The Challenges in 2008

 

 

 

Market Sufficiency – Do you need another nursery in your neighbourhood?

 

Each Local Authority now has a duty to establish whether or not there is sufficient affordable childcare in every local community and if not, ensure that there is.  If the data now being collected is inaccurate or the wrong conclusions drawn, this work has the potential to destroy established good quality provision by stimulating the creation of new unsustainable places that will also eventually close leaving communities worse off.  EDNA believes that any survey must consider what already exists and that empty places in existing good quality provision is a sure sign of adequate supply.

 

This work might also lead to a greater understanding of the impact of school admissions on the wider mix of services available to young children and their parents.  The move towards single entry in September empties nurseries in the autumn term starving them of revenue since not all parents of younger children seek a place at that time.  Then they slowly fill, until there is gridlock in the spring and summer term when parents of younger children struggle to find places.  These pressures can be eased by returning to a three term entry for rising fives.

 

Early entry and part time nursery places within school damage the opportunities for providing integrated care and education for those children.  When education is separated from the care of young children, the care is often of poor quality, not valued and becomes unsustainable.

 

Early entry and part time nursery places within school also destroys places for younger children.  This is because the staffing costs for under 3’s are more than twice those for 3 and 4 year olds, yet the fees nurseries charge parents are not double, if they were they would not be affordable.  Take away the 3 & 4 year olds and these settings are no longer viable.

 

Many schools within disadvantaged areas have had nursery classes for many years admitting all the 3 and 4 year olds in their area.  This is one reason why day nurseries have failed to flourish within the shadow of these schools resulting in childcare deserts.  Central Government and Local Authority policy must change to reverse these experiences, not extend them to areas which are currently well served.  The problem is more often a lack of demand, not a lack of supply.
 

 

Nursery Education Grant – Funding cut by 33% compared to sector wage costs

 

When the entitlement to free nursery education was first introduced in its current form in 1998, providers were funded at a rate of £2.66 per hour.  Nearly a decade later the rate of funding in Essex is now £3.50 per hour, an average rise of 3% per annum.  However, throughout that period there has been an acute shortage of qualified staff with nurseries trying to retain experienced staff in the face increased recruitment in to publicly funded jobs resulting in average wage inflation of 8% per annum over the same period.

 

An immediate increase to £5.31 per hour is required to restore the value of the grant, an increase from £1,662 to £2,522 per annum for the current 2½ hour session over 38 rather than the original 33 weeks.  This erosion of 33% in real terms at the same time the sector has been asked to move towards a graduate led workforce means many providers can no longer afford to participate in the provision of the free entitlement.

 

EDNA’s campaigning and the commitment of our Local Authority to work in partnership with independent providers means that Essex has fared better than some parts of the Country.  However, new funding arrangements from April 2008 and a policy to extend the amount of time providers are asked to provide a service at below cost, from 12½ to 15 hours per week, means it is now vital the underlying economics are understood.

 

 

The Administrative Burden of Childcare Vouchers – Who pays?

 

About a third of a day nurseries revenue is now determined by the government through the payment of the nursery education grant, another third is paid directly by parents while the remaining third is now paid via some form of childcare voucher scheme.

 

This might be described as a win, win, win, loose deal, where the parents unlock a tax and national insurance saving of between £1,886 and £2,916 if both parents use the scheme, their employer saves 12.8% on all money paid in this way by avoiding employers national insurance and the voucher companies charge between 5 and 15% of the face value for issuing the vouchers.

 

While day nurseries welcome any scheme that helps make childcare more affordable, the cost of administering the huge array of widely differing schemes has fallen on childcare providers.  It is estimated that each day nursery is now spending about 20% of their management time trying to reconcile vouchers and chase payment.

 

EDNA is urging the NDNA to support providers nationally to refuse to accept any new vouchers until voucher companies share half the fee they charge with providers who are actually doing most of the work administering these schemes.