Government funding drives up childcare prices
By Rachel Lawler
86% of early years providers say that the funding they receive for three- and four-year-olds does not cover the cost of delivering childcare places, as a new Alliance survey shows how government underfunding is pushing up childcare costs.
The Alliance surveyed nearly 2,000 early years providers about rising fees as the cost-of-living crisis hits families.
Two thirds of the survey respondents said they would be increasing their fees this year, with 35% of providers saying they would not be increasing fees at all if funding covered their costs, while 43% said they would not be increasing fees as much.
Worrying outlook
Of those providers whose local authority had already confirmed their funding rates for April 2022, 90% said that this will not be enough to cover the cost of delivering funded childcare places.
Around a third (30%) of the providers surveyed said that they were currently operating at a loss, while 34% said that they expected to be operating at a loss in 12 months’ time.
A huge 98% of respondents said that the government was not doing enough to support the early years sector at this time.
Parent concerns
A parallel survey of 27,000 parents, run by campaigners Pregnant Then Screwed and online forum Mumsnet, found that 62% of parents are now spending as much or more than their rent/mortgage on childcare.
A quarter of parents said that they had to cut down on necessary expenses such as food, heating or clothing in order to afford childcare and 43% of mothers had considered leaving their job because of the cost of childcare.
A huge 99% of parents said that the cost of childcare is making the cost of living crisis even more challenging for them.
Pregnant Then Screwed has launched a campaign called #UnHappyMothersDay to raise awareness of the many challenges mother’s experience. They will deliver their petition demanding an independent review of the childcare system to 10 Downing Street and will deliver #UnHappyMothersDay cards to influencers and MPs to raise awareness of the campaign.
Provider crisis
Early years providers themselves are also struggling with the cost-of-living crisis. 73% of those surveyed by the Alliance had not received a pay rise in the past two years and 15% of respondents are currently, or have previously been, in receipt of Universal Credit.
One in 20 of the providers surveyed had used a food bank in the past two years and 31% were currently overdrawn in their personal bank account.
Almost half (48%) of the Alliance survey's respondents said that they are actively considering leaving the early years sector (42%), are currently leaving (5%) or have already left (1%).
Failing funding rates
Neil Leitch, chief executive of the Alliance, commented: “Early years funding has continually failed to keep up with soaring costs, leaving many providers with no choice but to increase fees in the coming year: it speaks volumes that over a third of our survey respondents said that if they were sufficiently funded, they wouldn’t be raising fees at all this year.
"With the vast majority of providers saying that the funding they receive is less than the cost of delivering places and even more worryingly, with even those that are set to receive funding increases in April telling us that this won’t be not enough to cover delivery costs, things are going to get a lot worse before they get better.
“Providers are now facing a cliff edge, with more than a third of early years businesses currently operating at a loss (30%) and even more (34%) expecting to operate at a loss in a years’ time – but this could all be avoided if the government finally admitted there is a problem and took action to plug the widening funding gap.
“Early years providers offer a lifeline for working parents and vital early education for young children, but it is becoming near-impossible for them to offer these critical services at affordable prices. The government needs to address the sector’s funding gap before more parents – and especially mothers – are forced to pay ever-increasing prices and compromise their careers to ensure their child can receive good quality care and education.”