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Childcare providers 'fear closure due to 30 free hours policy'

Published 20/04/2016

Around 1,500 childcare providers responded to an online survey by the Pre-school Learning Alliance
Around 1,500 childcare providers responded to an online survey by the Pre-school Learning Alliance

Almost half of childcare providers fear they could be forced to close as a result of the 30-hour free entitlement offer, a survey has revealed.

The online poll also found that 48% of providers felt they would have to reduce the number of places they offered to other age groups, if they delivered the extended entitlement.

Approximately 1,500 providers responded to an online survey conducted by early years membership organisation the Pre-school Learning Alliance.

The findings come as the Public Accounts Committee prepares to question the Department for Education on the potential impact of the policy.

Of the 1,443 respondents, 49% said they thought there was risk they would close as a result of the entitlement offer.

The Childcare Bill delivers a Tory manifesto commitment that will double free hours from 15 to 30 hours for 38 weeks a year - a total of 1,140 hours of childcare a year.

Half of the providers said they did not feel confident that they have the capacity to meet the demand for places under the 30-hour offer, and 58% expect the offer to have a negative financial impact on their business.

Almost all of the providers (98%) said they currently offer the 15-hour free entitlement, but 19% said they were not planning on offering the 30 hours, while 51% said they were not sure.

Neil Leitch, chief executive of the Pre-school Learning Alliance, said: "These figures are a stark warning of what could happen if the Government insists on rolling out an underfunded, under-resourced free entitlement offer.

"While we welcome plans to increase average early years funding rates as an important first step, independent research has shown that, with continued cost pressures including the introduction of the 'national living wage', this will still leave a significant funding gap for early years providers.

"Given that the move to 30 hours means that most providers will no longer be able to cross-subsidise in order to plug this gap, it's no surprise that so many are fearing for their future."

He added that the Government had chosen to "turn a blind eye" to concerns about whether the Government has the capacity to deliver the offer.

"We want the 30-hour offer to be a success, for the sake of both families and providers, but the only way that this will happen is if the Government and the sector work together.

"As such, we look forward to working in partnership with the DfE on addressing these serious concerns and working towards our shared aim of a quality, affordable and, crucially, sustainable early years sector," said Mr Leitch.

A Department for Education spokesman said: "We have already carried out an extensive consultation with the sector and have undertaken the most comprehensive analysis of this market ever.

"As a result, we will be increasing the average funding rate paid to providers through an additional £300 million per year. We will also be consulting on fairer funding allocations, including the introduction of an early years national funding formula, and making sure more money reaches the front line instead of being top-sliced by councils."

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