|
Memorandum submitted by the Federation of Small Businesses (FSB)
The FSB is the Small businesses
make up 99.3 per cent of all businesses in the The
FSB represents approximately 1,150 day nurseries across the From an FSB survey of 280 Private, Voluntary and Independent (PVI) nurseries in February 2009: · 87 per cent said that the level of funding for the 12.5 hours does not cover the cost of provision · 62 per cent said extending the free entitlement from 12.5 hours to 15 hours will negatively affect their business · Most concerning, only 18 per cent said they were certain that they
would still be running their business by 2015. This is extremely worrying considering the
fact that PVI settings provide 70 per cent of nursery places in
the The FSB response focuses on funding, sustainability and value for money issues that are most affecting our Private, Voluntary and Independent (PVI) providers. BDO Stoy Hayward predicts that 36,500 businesses will fail this year. Based on these predictions, around 200 private, voluntary and independent nurseries could close down in 2010. The average nursery has 46 places according to Laing & Buisson's Children's Nurseries UK Market Report 2008. This means the parents of over 9,000 children (aged of 2-5 years old) could struggle to find suitable provision for their children. Nurseries, signed up to the Code of Practice, have to provide 12.5 hours of free nursery care per child per week to any parent who wants it. FSB research shows that the average nursery receives £3.64 per child per hour from their local authority to provide the free places. Nursery owners say that if they could charge for those 12.5 hours it would be at an average of £4.70 per hour, a shortfall of £1.06.[1] The FSB urges the Committee to advise the Government to suspend the 2006 Code of Practice on the provision of free nursery education places for three and four year olds to enable nurseries to charge at a level which enables them to cover costs until a workable funding formula can be applied across all local authorities. The FSB position, based on legal advice, is that the government should conduct a post implementation impact assessment into the 2006 Code of Practice on the provision of free nursery education for three and four year old children before deciding whether the move from 12.5 hours to 15 hours is discussed. A recent Barrister's opinion advised the FSB to push for a post-implementation impact assessment to fully address the negative impacts on Nursery providers. We are delighted that the DCSF has decided to undertake an RIA on the extension from 12.5 hours to 15 hours, however, Many providers have told us that they will be out of business by 2010 which is why the FSB urges the Government too:
1) Hold a post implementation impact assessment on the current state of the nursery sector.
2) Suspend the current Code of Practice until a full assessment has been undertaken.
October 2009 [1] FSB Nursery survey, November 2007 |