Champagne Nurseries Lemonade Funding – How ‘Free’ Funded Hours Impact On A Nursery

In 2010 the introduction of 15 hours of “Free childcare” was introduced for all parents of 3-4 year olds.  In September 2017, the UK Government extended this offer of “Free Childcare Places’ for children between the ages of  3- and 4-year-olds of working parents in England where children in this age bracket would be eligible for 1140 hours of government-funded childcare per year rather than the 570 hours that were previously offered – the equivalent of 30 hours per week over 38 weeks of the year.  To qualify for this benefit, parents must earn more than £120 per week (equivalent to 16 hours per week at the National Living Wage), and less than £100K per year.

On paper, this sounds like an amazing benefit for parents, however, there is a major flaw in this system – one that hasn’t been thought through properly and one that has been affecting childcare providers throughout the UK since the new scheme came into place. This flaw in the system is that the Government funding only covers the education needs of a child and does not include consumables that are needed to provide that service (paint, paper, books, toilet rolls, pencils, cooking activities etc.).

Nurseries, pre-schools and childminders are a business and like every other business in the UK, whether it is a hair salon, car repair centre, retail outlet or business service, they need to make a profit in order to survive and to keep trading.

The ‘free’ funded hours are paid for by the government and the £’s per hour that the Government allocates to each child and each childcare provider is significantly lower than the hourly rate needed to keep a nursery in profit (and in many cases, to even breakeven). Here at Cuddles the hourly rate that we receive from the Government for each funded place is at least £1.44 per hour less for each child and each hour than we need to breakeven.

This puts all childcare owners in a very difficult position, as the lower hourly rate that is paid through Government funding impacts heavily on the sustainability of many nurseries, pre-schools and childminders throughout the UK. Think about it – as a business, a nursery will still have all of the normal running costs from rates, taxes, heating/lighting and equipment through to staff wages (ensuring that the National Living Wage is met), pensions, training, and as a regulated industry, they are also governed on the ratio of employees to children by Ofsted.

As parents, making sure your little ones are well cared for whilst you are at work is the number one priority. You want to make sure they are being stimulated with appropriate activities and that they are in a safe and nurturing environment, cared for by professional well-qualified staff. Likewise, here at Cuddles, it’s our number one priority to ensure the above is delivered.

As an employer, we also have a duty of care to our employees. However, for the childcare profession, under the current Government structure, this has put a lot of financial pressure on all providers which, in turn, affects pay scales across the board which then impacts on those deciding whether to pursue a career in childcare.

In March 2016, a new campaign was launched by Nursery Owners Group following an appearance by a group member on “Good Morning Britain” with the aim to support nursery owners and childcare professionals. Champagne Nurseries On Lemonade Funding (CNLF), is the campaign to bring the impact that funded hours are having on Day Nurseries to the public domain.

The movement helps to support nurseries and childcare professionals to explain to parents and carers the impact that the ‘FREE funded hours’ is having on this whole industry (and the reasons why, even though their child is receiving funded hours from the Government, their nursery will be charging for consumables such as snacks, toothbrushes, nappies, paints, paper, cooking, woods trips etc.) The group also campaigns to the Government on necessary changes needed to improve the Early Years Childcare here in the UK.

Want to find out more? Here is a link to a great little video which has been produced by Champagne Nurseries Lemonade Funding that we think easily explains how the funded hours are impacting on nurseries and the struggles they face.

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