Reading childcare among most expensive in the South East

The average hourly fee charged by childcare providers for three and four year olds in Reading was £5.75 in 2019, according to a Department for Education survey.

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That was one of the highest charges in the South East, where the average was £5.37.

Fees in the area have increased over the past year, rising from £5.50 in 2018, following a national trend which saw a 2.4 per cent hike across England.

Localised figures are rounded to the nearest 25p.

Families with both parents in work – or just one in single-parent households – who earn at least 16 hours minimum wage per week but less than £100,000 a year are entitled to 30 hours' free childcare weekly during term time.

But industry experts argue funding for the scheme does not cover provider's costs, pushing up the cost of childcare outside the funded hours.

In Reading, the number of Early Years childcare providers – those who care for children from birth up until five – registered with Ofsted ​fell from 226 in 2015 to 197 last year, a decrease of 13 per cent.

Over the same period, the number of providers nationally dropped from 73,500 to 61,700, a 16 per cent decline.

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Liz Bayram, chief executive of the Professional Association for Childcare and Early Years (PACEY), said the current system was "untenable", and called for the Government to readdress its funding formula.

"The situation has been in this mess for far too long and this government needs to take action now," she said.

“We believe all of [the challenges] can be resolved if this government revisits its funding formula for early education entitlements so that it covers the current cost of delivering a place, and in future is linked to inflation."

A Freedom of Information request by the National Day Nurseries Association found that three-quarters of councils underspent on early years education in 2018-19, with £63.5 million earmarked for pre-schoolers either lying unused, or channelled away to other areas of education.

Reading Borough Council reported a £240,760 underspend during that time.

The council currently receives £5.14 in government funding per hour per child, according to NDNA.

Of this, £4.80 (93 per cent) goes to providers as a base rate to fund the provision of free places.

Additional hourly supplements provided by the council based on levels of deprivation or special educational needs have not been factored in.

Local authorities are required to pass on at least 95 per cent of early years funding to providers, with a maximum 5 per cent permitted to be kept back for administration costs, and to meet other local needs for pre-schoolers.

Vicky Rhodes, Brighter Futures for Children's Director of Early Help & Prevention, said: "The high cost of childcare in Reading is acknowledged and determined by market forces in what is a predominantly private sector.

"There is a high number of small independent providers in the Reading market, as opposed to large national nursery chains, which means they do not benefit from economies of scale.

"This means running costs could be higher than in other areas of the South East. Reading also has high business rates that impact on the childcare charges to parents.

"Many of our providers report that they find it difficult to maintain financial sustainability, even with the small increase in the hourly rate from April 2020.

She continued: "We would agree the government needs to review the funding rate for early years entitlement and link annual increases to inflation to give the market future stability.

"Within that review we would suggest due consideration to the additional administration of the 30 hours entitlement that was introduced in 2017 without any linked funding.

"Brighter Futures for Children holds a contingency amount in the Early Years budget.

"This budget pays for the funded early years entitlement for 2, 3 and 4 your olds.

"This is needed to cover against a large variance occurring between government funding received and actual payments to providers, for example a decrease in number of children accessing funding."