Nursery owners face uncertain future under new scheme Magazine
Chartered Accountants, Duncan & Toplis, are warning nursery owners to take action now to protect their business from the potential financial damage that the new free childcare scheme could cause later this year.
From 1st September, families with working parents will be entitled to 30 hours free childcare per week for three to four year olds (subject to certain criteria).
The rates paid to children’s nurseries for these funded hours is significantly lower than most nurseries charge for payable sessions, whether that be an hourly, daily or weekly rate.
With the National Living Wage increasing each year, business rates going up due to the new rateable values that came into effect from 1 April 2017 and the on-going implementation of Auto Enrolment, children’s day nurseries are really feeling the squeeze.
As if that wasn’t enough to think about, nursery owners will also need to establish whether there are sufficiently trained employees available to enable the nursery to offer the increased funded hours to parents that wish to take up the offering.
Employing apprentices to “fill the gap” in available staffing could be an option for some nurseries, provided that they have the resource to give the necessary “on the job” training and supervision. More information on taking on an apprentice can be found at www.gov.uk/take-on-an-apprentice.
As the shortfall in nursery income will inevitably have to be subsidised by the business, many nurseries are looking at ways in which they can plug this gap and remain in business. Ideas such as charging much higher rates for additional hours, introducing additional charges for lunches, or having to implement a structure to the times that funded sessions are available are all options, but for many nursery owners these go against the grain and prevent them from providing the flexibility they have previously offered to parents.
Sarah Clyde is a Director at Duncan & Toplis who has been assisting nurseries in planning for this change. She says: “Although this is a worrying time for nursery owners, there are strategies we can help people to put in place that will mitigate the effects of the increase in free hours. I would encourage nursery businesses who have not yet considered the impact to seek expert advice at the earliest opportunity”.