How will extra free childcare for working families work?
- 1 June 2015
- From the section Education & Family
As concerns are raised about how the government will fulfil its pledge to boost free childcare for working families to 30 hours a week, the BBC News website asks key questions about how the scheme may work.
What free childcare do parents get now?
Currently, all three- and four-year-olds are entitled to 15 hours free childcare a week.
This is funded by the nursery education grant from local authorities of about £3.80 per chid, per hour.
If the child attends a state-maintained nursery or a local authority funded children's centre, it is unlikely that the parent will be asked to contribute anything further.
But those with children in private nurseries, and even in pre-schools run by voluntary organisations, will know the government entitlement is rarely truly free at the point of use.
Some of the poorest two-year-olds are also entitled to 15 hours free childcare under a separate scheme.
Is the grant enough?
Nurseries and pre-schools say no.
Research by the National Day Nurseries Association from January 2015 suggests funding for every three- or four-year-old falls short by an average of £800 a year.
Underfunding has been reported by the NDNA in six successive surveys over the past four years.
Despite rising costs, driven by pay, utilities and business rates, funding paid to nurseries by local authorities has been stagnating, with most local councils giving no increase.
Local authorities set different rates for the hourly nursery grant, the NDNA research suggests £3.80 is the average for nurseries, per child, per hour.
And at about half the national minimum wage, it is clear why nurseries in the independent and voluntary sector are having to get parents to make up the difference.
The Pre-School Learning Alliance says grants for the the existing 15 hours fall, on average, 20% short of the true cost.
How do nurseries make up the shortfall?
The short answer is - from parents.
But as extra hourly fees are not legal, nurseries have worked out canny ways to get round this.
The most common technique is requiring parents to take more than the total number of free hours and charging a set fee for the extra time.
This extra time can be as little as 15 minutes on top of a three-hour session.
One nursery in south-west London, requires parents of three- and four-year-olds to pay £28 per three-and-a-half hour morning or afternoon session.
That's effectively £28 for the extra half an hour each day. At five mornings a week, it's a total of £140.
Another way is limiting the flexibility of the way sessions are used.
One in east London requires parents to use the free hours in specified three-hour sessions, but limiting these to two sessions per day.
So a mother needing to cover two full working days, of say nine and a half hours or 19 hours a week, would only be able to use 12 hours of her 15-hour entitlement. And yet she is required to pay the full day rate (pro-rata) for the rest of the hours used.
Nurseries are also cross-subsidising from other parents of younger children, who typically pay a higher hourly fee - in part because the staff ratios to babies are lower - and use registration fees and one-off administration charges, not to mention paying to go on waiting lists for places, to fill gaps.
How will the new scheme work?
Many of the details are not yet clear.
The existing three- and four-year-old offer is a universal one, with nearly 90% of children of that age group accessing it.
The extra 15 hours, however, are for children from families where both parents are working.
It is not clear how much or how long parents will have to work in order to qualify for the extra childcare time and earlier reports of a £150,000 earnings threshold have since been denied.
Therefore, it is not clear how many children would be entitled to the scheme.
But ministers have said up to 600,000 families could benefit, saving each as much as £5,000 a year.
Has it been fully costed?
During the general election campaign, the Conservatives pledged £350m for the extra hours.
This prompted cries of derision from early-years providers, who said it would bring the sector to its knees without a substantial increase in the rates.
The Pre-School Learning Alliance's research suggests £350m is a quarter of what is needed to make good existing shortfalls and roll the scheme out nationally.
Its chief executive, Neil Leitch, says: "I think we are at breaking point with just the 15 hours. Extend that to 30 and you will see a different position altogether."
Has the government made any concessions?
Yes, the government has committed to increase the average childcare funding rates.
The Department for Education is to begin a review overseen by Childcare Minister Sam Gyimah before the summer.
And Employment Minister Priti Patel is to set up a task force, with providers and stakeholders, to look at how the plans can be progressed speedily.