An analysis of party pledges on early years shows the Conservatives would leave the childcare sector with the biggest deficit, potentially leading to rises in childcare fees or nursery closures.
The Conservative party’s manifesto commitments on childcare will cost an estimated £824m due to underfunding of ‘free’ childcare and minimum wage rises which will push nursery prices up and potentially cause closures, according to an independent analysis.
The analysis by Ceeda, an independent research company specialising in the early years, shows that, while the Conservatives promise the least spend on childcare for pre-schoolers, their manifesto is likely to cost families the most.
Detailed analysis of manifesto commitments forecasts a shortfall between nursery operating costs and government funding of pre-school childcare places of an estimated £824 million under the Conservatives, £314 million under the Liberal Democrats and £80 million under Labour.
The Conservatives have pledged no new funds for ‘free’ childcare places for 2 to 4 year olds in their manifesto, with offers remaining as at present: 15 hours per week for disadvantaged 2 year olds and all 3 to 4 year olds, rising to 30 hours per week for 3 to 4 year olds in working households.
Ceeda says Conservative funding commitments would lead to a £571 million shortfall on 2 to 4 year old places in 2020/21, rising to £824 million when cross-subsidies for younger age groups are factored. This is due to underfunding of ‘free’ places and a funding freeze.
Underfunding and the funding freeze has already led childcare providers to take a number of steps, including:
Meanwhile, the Labour party has proposed significant expansion of early education and childcare entitlements of 30 hours a week, across 38 weeks of the year, for all 2 to 4 year olds. This also comes with a promise of increases in proposed funding rates – an increase of 40.7% on the current funding rates for 2 year old places and 13.6% for 3 to 4 year old places.
Ceeda says this would leave a significantly smaller forecast shortfall of £80 million at full roll-out, reducing the current financial pressure on providers, and therefore families. Phased roll-out and a commitment to annual funding reviews may narrow this gap, it says.
The Liberal Democrats are promising free places for children aged 9 to 23 months in working households and an expansion of existing 2 to 4 year old offers to every child, for 35 hours a week across 48 weeks of the year. At full roll-out, Ceeda says this could involve delivery of around 1.8 billion hours early education and childcare in private and voluntary sector nurseries and pre-schools, compared to around half a billion at present.
The party has also pledged large funding increases, but Ceeda says the sheer scale of the proposals mean nurseries and pre-schools may still be out of pocket by an estimated £314 million at full roll-out. However, it says that the party’s commitment to annual rate reviews alongside phased rollout could narrow this gap.
Dr Jo Verrill, Managing Director at Ceeda, says: “Our analysis of party pledges and sector operating costs throws into sharp relief the challenges which lie ahead. A new Conservative administration would continue the funding freeze and seriously threaten the sector’s sustainability, particularly in deprived areas. In contrast, the Labour proposals appear well-costed, but a shortfall remains. The Liberal Democrat commitment is the most radical and would need a careful, phased roll-out tied to annual fee increases, if large funding deficits and major staff shortages are to be avoided.”