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The cost of free nursery care

The Government must do the maths on extending free nursery care during a recession as hundreds of nurseries across England are being forced to close, unable to pick up the tab of providing care below cost price.

Many nurseries and play groups only just break even, and some report a loss of between £1 and £5 per child per session under the current system, which requires nurseries to provide 12.5 hours a week of free sessions for nursery-age children. Nurseries, the majority of which are small enterprises run by independent business owners, are not allowed to charge ‘top-up’ fees to recover their full running costs.

Now the Government is planning to extend the free entitlement of nursery care from 12.5 to 15 hours per week in 2010, the Federation of Small Businesses (FSB) is calling for a proper Regulatory Impact Assessment of the plans. In some local authorities, for example, the funding formula being used is insufficient to cover costs and must be readdressed.

A proper assessment of the system, which calculates the impact of the extra hours on care providers, is long overdue and is needed before many more small businesses go to the wall – leaving many pre-school children without a place and parents struggling to find childcare.

Colin Willman, Federation of Small Businesses Education and Skills Chairman, said:

“Nurseries are at the heart of our communities: they play an important role and serve the local areas in which we live. Most nurseries are not out to make huge profits, but at the moment, many are struggling just to survive because they are being asked to provide a service below the cost of delivery.

“This is no time to make it harder for care-providers to do their job. The Government must have a Regulatory Impact Assessment which takes into account the way free nursery entitlement works and the impact it has on these small businesses that are so key to our local communities and to the economy. This assessment must take place soon, before we end up with no places for any children – free or otherwise.”

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About Julie Hall

Hi, I'm Julie Hall, the founder of Women Unlimited. Which is my 4th business. I've had a business as a headhunter, a consultant, a new media agency and now finally Women Unlimited. I've learned lots of lessons - many of which could have been avoided. I hope you find the articles and stories on this website useful, and feel free to get in touch, I'd love to hear from you.

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