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Nurseries Hit By Cost Crisis Are Considering Raising Fees And Meal Prices

Nursery schools are facing a 'real crisis' as prices rise, an industry expert has said (Alamy)

4 min read

Nurseries are facing a “real crisis” with “frightening” levels of inflation and soaring energy bills, according to one leading industry expert.

As energy bills soar, households will be protected to some extent by the price cap set by the regulator Ofgem, however, businesses do not receive this same protection

On Wednesday it was announced that inflation hit 10.1 per cent in the 12 months to July, hitting double digits for the first time since 1982. 

Early years childcare providers say they are “having to look at” whether they should raise overall fees as well as up the cost of facilities such as on-site meals for children to try to make up some of the shortfall from government funding and rising costs, Jonathan Broadbery, Director of Policy and Communications at the National Day Nurseries Association, said. 

He told PoliticsHome that when it comes to the money provided by the government for 30 nursery hours a week for three and four year-olds and other provision for younger children, “the funding rates don't match the cost of delivery”.

With energy bills rising by thousands of pounds this year, “the nurseries have to remain sustainable so they have to look at other areas of their business,” he added.

“As wholesale energy prices have changed, nurseries' costs have gone up month by month, a lot of our members are talking about energy bills that are tens of thousands of pounds more expensive than they were this time last year,” Broadbery said.  

“[Nurseries] have to look at what additional charges they might be able to make for the funded hours.

“So we have a lot of people look at meal costs [...] and have to say to parents ‘yes, you’ve got your day [...] but we need to charge you £3 a day or £2 a day for lunches, snacks’.

"They’re having to look at those charges, but also for the children where parents are entirely responsible [for payment] they’re having to look at those fees.

“Earlier this year some of our members said they were looking at fee increases of between 4-8 per cent, but that was before inflation was going through the roof and the only other alternative is to go out of business because they have to provide food, meals, and a safe environment for the children. 

“If they can’t do that in a financially sustainable way they will close.” 

He added that the "inflation figures are frightening for our members, they’re facing a real crisis and added to that is a lot of the time they can’t recruit the staff they need.” 

PoliticsHome has reported that the cost of living crisis has become “a frontline issue for schools”, as one expert said he had heard “harrowing” stories from some teachers. 

Lee Elliot Major, the country's first Professor of Social Mobility at Exeter University, said there are growing reports of pupils unable to afford the bus fare to get to school or to buy lunch, with the problems set to get worse this winter as inflation continues to rise and energy prices set to spike.

Speaking to PoliticsHome he said post-pandemic there are “the highest absence rates in living memory, many of which are the poorest pupils”, and that he fears this will damage the life chances of disadvantaged children, while middle-class kids are insulated from many of these same issues.

Shadow Education Secretary Bridget Phillipson said: “Families are facing soaring costs and the Conservatives are failing to help.

“Rising prices are an acute problem for childcare providers, because the government deliberately underfunds the core provision to which children are entitled, so nurseries are plugging the gap by charging parents more. 

“Childcare costs are punishing families already squeezed by soaring energy, food and housing costs.

"Labour’s fully-funded plan would fix the problems immediately and for the future, saving the typical household £1,000, as well as providing the foundations for a stronger, more secure economy.

"Only Labour can give Britain the fresh start it needs.”

A government spokesperson said: “We have spent more than £4 billion in each of the past five years to support families with the cost of childcare.

“To better support the early years sector we are also increasing funding to support employers with their costs, investing millions in better training for staff working with pre-school children and have set out plans to help providers run their businesses more flexibly.

"This includes plans to support more childminders into the market by reducing upfront costs.”

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