The flaws in the free childcare policy

9 Sep 2017


It’s September, which normally means two things. One, it’s raining, and two, you can’t drive anywhere in rural England between the hours of three and four pm without getting stuck in gridlocked traffic. Both of which have happened this week.


Yes that’s right, summer is over and the new school term is back with a vengeance. Rather than gripe about the children of the Westminster Village once again acting silly, I thought I’d write about some real children instead. Pre-school children, to be specific.


You see, just over eighteen months ago, as part of my attempt at masquerading as a journalist, I decided to write about nurseries. That previous story came off the back of a Press Association wire piece that suggested that the government’s new proposal of thirty hours of free childcare for three and four-year-olds was going to be taken up by fewer than half of nurseries because of concerns over funding. At that point, the scheme was in the midst of being piloted in twenty-five local authorities, including Medway, my journalistic ‘patch’, as it were.


Safe to say, the funding issues were real. The statistics spoke for themselves: 89% of nurseries made a loss on the existing free fifteen-hour places, with the gap between the cost of the places and the funding from the government the highest ever, at £1.68 an hour. One Medway nursery told me at the time: “We’ve got nowhere near the funding we need and two-thirds of our children already are on funded places. It’s going to have a massive impact.” Another said bluntly that “the money we get from the government is not the same as if we had a paying child.”

The reason I’m revisiting what is seemingly ancient history is because this week marks the first week of the actual rollout of this particular policy. Now, the purpose of a pilot scheme is that it is supposed to be a small-scale trial designed to work out any problems and iron out any kinks. Did the Department for Education take on board this criticism over the feasibility and funding issues surrounding this policy?


Well, Josie Thompson, who runs three nurseries in Harrogate, told the BBC’s Zoe Conway on the Today Programme last Wednesday that these free nursery places cost £4.70 per hour to provide. In return the government provides, drum roll please, £3.90 per hour.


*Bangs head against keyboard*


In fact, what the DfE did release in August was an ‘evaluation’ that effectively amounted to a congratulatory backslapping over the fact that 83% of nurseries were “willing and able to deliver the extended hours.”


In response, the Chief Executive of the National Day Nurseries Association, Purnima Tanuku, said that “It must be acknowledged that there is a funding shortfall to pay for this childcare” and that the DfE needed to review the policy “urgently, not just in April 2018.”


Indeed, a report by the New Economics Foundation this week reported that the only way for this policy to break even was for nurseries to pay their staff below minimum wage, or £7.33 an hour. The underlying problem is that these places are not ‘free’ at all, rather they are directly subsidised, based on a new funding formula for all local authorities. Similar to the NHS, an institution which you might recall having one or two minor budgetary problems recently, it may be free at the point of use for its users, but it is not free to operate. And, unlike the NHS, the providers of this childcare are often businesses, so running up losses is not an option.


For some nurseries, like one the BBC visited in Harrogate, which asked for £8 a day, the only option seems to be to the begging bowl. However, the DfE rather bizarrely stipulates that these contributions must be voluntary and that nurseries cannot ask people to pay. The government apparently seems keen to keep up its pretence that these places are ‘free’. It’s not a dissimilar situation to the more widely reported funding crisis in the schools system, which has seen schools send out letters to parents asking for financial contributions on account of budget cuts.


Like a lot of bad policies, this latest one stems from good intentions. Saving working parents both time and money by doubling the subsidised childcare available to them is undoubtedly a good thing to do, the government estimates it saves parents up to £5,000 a year through these places. There is undoubtedly a debate to be had over whether taxpayers should be directly subsidising the profit margins of private enterprises for the benefit of people who could hardly be described as poor, but that is a debate for another day.


All the positives will however be for nought if it then chooses to continue to pay the providers of this care mere pennies on the dollar. Having fully greenlit this scheme, the only option seems to be help get nurseries out of the red after just one week. Along with the NHS and the education system, it’s now the third funding crisis that’s looming over this government. Perhaps Amber Rudd and Theresa May could do with that magic money tree after all.

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