Education CommitteeWritten evidence submitted by National Day Nurseries Association (Purnima Tanuku OBE, Chief Executive)
It was a pleasure to provide evidence to the Education Select Committee’s inquiry on Sure Start Children’s Centres recently. As promised during the session, please find below the relevant pieces of information that Committee requested.
Funding Reform
As it stands, Government funding for childcare reform is complex—creating confusion for both parents and providers. Funding is split into various streams, with parents having access to tax credit, Employer Supported Childcare (childcare vouchers) and free entitlement places. Because of this inherent complexity, much of the funding does not actually get to childcare providers, particularly as a result of the funding from tax credits and free entitlement being indirect. Making funding more efficient would increase the amount of money getting to the frontline of provision. Funding simplification, whilst a major structural reform, may address some of the funding inefficiencies, improving both childcare affordability and the sustainability of the nursery sector.
Ring-fencing Funding
Measures must be taken to ensure that free entitlement funding is reaching nurseries. In NDNA’s latest Business Performance Survey, nurseries told us that free entitlement places are costing them £700 per year per child. In a sector where a difficult economic environment, increased parental unemployment and rising living costs have led to concerns around financial sustainability, this places further pressure on nurseries, and increases cost to parents for unfunded hours. Government should look to ring-fencing this funding so it is passed on in totality from local authorities to nurseries.
Cross-Departmental Support
Government has made a laudable commitment to extending free entitlement provision to disadvantaged two-year-olds, with the first 20% gaining access to the offer in September this year. In a recent survey carried out by NDNA, 33% of nurseries told us they would like to deliver the two-year-old offer; however they have concerns that they will not receive the appropriate level of support from banks in order to do so. There are governmental initiatives, such as BIS’s funding for SMEs; however these often do not reach the nursery sector. Government needs to ensure that departments work together to guarantee the nursery sector is being best equipped to deliver the two-year-old offer, helping our poorest children.
Another example where cross-departmental support could be given to nurseries is with business rates. Like all small businesses, nurseries are subject to business rates that place pressure on the financial sustainability of the sector. Government could look to helping nurseries with the cost of these rates, thereby improving the likelihood of their being able to deliver the two-year-old offer. In Wales, for example, nurseries with rateable values below £12,000 can receive 50% relief on business rates. Such initiatives improve the sustainability of the sector, ultimately improving nurseries’ ability to help the most disadvantaged children.
Interest Free Loans
Like all small businesses, nurseries are going through a protracted period of difficulty in securing loans from banks. NDNA’s latest research show that 22% of nurseries feel that banks are not supportive, while 45% believe they are neither supportive nor unsupportive. Ensuring access to capital is vital for the nursery sector, particularly when it comes to delivering the two-year-old offer. One way to rectify this would be by offering government-backed interest free loans to guarantee nurseries have access to an adequate level of capital. The Government Equalities Office has recently committed to offering £500 to new childcare start-ups, however this is a very small contribution that is only available to new entrants and for nurseries this barely covers the Ofsted registration fee and Disclosure and Barring Service checks.
Supporting Childcare for the Youngest Children
For many parents, the burden of childcare costs is greatest in the earliest years of their child’s life. Government could look to “front-loading” the support available to parents to ensure they are most supported when support is most needed. This is not to say that support is needed throughout a child’s development. Indeed concerns that the new “tax free” childcare scheme will not be initially available to parents with children over the age of five are warranted (particularly given the current childcare voucher scheme covers children up to the age of 15). However, it is important for Government to recognise that the major part of financial support is needed in the earliest years of childhood.
In addition to this information, I have attached our latest Business Performance Survey to this email. This includes NDNA’s latest research on the issues facing nurseries, including free entitlement funding, bank loans and local authority support.
If you need any further information, please do not hesitate to contact me.