve heard of some nurseries putting their fees up for under-threes to cover the shortfall.

“We’ve already had Coppice Park nursery close this year in Harrogate for financial reasons.

“This will also effect preschools and nurseries in schools. I don’t know how they will manage, financially.

“We don’t want to but we might have to take private customers as I won’t let the new system send me under.

“If we follow the Government rules as they are now, our business will go into a loss-making situation.

“We have made it work up to now but if too many of our parents don’t want to pay the voluntary £8 a day, we will have to pull out of the new scheme by Christmas.

“We are a private business but we are being treated like we’re nationalised.

“How can a business run when it doesn’t cover the costs?”