Wales Childcare Crisis: Nine in ten nurseries expect to make a loss or break even
NDNA Cymru’s recent survey reveals that rising costs are continuing to put significant pressure on the sustainability of the early years sector in Wales.
National Day Nurseries Association (NDNA) Cymru surveyed respondents across 102 private, voluntary and independent nurseries and discovered that 91% expect to make a loss or just break-even.
Government funding for the Childcare Offer and early education has remained stagnant since 2022 meaning the funding gap is growing against a backdrop of steeply rising costs.
Looking at staffing bills alone providers expect to see an average increase of 15.2% compared to 14.7% last year. The survey showed that providers are working hard to support families by keeping fee increase to 9.3%.
The compound effect of rising costs and underfunding is evident as 97% of providers say their funding rate for the Childcare Offer for Wales, which is currently £5.00 per hour, does not cover their delivery costs. This compares to 90% in 2023.
When providers were asked about the funding shortfall as a result, the average response was £1.91 per child per hour. This amounts to a startling £2,177 per child across 30 hours of early education and childcare offer across the year.
Purnima Tanuku OBE, Chief Executive of National Day Nurseries Association (NDNA) Cymru, said: “It is clear from our survey results that the financial strain on early years providers is relentless. It really is time for the Welsh Government to commit to reviewing their funding rates to ensure sustainability for the sector.
“The minimum wage rise in April will further impact on the rising costs our nurseries in Wales are experiencing and the stagnant funding rate is simply not enough to cover their operating costs.
“If 91% of nurseries in Wales expect to make a loss or break-even this is just not sustainable. As a result we are likely to see more settings close. If settings cannot generate any surplus then they cannot invest in staff or improving their learning environment.
“These are challenging times for early years providers and families and we see our nurseries working hard to keep their fees as low as possible. However, when your biggest customer, the Welsh Government, has not been keeping pace with rising costs this becomes more difficult every year.
“We need to see Ministers take urgent action to support providers with hardship payments that were available during Covid as well as a long-overdue review of funding rates.”
NDNA had already produced a report on the Flying Start expansion which shows a mixed picture across 22 local authorities throughout Wales. The confusion and uncertainty that this creates is reflected in the survey with not all providers able to deliver these hours.
The survey also found that early years providers were keeping fee increases below their rising costs, but were having to increase them more than last year. The average increase in bills to families was 9.3%, compared to 7.4% in 2023, with a 15.2% increase in staffing costs.
NDNA are calling on the Welsh Government to put measures in place to support the growth and sustainability of the early years sector including the cap on additional charges for meals and snacks to be reviewed. NDNA are also asking for underspends in the Childcare, Playwork and Early Years (CPEY) budget to be reinvested in hardship funds for providers.
Full results from NDNA’s Annual Business Performance Survey 2024:
- 15.2% – average staffing bill increase from April 2024
- 9.3% – average fee increase to parents from April 2024
- Business performance: 42% expect to make a loss this year; 49% expect to break even
- 97% of respondents say their rate for the childcare offer does not cover their costs
- The estimated average shortfall for 2023/24 is £1.91per child per hour for 2023/24- this is likely to be much higher in April when we see salary costs increased and a lower percentage of fee increases that will not cover these costs
- The estimated average shortfall for 30 hours over 48 weeks is £2,177
- The survey ran throughout January 2024; responses covered 102 PVI settings across Wales
- Wales
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