Ď㽶ĘÓƵapp

by Jess Gibson and Shannon Pite

Early years settings and childminders in England have warned they are likely to limit the number of government-funded places on offer and increase their prices, a new survey by the Early Years Alliance has found.  

According to the online survey, which received over 1,100 responses from early years settings, of the 98% of respondents offering government-funded places to three-and four-year-old places, four in ten (41%) are likely to reduce the number of funded three- and four-year-old places they offer over the next year, while a further one in six (18%) said that they could opt out of the three-and four-year-old scheme altogether.  

Of those respondents (98%) currently offering funded places for two-year-olds, nearly a fifth (18%) are likely to reduce the number of places they offer over the next year, while a further 5% could opt out of the two-year-old scheme entirely.  

The survey also highlighted that while the funded entitlement for eligible working families of two-year-olds and under-twos is set is to increase from 15 to 30 hours per week from September, next month’s policy changes have also prompted many settings to rethink any expansion plans.  

Only a third of providers offering funded two-year-old places for 15 hours a week are planning to extend all these places to 30 hours a week from September (when the entitlement scheme is due to expand), with around two in five likely to do the same for funded places for under-twos. 

Only just over a third (36%) of those offering funded two-year-old places currently plan to extend all 15-hour places to 30-hour places, while over a quarter (28%) will only extend some places, 10% don’t plan to extend any and a further 26% are undecided.  

Of those settings (61% of all respondents) currently offering funded under-twos places,  only 41% are planning to increase all 15-hour places to 30-hour places, with 19% only planning to extend some places, 6% not planning to extend any and 17% undecided.    

Survey respondents highlighted that these changes are a result of the combined impact of National Insurance rises, minimum wage increases, and updated rules on charging – all of which are due to come into effect in April. 

The research also found that as a result of the growing pressures on early years settings, over the next 12 months: 

• 94% of respondents are likely to increase fees for non-government funded hours.   

• 77% said they are likely to introduce or increase the price of optional extras, such as nappies, meals and trips.  

• 68% said they are likely to restrict when funded hours can be claimed.  

• 28% said they are likely to permanently close.  

The Early Years Alliance is calling on the government to take urgent action to mitigate the impact of upcoming policy changes by:  

• increasing investment into the early years – with a particular focus on increasing funding rates for three- and four-year-olds – to ensure that providers are able to meet rising cost pressures while keeping parent fees as low as possible   

• establishing a mechanism to ensure that funding rates continue to increase in line with provider costs going forward   

• either exempting early years providers from the National Insurance changes or committing to compensating providers in full for the increases. 

Commenting, Neil Leitch, CEO of the Early Years Alliance, said: “These survey findings should set alarm bells ringing across government. At a time when ministers are looking to significantly expand the early entitlement scheme, we have a huge proportion of providers warning that the exact opposite is likely, with many forced to limit funded places or opt out of the offers entirely due to unsustainable financial pressures.  

“While we of course recognise the need to ensure clarity and transparency for parents when it comes to additional charges for entitlement places, the fact is that this updated guidance has been implemented against a backdrop of severe and sustained underfunding, which the government has yet to address, or even acknowledge. Add to this the impact of upcoming increases in both National Insurance contributions and the national minimum and living wage, and you have a perfect storm of challenges for early years providers – one that many will not be able to survive.    

“If the government is to have any chance of ensuring that families can access the quality, affordable early years care and education that they’ve been promised, then it needs to support the businesses that deliver this. That means ensuring that funding actually meets the cost of delivering high-quality places, both now and in the future, so that providers don’t need to rely on additional charges to keep their settings afloat and are able to withstand changes like the upcoming National Insurance rise.  

“It is one thing to recognise the importance of the early years, but it is quite another to deliver the financial and practical support that settings need – and make no mistake, our sector needs it now. We therefore urge the government to work with the sector and ensure that the early years gets the investment it needs to deliver on the promise made to parents – before we reach the point of no return.”