Increase in government funded childcare hours

The Scottish Government plan to increase funded childcare hours for three and four year olds from the current 600 hours to 1,140 per year. The extended hours policy is due to be introduced from 2020; however there are significant concerns about the practicalities of implementing such a policy, especially from a private nursery’s perspective.

Insufficient number of available places to meet demand

By doubling the amount of free childcare, in effect a half day funded place could become a full day place meaning private nurseries would effectively either have to double their available places or half the number of funded places available.

If a nursery is to increase their number of places, this will require additional employees to meet the staff to child numbers ratios. It is estimated that an additional 8,000 will be required across Scotland to meet the anticipated demand. Employing additional staff presents problems both in the ability to recruit suitably experienced and qualified staff, and the actual financial cost of covering staff wages and training.

Furthermore, can the nursery premises physically accommodate additional places? If the building is too small, is an extension feasible? Are the existing grounds large enough and are there sufficient monies available to cover the costs of building alterations?

Inadequate funding

Private nurseries who already provide local authority funded places, have advised that the current level of funding is inadequate to cover costs, and are very concerned that this will be exacerbated if private nurseries are required to offer more funded places. Many private nurseries presently have to request top-up payments from parents to cover expenses such as meals and snacks.

In addition, there is concern not only regarding the amount of funding, but also, the actual receipt of the funds. The timing of local authority payments can have a significant impact on cash flows, especially if there is any delay in payments. If payments are delayed, nursery owners will need to find alternate means of finance to cover costs until the Local Authority funds are finally received.

Additional issues

There is also concern amongst private nurseries that there could be an additional administrative burden via having to report to two regulators, being the Care Inspectorate and Education Scotland.

It is clear that the impact of the extended hours could pose significant financial and administrative issues for private nurseries and nurseries need to take action now to ensure they are prepared to meet the extra demand.

We at EQ, with our dedicated team, can help guide you and assist with your business needs. For more information, or to speak to a member of our Healthcare team, contact your local office contact or email healthcare@eqaccountants.co.uk.