Government childcare scheme could force nursery workers' wages down

By agency reporter
September 6, 2017

The Government’s new 30-hours free childcare scheme is so underfunded that in theory, nurseries would have to pay their staff below minimum wage to make it work, new research has revealed.

From 1 September 2017, most parents in England are entitled to 30 hours free childcare a week for children aged three to four. The government reports that more than half of parents eligible have now applied to take part in the scheme.

On average, parents are currently charged £6 per hour for under twos, £5.30 for two year olds and £5.10 for three and four-year-olds. But the government is offering providers just £4.27 per hour for this same care, leaving nurseries with a significant gap in their finances.

According to new research by the New Economics Foundation, for nurseries to break even without passing on costs they would have to pay their staff just £7.33 an hour. This is below the national minimum wage for 25-year-olds and over.

That would mean a pay cut for 62 per cent of the least-qualified nursery workers in the country. Of nursery workers with at least A-level equivalent qualifications, 85 per cent would face a pay cut.

The amount of money government gives providers per hour of 'free' childcare is fixed, regardless of location and age of the child. But providers say that the amount does not cover the true cost of childcare and that parents currently subsidise the difference.

Whilst the government has said that it is illegal for nurseries to ask parents to pay ‘top-ups’ on their per hours fees, they are able to ask parents to pay for ‘extras’ like food, nappies, trips or activities. In this way, many parents are left to fill the funding gap. Alternatively, some nurseries may consider cutting services in order to meet the shortfall in funding.

These findings raise wider concerns about the way in which childcare is funded in the UK.

Lucie Stephens, Head of Co-Production at the New Economics Foundation, said: “It’s right that the Government is looking at ways to deal with the crippling cost of childcare for parents. But they have to put their money where their mouth is.

"This research shows that the whole system for funding childcare in this country doesn’t really work. Nurseries will either pass on the extra cost to parents, cut services or squeeze their workers’ wages. None of that is good news.

"We need to support new and better ways of doing childcare. When parents have real control over the design and delivery of the care their children receive, it becomes more affordable and more suitable for their needs.

"At the New Economics Foundation we are working with parents to develop new models of childcare, which combine decent pay and conditions for staff with real control and affordability for parents.”

* New Economics Foundation http://neweconomics.org/

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