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74% of providers say 30 hours funding doesn’t cover their costs

By Rachel Lawler
Almost three-quarters (74%) of childcare providers have said that the funding levels for the 30-hours offer do not cover the cost of providing a place, according to a new survey.
The Alliance surveyed around 1,400 childcare settings in August 2017 about the 30-hour offer. 49% of those asked said that they planned to increase how much they charge for additional, non-funded hours in order to make-up the shortfall. 52% said that they would increase the cost of other services, such as food or trips out.
Alarmingly 38% of those who responded said that they didn’t think their setting would be sustainable in 12 months time.
30 hours launch
The 30-hours offer is due to launch tomorrow, on 1 September. Over the summer months, many parents have struggled to access the offer through the government’s Childcare Service website, which has experienced a number of technical difficulties since its launch. The problems have left thousands of parents unable to sign up for both the 30-hours offer and tax-free childcare.
Neil Leitch, chief executive of the Alliance, said: “As one of the government’s flagship policies, the launch of the 30-hours offer should have been a day of celebration. Instead, all we have is a policy in chaos.” He said that parents were now facing additional charges and unexpected restrictions on the offer.
Neil added: “We cannot wait for this problem to solve itself. Every week we’re hearing of more and more parents struggling to find places that actually suit their childcare needs. Every week we’re hearing of more and more childcare providers being forced to shut down as a result of the 30 hours. This simply cannot continue.”
Provider concerns
Eve Wort, formerly principal at Anchors Nursery School, Hampshire, closed her setting at the end of this year’s summer term as a result of the offer. She said: “Our funding was reduced from £4.44 per hour to £4.36, when our hourly costs are around £6 per hour. Without being able to charge supplementary fees, our traditional nursery school operation is not sustainable.”
Unwilling to sacrifice quality or reduce staff-to-child ratios, Eve said the setting had no other option but to close. She added: “It is very sad that this government is having such a damaging effect on the diversity of childcare provision.”

Karen Simpkin, managing director at Sunflower Children’s Centre in Sheffield, says that she is limiting the number of places her setting is offering and plans to review whether or not to continue at the end of this term.

Karen said: “The main issue is the funding. Even if you only take into consideration the national minimum/living wage, the margins are extremely tight and not realistically do-able. On top of that, I’ve got to cover business rates, utilities, admin, cleaning and equipment – the list is endless.” She says that if the setting makes too much of a loss on the 30-hours, it will stop offering the places altogether.

Karen adds: “Why should a reputable business have to ask for donations to make-up the shortfall from this poorly thought-out and poorly funded policy?”

Key survey results
Does your current funding rate cover the cost of delivering a 30-hours place?
Yes - 26%
No  - 74%
Are you planning to restrict the days/times parents can use the 30-hours?
Yes – 37%
No – 45%
Undecided – 18%
Are you changing the amount you charge for non-funded hours as a result of the 30-hour offer?
No – 50%
Yes, we will increase fees – 49.5%
Yes, we will reduce fees – 0.05%
Do you think your business will be sustainable in 12 months’ time?
Yes – 62%
No – 38%