96% of childcare providers say ‘free’ childcare doesn’t cover their costs

Nearly a quarter of childcare providers think they will close in the next year due to the mismatch between the Government’s key childcare policy and the full cost of childcare places, according to a survey by the lobbying group Pregnant Then Screwed.

The survey of 266 childcare providers found that 96% state that the Government subsidy to operate the 30 hours ‘free’ cover for three and four year olds doesn’t cover costs. Twenty two per cent say that means they don’t believe they will still be open this time next year.

Some 71% admit that they have found it difficult to recruit new staff, 90% think that childcare workers are badly paid and 63% think that childcare workers are overworked, with 69% saying that the lack of skilled workers has had a negative impact on their business. Ninety two per cent say they are facing financial challenges owing to the stress of providing 30 hours ‘free’ childcare by the Government.

Joeli Brearley, founder of Pregnant Then Screwed said: “Our research with childcare providers demonstrates that the Governments approach to childcare just is not working. The offer of 30 free hours sounds good on paper, but in reality, it is manifestly inadequate for the scope required.

“As it stands mothers get a year of maternity leave, with only 9 months paid. So, there are two years when they either have to stay at home or bear the brunt of the high cost of childcare. With the Government imposing 30 ‘free’ hours on childcare providers from three years onwards for just 38 weeks of the year, providers are recouping costs from younger years. This necessary action to stay in business, is the key reason behind mothers being unable to return the work because of the high costs, further adding to the motherhood penalty and gender pay gap.

“We need the Government to create a childcare system that works for everyone, so that nurseries can stay open and provide quality care, and parents can go to work without facing the burden of high cost childcare.”

The survey is published after the Lib Dems pledged to increase free childcare to 35 hours a week for 48 weeks for working parents of children aged between nine months and four and Labour said it would extend the 30 hours of free childcare to children between the ages of two and four.

Neil Leitch, chief executive of the Early Years Alliance, said: “These results paint a grim picture of the sector’s future, but they are hardly surprising considering the thousands of providers that have closed in recent years.

“The reasons behind these closures are rarely complicated. I’ve spoken to hundreds of high-quality providers, all of them cherished by local families, that have simply been unable to cope with the financial burden so-called ‘free’ childcare places on them. Many more continue to survive only because parents can afford to subsidise supposedly funded hours by paying higher fees and voluntary charges. The hard truth is that this is unavoidable when the gap between the true cost of delivering those hours and the funding received stands at two thirds of a billion pounds and is growing all the time.

“Parents are starting to see through the empty promise of ‘free’ childcare and, frankly, it’s time the politicians caught up. Instead of ever more generous offers of other people’s money, political parties should work out what’s best for the child and start developing serious, properly funded childcare policies that don’t leave parents worse off and don’t force providers out of business.”

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