Spring Budget childcare plans may benefit parents but harm nurseries

A nursery in Manchester has expressed concerns about the Chancellor’s childcare plans after the March Budget announcement.

Cary Rankin, the CEO of Thrive Education and Childcare, says that though Jeremy Hunt's plans will be “great news for parents”, the funding will need to be “planned very, very carefully.”

The Chancellor's measures include:

  • The current 30 free hours of childcare per week extended to all children aged nine months or above, for households in England where both parents work

  • The hourly rate for childcare providers who deliver those free hours will increase

  • 700,000 families on Universal Credit will get childcare support upfront

  • The current cap which people on Universal Credit can claim for childcare will increase to £951 for one child, £1,630 for two

  • A £600 incentive payment for people who sign up to be childminders (£1,200 for those who sign up through an agency)

  • An optional reduction in adult to child ratios from 1:4 to 1:5 in line with Scotland.

However, childcare providers like Thrive in Manchester's Media City say the plans need to include a doubling in their funding and support to increase their workforce.

Mr Rankin said: “This is great news for parents. No doubt it’s something that’s going to really assist them with the cost of childcare moving forwards but we need to look at this really, really carefully. In principle it’s great, but the challenge will be about trying to deliver it right now. 

“We are suffering in a workforce crisis, unable to staff on current demand, so increasing the opportunities for parents to access funding is going to need to be planned very, very carefully.”

The funding rates are set by the government and local authorities - many providers will be waiting to hear if they will receive enough to offer this extra care.

“Our current rate is about £4.70 per hour per child, costs of delivery in excess of £7 per hour. We don’t have any input into what that rate will be, we can only push back if we feel that rate isn’t enough,'' said Mr Rankin.

“Ultimately, if we are unable to offer the funded hours because the funded rate isn’t enough then principally I think quite a few people will steer away from offering the funded place for the one to two-year-olds.''

Jessica White has been working at the nursery for more than 14 years and says the decrease in ratios will not happen unless there are more practitioners available.

Ms White said: “I think it’s  a bit of a struggle because obviously we want to tailor for those children and making sure on that ratio, if we are on a 1:4 ratio, we provide the best care for them and making sure our attention is fully on those children rather than having an extra one and having to expand our attention.”

The nursery has also seen an increase in the number of children wanting places in the last few months. Ms White says: “It depends on us having the space for the children and just making sure we’ve got the staffing for them.''

The cost of living has also impacted parents, with many nurseries having to increase the amount parents pay. For many the price of childcare costs can be more than half of their weekly take-home pay.

“We’ve seen both sides of it. We’ve had some parents who are fine and haven’t asked any questions,'' said Ms White. 

''But then we’ve had others, who are struggling and we’ve had to talk to them about why we have to put these costs up with rising bills, food bills, childcare costs are going up everywhere.

“We’re asking much more of our parents than we have done in previous years, but what we’re trying to do is cover our costs.

Mr Rankin continued: “Right now with the national minimum wage going up by 10% at minimum, utilities, the cost of consumables to operate the business, we’ve had no option but to pass those costs on to our parents.

“Our parents have found that very, very difficult but they’ve been very understanding in most cases but it’s not an increase that we wanted to put in this year.”

Ultimately, nurseries like these say if they are not given support to increase the workforce and their funding, many will have to close.

“If we continue, or any provider is asked to continue, to provide additional funded places at the current rate, there will be no providers left. 

“The funded rate is 50% of what it needs to be so we would continue operating at a deficit until the cash has run out,” Mr Rankin said.

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