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30 hours free childcare and the national living wage

date August 7, 2015

Positive news for working families or a huge challenge for early years childcare?
At NurseryBook HQ, we are committed to tackling one thorny early years issue a month. In August, that topic is 30 hours free childcare. The government’s promise to double the amount of free childcare available to eligible 3- and 4-year olds, and its pledge to introduce a national living wage, are both intended to be good news for working families. But is the overall impact of these measures actually going to reduce the number of parents able to afford childcare? And what impact will they have on early years childcare practitioners?
A recent study on the issue of free childcare by the National Day Nurseries Association (NDNA), and carried out on Netmums, revealed four out of five families with eligible children (aged three or four) planned to make full use of the extended childcare hours. More than 50% of the working parents involved in the 1,000 person study said they would look for more work in order to be eligible for the free childcare, while 75% who weren’t currently employed said they would look for work (both parents must work eight hours per week to be eligible, unless they are single parents).
From the perspective of early years childcare providers, however, a recent report by University College London researchers warns the huge commitment to increasing free childcare is ‘not viable’ because the government ‘is not adequately funding these free places’. It’s worth noting that the government has committed to increasing the average childcare funding rates paid to providers (the hourly funding provided for each free place) with a DfE review overseen by Childcare Minister, Sam Gyimah. However, the government’s current rates are lower than what they’d usually charge, says the report by UCL’s Institute of Education.
UCL’s conclusion is that early years provisions will be forced to keep pay barely above minimum wage, to raise their fees, or both, meaning talented staff may look outside the sector and those parents who already pay significant childcare fees, may not be able to afford it.
When you overlay the introduction of a National Living Wage, these issues are compounded and early years childcare providers face a significant budgeting challenge. As of April 2016, all over 25s will be entitled to £7.20 an hour, increasing to £9 an hour by 2020.
The UCL report found average pay for private nurseries is currently close to the minimum wage at an average of £5.60 an hour, although pay in the public sector is better, at £7.80 an hour.
However, the report also confirmed childcare practitioners are increasingly better qualified, in line with the rise in quality of early years provision generally (and a rise in demand for that quality of teaching, both from parents and Ofsted). By last year 75% of childcare practitioners held NVQ level 3 or higher, an increase of 12% since 2005, arguably yet another reason to increase pay.
Although many childcare practitioners are under 21, the National Living Wage will still clearly have a huge impact on already stretched budgets. In this “new era of Ofsted”, where quality education to provide all children the best possible start in life is an absolute priority, will it be parents, practitioners or both who will bear the brunt of this funding pressure? NurseryBook has committed to exploring these issues throughout August and looks forward to hearing your thoughts.