Free Early Years Education - threat or opportunity for schools?
One of the Conservative party election pledges was to extend the free early education entitlement for three and four year olds from 15 to 30 hours per week for working parents.
In the recent Autumn Statement, George Osborne reiterated his commitment to this, although he did announce a couple of limitations on the entitlement. The entitlement will be available for those who earn up to a maximum of £100,000 a year and who work at least 16 hours a week (if parents are in a couple, then both parents must work at least 16 hours a week).
The Childcare Bill 2015-2016 has not yet received royal assent but it is anticipated that this increase will be rolled out from September 2016 and be fully implemented by September 2017.
Although at first blush this may seem a positive opportunity for schools, with the consequence of a likely increase in demand for places, it is likely that these proposals will represent a real challenge to a financially sustainable operation.
Whilst the government has stated that it is committed to increasing the average childcare funding rate paid to providers, to date no figures have been published.
Many nursery providers and pre-prep schools find that the funding rate received from the government often does not meet the costs of running the nursery. This challenge is likely to increase with the introduction of the National Living Wage and increased pension costs. The extension in the free early education entitlement in 2016/2017 is likely to further compound this issue unless there is also a significant increase in the funding rate.
Unfortunately the opportunities for providers to look for alternative means to supplement their fees are limited. The Department for Education's Statutory Guidance Early education and childcare precludes providers who operate the scheme from setting restrictions on parents to guarantee a minimum number of hours, charging top up fees, or charging for certain extras.
As a result, we are seeing that a significant number of nurseries and pre-preps are reviewing their options and considering strategically the advantages and disadvantages of continuing to participate in the scheme. Many schools consider the nursery offering to be a 'loss leader' to raise the school's profile in the local community, widen the potential net of interested families, and encourage parents to choose the school for later years' education. Schools should critically assess their retention rates, and assess whether the nursery provision is really achieving this aim.
We would encourage all schools to critically review the staff costs and budget for the early years provision and undertake financial modelling to assess the likely impact of the extension to the free early education scheme.
We are seeing an increased number of schools and nurseries deciding to no longer participate in the scheme. If this is likely to be an outcome then it is essential that the necessary notice is given and that the communication strategy is managed effectively to minimise the impact on children, parents and staff.