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By Rachel Lawler

The government has been told to “get its figures straight” by the Alliance, after representatives from the Treasury made inaccurate comments about funding research.

 

During an oral evidence session of the Treasury Committee’s childcare inquiry on 31 January, Elizabeth Truss MP, chief secretary to the Treasury and Beth Russell, director general of tax and welfare, claimed that research into the cost of childcare had taken into account the rising national living wage.

 

The DfE-commissioned report was conducted by Frontier Economics and estimated the average cost of delivering a childcare place for three- and four-year-olds to be ÂŁ3.72 per hour.

 

However, the report states that its findings were based on actual salary amounts paid to staff between March and December 2015, when its data was collected. In the few instances where salaries were not reported, Frontier Economics used either the ONS average reported qualification level of the age-appropriate minimum wage instead.

 

The report makes no reference to planned future increases in the minimum wage or national living wage being included in its cost of delivery calculations.

 

Neil Leitch, chief executive at the Alliance, commented: “We have long argued that more needs to be done to ensure that funding rates take into account rising delivery costs – and in particular, increases in staff costs. The suggestion that an hourly funding rate of ÂŁ3.72 will be enough to cover provider costs until 2020 would be laughable if it wasn’t so serious. 

 

“Providers across the country are facing a daily struggle to keep their doors open – the least the government could do is gets its figures straight”

 

During the same debate, Truss also highlighted the average funding rate of £4.94 per hour, comparing it favourably with Frontier Economics £3.72 per hour average cost. She said that this was evidence that the government is paying “significantly over the cost for the provision of those childcare places”.

 

The Alliance has described this comparison as “misleading”. The average rate of £4.94 is paid to local authorities, not providers. This figure includes additional funding including the Early Years Pupil Premium and the supplementary funding for maintained nursery schools.

 

Neil said: “The DfE’s own figures state that the average funding rate for PVI providers is actually ÂŁ4.34 – and this of course varies significantly from area to area, with some providers receiving much less. Given that independent research from Ceeda put the cost of delivering childcare at ÂŁ4.53 back in 2014, it’s clear that the government is not painting a complete picture of the funding situation.”