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Childminders facing 30 hours funding shortfall of up to £1,200 a year

With 30 hours free childcare due to start in England in September, our latest research has highlighted that the average registered childminder will experience a shortfall of over £400 per child, per year, for every funded place they offer. 

The PACEY Childminders Fee Survey[i] published today reveals that the average childminder hourly rate is just £4.64. Despite local authorities receiving an average of £4.85 per hour from the Department for Education for the 'free' entitlement, most are planning to pass on far less to childminders.

With the average local authority base rate in 2017/18 being £4.28 according to the PACEY research, childminders are facing an average hourly shortfall of £0.36 per hour, per child.

Based on the 1140 funded hours per year (30 hours per week), childminders could potentially see an annual shortfall of £410.40 per 3-and 4-year child. As childminders are permitted to care for up to three children under the age of five, some could lose as much as £1,231.20 per year.

PACEY is warning that this deficit will have a detrimental effect on the sustainability of a childminder’s business, given the average net income is just £10,100[ii] per year.

Liz Bayram, PACEY Chief Executive comments:  “Our research highlights that if childminders purely offered funded places for two, three and four year olds, many would soon face closure. We know most of our members are on very low incomes and by offering just one funded place they could face a loss of £400 per year which is significant. It could equate to a mortgage payment or a month’s food and sundries.

“While we acknowledge that some local authorities’ hourly rate does cover the full cost of delivering a place; in others the shortfall will have to be made up through supplements or by charging for lunch and other extras. However, this comes with risks. Current government guidance is clear that charges cannot be a condition of offering a place; funding supplements are complex and could change in the future.”

PACEY is calling on whomever forms the next government to recognise that the current commitment to 30 hours can only be achieved with a long term sustainable funding plan which must be subject to regular review.

Liz Bayram continues: “Between now and September, we are calling for decisive action to provide additional funding in those local authority areas where fees are clearly not sustainable. We know our members need improved guidance on how they can charge for meals and additional services, as well as effective business support to enable them to work in partnership to deliver the extended hours. Only then can we reduce the detrimental impact on childminding small businesses.”

This summer PACEY is launching a business sustainability toolkit and a package of peer support, developed and delivered by childminders for childminders. The project will not only support childminders to review their business sustainability, it will also champion childminding to parents and to local authority decision makers.

PACEY believes that childminding needs to be regarded as a high quality option for parents wanting to use their funded hours.  To be able to do this, local authorities need to integrate childminding into their childcare offer, so parents can choose childminding or a combination of childminding and group care for their 30 hours.

For more information contact:

Susanna Kalitowski, Policy and Research Manager
T: 020 8290 2417/07734 734 022

[i] PACEY Childminder Fee Survey. Research carried out 15 February – 6 April 2017. Base sample: 1523

[ii] Childcare and Early Years Provider survey: 2016 £18,600 is the average income from a childminder providing childcare (table 14) minus £8,500 which is the average cost of a childminder providing childcare (table 12) equates to £10,100 net income.