On average, nurseries are losing out on around £800 per child a year due to underfunding of free early years places, it suggests.
Under the current system, three and four-year-olds in England along with the most disadvantaged two-year-olds are entitled to 15 free Government-funded hours of early education and childcare per week.
But a new survey by the National Day Nurseries Association (NDNA) suggests that many nurseries are resorting to charging mothers and fathers higher fees for the additional hours their child attends and for youngsters who are not eligible, to cover a shortfall in Government financing for the free entitlement.
It suggests that 96% of nurseries are offering the 15-hour funded places for three and four-year-olds and 86% are offering places for two-year-olds.
But some have chosen to opt out and many more are cautious about expanding, the survey indicates.
Around two thirds (65%) of nurseries are not planning to offer any more funded places for two-year-olds, while 6% are planning to cut back and 19% are planning to offer more.
Overall, nurseries receive £3.80 per hour on average for each funded place for three and four-year-olds, the study finds, but this is £1.42 less per hour than they actually need.
This means that they are losing out on around £809 per child, per place each year.
For two-year-olds, nurseries get an average hourly rate of £4.92, and this is £1.25 less than they need – a total of £712 per child, per place each year.
Around 85% of nurseries questioned said that they are not covering their costs for three and four-year-olds, while 46% said they are losing out on two-year-old places.
“A large majority of nurseries are suffering losses on the provision of free places for three and four-year-olds and nearly half are making losses on the newer two-year-old offer,” the report says.
It warns: “Underfunding has been reported by NDNA in six successive nursery surveys over four years. Despite a rising cost base, driven by pay, utilities and business rates, funding paid to nurseries by local authorities is stagnating, with most giving no increase.”
The report adds: “This chronic underfunding has skewed the nursery business model. Nurseries are forced to make up their losses by pushing up the fees parents pay for additional hours of childcare beyond the free 15 hours, or for children below the entitlement age.”
The findings also show that 85% of nurseries are considering raising their fees in the next 12 months, with increases likely to be between 2% and 3%.
NDNA chief Purnima Tanuku said: “Four months from the general election, childcare is at the top of the political agenda and politicians must balance the conflicting priorities of cost, quality and choice for parents.
“The sector is facing unprecedented challenges – funding does not cover the cost of free places and costs are increasing. Nurseries have great expertise and commitment to high quality childcare and early education that makes a real difference to children and families. If these issues are resolved they could do even more to support parents.”
The report comes just days after a poll found that a fifth of working parents are considering reducing their hours or giving up their job altogether because of childcare costs.
The survey of 1,000 parents of children aged up to 16 also found that many were planning to cut back on essentials this year because of the financial strain of childcare.
More than two thirds of those polled by the charity 4Children paid for childcare, and around one in five of those said they are thinking about reducing their working hours or quitting their job.
Anne Longfield, chief executive of 4Children, said: “Childcare is one of the biggest financial challenges facing parents today with 4Children’s recent polling finding the cost is pushing some parents to consider giving up work or cutting hours, with parents of the youngest children feeling the pressure most acutely.
“Whilst we have seen progress on childcare in recent years, we now need all political parties to put high quality, affordable childcare at the top of their agenda as we approach the general election – answering the call from thousands of families across the country for more support.”
A Department for Education spokesman said: “Our funding has been increased to £2.9 billion to provide 15 hours a week of free childcare for all three and four-year-olds, as well as for the most disadvantaged two-year-olds.
“We recommend that eligible families take up this offer and let their children join the 155,000 two-year-olds accessing a funded early year place.
“We have made clear to local authorities they should pass on as much of this funding as possible to nurseries. The money we give to local authorities is more than the average hourly rate for nurseries providing free childcare places.”
Source Article from http://www.shropshirestar.com/shropshire-business/money/uk-money/2015/01/14/parents-paying-more-for-childcare/
Parents 'paying more for childcare'
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