'Free' childcare scheme sparks nursery fee rise for parents

Lily Canter
4 September 2018

Parents have seen a rise in childcare fees since the introduction of the government’s 30 ‘free’ hours scheme a year ago, according to two new reports.

The flagship initiative which promised to give working parents 30 funded hours of childcare a week to all three- and-four-year-olds has led to nurseries hiking fees and charging for extras in a bid to plug a funding gap.

A survey by the Pre-School Learning Alliance reveals that half of childcare providers have increased fees as a result of offering the 30 hours and 42% have introduced or increased charges for additional services such as meals, nappies and trips.

A separate poll conducted by Mumsnet found that 45% of parents accessing the 30 funded hours scheme had been asked to pay additional fees for non-funded hours and 41% had been asked to start paying more for goods and services.

Childcare providers say they have been forced to put up rates on non-funded hours and to start charging for extras in order to compensate for an estimated £616.5 million funding shortfall from the government.

Neil Leitch, chief executive of the Pre-School Learning Alliance, says: “While better-off parents may be able to shoulder these unexpected costs in the short term, those on the lower end of the income scale – the families that the government claims to be so committed to supporting – are the ones who are likely to suffer as a result.”

He also warns that the situation will get worse with early years funding levels frozen until 2020, despite business costs and wages increasing.

Responding to the reports, children and families minister Nadhim Zahawi MP says: “More than 340,000 children have benefited from a 30 hours place in its first year, as childcare providers have risen to the challenge of delivering the offer – meaning that thousands of hardworking parents are saving up to £5,000 a year on their childcare bills.

“We are spending more than any other government on childcare support with £1 billion extra funding a year to deliver all of this government’s free childcare offers. We continue to monitor delivery costs and we have commissioned new research to provide further information on the costs around childcare.

A third of providers plan to increase costs

A Pre-School Learning Alliance Freedom of Information (FOI) request to all local councils in England in 2017 found the average funding rate to childcare providers was £4.27 per child per hour with some providers receiving less than £3.60. 

The Alliance’s latest report reveals that the funding rate is lower than the actual cost of childcare delivery for 63% of providers. And as business costs increase, a third of providers say they plan to increase fees for non-funded hours in the next year, meaning parents not eligible for the free hours will be subsidising those who are.

Mumsnet founder and chief executive Justine Roberts says: “The idea behind giving working parents 30 free hours of childcare is, in theory, a good one. But any scheme needs to be backed up by sufficient planning and funding, and our users are telling us this simply isn't happening. 

“Given the benefits working parents bring to the economy, it's not good enough that nearly half of recipients are having to pay additional fees for non-funded hours.”

Government scheme “causing financial hardship” for childcare businesses

Aimi Turnbull (pictured below) was delighted when her daughter turned three and became eligible for the 30 free hours at preschool. She initially received a reduced invoice but after just one month the pre-school introduced a food supplement fee of £8.30 a day.

Aimi Turnbull and family

Ms Turnbull explains: “The pre-school said the scheme was causing their business ‘financial hardship’, as the amount they claimed back from the government didn’t make up the difference, and left them with a shortfall each month.

“I thought the idea of the scheme was to help parents back into work, but if the pre-schools have to increase the day rates, there is no benefit to the parents.”

Meanwhile, mother-of-three Emma Wilkinson was forced to change nurseries after she discovered her provider wanted to charge her almost £4,000 a year for supposedly ‘free’ childcare for her eligible three-year-old and increase fees for her one-year-old.

“We received a letter saying what the break down was and how the free hours were going to work. When I looked at it closely I realised we were being charged extra for meals and activities which never appeared on the bill before and there was no opt-out.

“We were going to be paying £3,935 a year for Sam to go to nursery for 30 hours a week. That is 46% of the full cost - that is not free childcare.”

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