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Early trials show risks to 30 hours 'free childcare' offer

A woman plays with baby at nurseryBy Caroline Graham

Rising delivery costs, falling profits, staff recruitment and limited venue capacity are all risks to the 30 hours free childcare offer, highlights a new report evaluating trials of the policy.

The Department for Education’s (DfE) Evaluation of Early Implementation of 30 Hours Free Childcare — published today – included a range of possible risks that could limit how providers engage with the 30 hours offer due to be rolled out in September.

During interviews, some providers said after having taken part in the early implementation project they would now consider limiting the amount of places on offer in order to make it financially viable.

Staffing it adequately to meet full demand may also be a challenge, they reported.

The research was conducted by Frontier Economics, NatCen Social Research and the University of East London and based on interviews with providers and parents in eight areas that began delivering the 30 hours policy in September — Hertfordshire, Newham, Northumberland, Portsmouth, Staffordshire, Swindon, Wigan and York.

Rising costs and decrease in profits

Reporting on the financial impact of delivering extended hours, a significant portion of providers said delivery costs had increased while many others reported a decrease in their profits.

The report said: “The main challenge for all types of providers was uncertainty around the business implications in terms of the switch in the balance of income towards free entitlement funding and the costs of any adjustments to provision required to deliver the extended hours.”

It also highlighted that local authorities would need to support some providers as they reviewed different ways they could provide the extended hours such as “whether it would be financially viable for a setting to adjust its service to deliver the full 30 hours or more prudent to offer fewer hours.”

The research also recognised the critical role local authorities would take in supporting providers with the roll-out in terms of delivering reliable payments systems which if they didn’t, could harm delivery of the offer and jeopardise future providers coming on board.

Funding rates must be increased

Commenting on the report, Neil Leitch, chief executive of the Pre-school Learning Alliance, said:

“The conclusions drawn by this evaluation will come as no surprise to the early years sector. It is not unwillingness on the part of childcare providers to deliver the additional hours which jeopardises the offer, but rather the unwillingness of government to recognise the challenges facing providers.

“With the bulk of childcare places being delivered by private and voluntary (PVI) providers and almost 40 per cent of these providers reporting that their delivery costs have risen, it is apparent that funding rates need to be increased to support the full implementation of the policy.

“Indeed, the report states explicitly that rising delivery costs need to considered when reviewing funding rates, something which the Alliance has repeatedly drawn attention to through its Fair Future Funding campaign. 

“Furthermore, with nearly 50 per cent of private providers reporting a decrease in profits, and many early implementers warning they are likely to limit the number of ‘free’ places due to concerns about financial viability, it is abundantly clear that more investment is needed.

“Ultimately, if these vital funds are not made available, we will see more providers closing their doors, more parents unable to access ‘free’ childcare, and more children missing out on valuable early years experiences.”

In preparation for the national rollout in September 2017, the DfE initiated early implementation in eight Local Authorities in September 2016 with the aim of delivering the extended hours to around 5,000 children.

This involved a universal offer to all eligible children of working parents in one local authority and an offer of places to around 400 to 600 children in each of the other seven local authorities. 

Where next?

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