The 30 hours ‘free’ childcare scheme, introduced by the government in September 2017, is not working.
There is not enough money made available to providers. It is not fairly distributed. Childcare settings are having to ask parents to pay for extras when they were promised free childcare; worse, providers find they are having to subsidise the scheme with their own revenue. But what exactly is wrong with the scheme?
The problem
Put simply, the 30 hours ‘free’ childcare scheme is underfunded. The pot is just not big enough.
As a result, the funding rates handed down from the various local authorities do not cover the cost of care and are often far below what a setting would normally charge. How can a setting survive when a place that usually earns them £5 an hour is funded at £4? Childminders interviewed by the Professional Association for Childcare and Early Years (PACEY) claim their loss is close to £400 annually per child. The National Day Nurseries Association (NDNA) claims the loss per child per year is around £958. Furthermore, term time only, sessional pre-schools like St Mary’s Nursery, which mirror school hours and only operate during term time, can’t offer additional hours or services to make up this shortfall. Not only are many providers like ours being forced to close, but many more still are having to swallow costs themselves and drastically reduce their wages or profits just to survive.
The biggest problem is that things are only going to get worse. With the increase in National Living Wage and pension contributions, the lack of proper funding is devastating in a sector where up to 73% of a provider’s costs come from the people who work there.
What’s more, there is a complete lack of transparency with parents about what the government exactly means by ‘free’. The small print contains restrictions on when it can be accessed and what it can be used on, yet parents rock up expecting to get 30 hours a week, free at the point of access.
“Regardless of where the data comes from, every report and survey shows that it is not a free deal for parents or nurseries,” says Neil Leitch, CEO of Pre-School Learning Alliance. “There is a complete lack of transparency.”
But it works for some…?
While it is true that some providers are managing to make it work, very few are coming out of the scheme better off. Some of the worst-affected include:
Preschools – Parents just pitch up expecting it to be completely free, and preschools don’t have existing relationships which they can use to explain the intricacies and collect contributions.
The non-catered – One big way providers make up the gap is with expanded costs for food. But you can’t charge £15 for some carrot sticks.
Those with low funding rates – Not everyone gets the same rate. Some areas are working at 50p or more below their normal charges. No amount of top-up fees and expensive lunches can make that work.
For some settings there is just too much of a gap between what it costs to deliver and the funding rate they are given, and they are forced to close their doors. That is the reality of what ‘free’ childcare is doing to the early years sector.
The evidence
You don’t have to take our word for it. Here is just some of the damning evidence against the 30 hours ‘free’ childcare scheme.
Two-fifths of providers receive less funding than in 2013-14.
62% of providers report that their parent paid fee is higher than the funding rate they receive, and 39% have reported a reduction of their profit or surplus.
One in four schools think poor children are missing out most as a result of the scheme.
Providers are losing at least one staffing day a week just to deal with the system, while half charge parents up to £10 a day in add-ons.
The scheme may be hitting the number of two-year-old places available.
Nursery closures have increased by two-thirds since the scheme was introduced.
Only 46% of places are genuinely free, and only 33% in year-round daycare.
The average shortfall between funding rates and average cost to deliver is 74p per child per hour.
The data used to calculate funding levels is outdated and predates the introduction of the National Living Wage.
(under)funded, not free
Broadly speaking, most people agree that the desire to get more parents into work is an honourable one. The problem is that parents shouldn’t be told it is an entirely free service when it’s not being properly funded.
““Here’s my default example. If I was to say to you that everybody gets a free car, naturally, you’re going to going to be over the moon. You go to your car dealership and say ‘I’d like that one please.’
They’re going to say ‘No problem, that’s £400 for the tires, £100 for the seatbelts and £200 for the steering wheel’ and you’re going to be upset that you didn’t get your free car. Because the car may have been free, but the bits that make it work, they cost extra. You’re going to feel pretty resentful about that.
30 hours ‘free’ childcare is just like that. Giving you a car, but not giving you the parts that you need to make it work.””
The truth is, parents have been duped. They’ve been told they’re going to get something for free, and found out that’s not what they’re getting at all.
If the sector doesn’t receive adequate funding and providers are unable to invest in training their staff, recruiting high quality people and investing in their setting, then quality will inevitably decline. This isn’t what parents, children or providers want.
Article adapted from “30 Hours ‘Free’ Childcare Is A Lie: Is There A Solution” by Matt Arnerich (Famly Blog, November 14, 2018) and “The Lie That Is 30 Hours Childcare” (The Money Whisperer, September 4, 2017 - https://themoneywhisperer.co.uk/the-lie-that-is-30-hours-free-childcare/