When Margaret Hodge addresses a conference in September on the role of the private sector in early years and childcare, her speech will be scrutinised by hard-pressed private nursery providers who fear their viability is increasingly threatened by a plethora of Government initiatives.
The Minister for Children emphasised her commitment to working with the private sector when she spoke at the annual conference of the National Day Nurseries Association. But the NDNA is gathering plenty of evidence from its own members that Sure Start projects, often sited close to existing private providers, are luring away their staff with better salaries and hitting occupancy levels by creating too much provision in some areas.
Single-site providers are most at risk, but large providers are also being affected by what the private sector brands as unfair, target-obsessed competition. One of the big chains lost the entire management team from one of its nurseries and finds itself powerless to stop the haemorrhage of nursery nurses to a local Sure Start offering them between 3,000 and Pounds 4,000 more for a similar job with apparently less reponsibility.
A DfES spokeswoman concedes, 'We know that there have been cases in the recent past where some funded programmes have been set up close to existing provision, and we recognise that this could potentially affect the sustainability of either one or other or even both of the settings.
'However, sustainability is not automatically affected and depends on factors such as the level of existing demand for childcare in the area. In addition, competition in itself is not negative if the existing childcare provision does not fully meet parents' needs, for example, if it is not sufficiently flexible.'
This is hardly a response that will allay the suspicions of the private sector that DfES policy is increasingly tilted towards the maintained sector.
Skewed thinking
NDNA chief executive Rosemary Murphy says there is 'a gap between Government intention and thinking and local delivery'. She blames the DfES's blanket approach of targeting initiatives exclusively at areas of disadvantage and 'skewed thinking' that suggests that private day nurseries are not located in these areas, when the department's own statistics show that 24 per cent of them are to be found there.
In some areas, privately-run neighbourhood nurseries are feeling the squeeze from Sure Start programmes. In others, such as Stoke-on-Trent and South Gloucestershire, it is the lack of foresight in placing neighbourhood nurseries virtually on the doorstep of existing provision which is antagonising the private sector.
Mary Graveney of the South Gloucestershire Private Nurseries Association, who runs the 39-place Ambourne House nursery, says that two new neighbourhood nurseries, one at Patchway and the other linked to new housing close to a British Aerospace factory, are posing a threat to her business.
'Before they make these decisions, did they not think it was appropriate to ask if anyone had spaces before they made all this money available? They should find out how many vacancies there are first,' she says.
The association wrote to the Sure Start Unit in early March but has received no reply. The strongly-worded letter, which was also sent to local MPs, education secretary Charles Clarke and the local EYDCP, said that 'new subsidised provisions appear to be driven by targets rather than by need or demand'.
It pointed out that the birth rate has fallen by a third, many providers have vacancies, maintained sector nursery classes are not full and childminders have reported a drop in their numbers. The letter concluded, 'We know that the aim of the national standards was to create a level playing field for all providers, but unfortunately it is now more unequal financially than ever before.'
School rolls
The prospect of nine neighbourhood nurseries and up to 18 children's centres in the Stoke-on-Trent area has prompted the North Staffordshire Nursery Network to carry out a survey of its private sector membership to establish the scale of the crisis.
Co-chair Nick King says that numbers registered for September at his 54-place Dresden nursery are already down by a half as schools take in younger children to try to offset the effects of falling rolls.
He says, 'We'll survive this year, but when the neighbourhood nurseries and children's centres come fully on stream it will be very hard. How can the private sector be expected to cope with this massive increase in places when on average we are already running at 70 to 75 per cent occupancy?'
He says there is also evidence that families in disadvantaged areas are not taking up places at the Government-backed nurseries in sufficient numbers to ensure their viability after the three years of funding runs out and that the nurseries are encroaching even more directly on the market share of the private sector. His manager, who lives in a fairly affluent area, recently received a glossy brochure through the post extolling the benefits of a neighbourhood nursery.
Staff exodus
While private providers are struggling to hold on to their market share in the face of competition from Government-backed initiatives and schools, they are finding it increasingly difficult to stop Sure Start projects poaching their staff.
The Sure Start Blurton project, one of three due to open within a mile of Mr King's nursery, advertised the post of nursery manager last month at a salary between 20,500 and 22,000, well above local market rates.
Tracey Storey, head of personnel and training at Leapfrog, which is now part of Nord Anglia, says that the manager and deputy of one of its nurseries in the south-west left to join a Sure Start project and so far have persuaded eight of their former colleagues to follow them.
She says, 'I don't think it's professional or appropriate and certainly not helpful in providing consistency of care. If we tried to compete we would have to radically increase our prices, which is not viable.'
Yorkshire GP Dr Christopher North says that the Hillbrow Day Nursery, which he and five GP colleagues created six years ago in Barnsley, is now threatened by competition from neighbourhood nurseries. He has accused Barnsley Choices, the local early years partnership, and Barnsley Sure Start of breaching the terms under which neighbourhood nurseries funding is granted, by failing to consult existing childcare providers.
He says that while neighbourhood nurseries are proposing to charge around 25 a day - the same as his nursery - staff salaries are 40 per cent higher. Managers' posts are advertised at 18,582 to 21,282, compared with his own manager's salary of 15,000; deputy managers are 14,817 to 16,944 compared with 11,200 at Hillbrow, while nursery nurses are being offered 5.65 to 6.52 per hour compared with 4.75.
Linda Mills of the Laurels Day Nursery in Barnsley, where one member of staff has left for a Sure Start nursery, has worked out that she could get in around 250,000 a year in fees, but that if she paid her staff at Sure Start rates the nursery would be in the red to the tune of 7,500, without taking into account any other running expenses.
Consulting providers
The DfES says that local authorities, as part of 'their strategic role', are expected to 'consult with other local providers and inform them about other similar developments within a community that might have an impact on them'. A DfES spokeswoman adds that the Sure Start Unit 'has already begun discussions with some national private sector providers and local authorities about how the non-maintained sector can play a greater role in the children's centre agenda'.
Rosemary Murphy says that private providers may seek involvement with Sure Start projects, but only 'with difficulty, because there is no dialogue'.
Tracey Storey believes that Sure Start should approach existing private providers and purchase places for children from disadvantaged areas 'who might not normally get exposure to the types of environment we offer in our nurseries'.
It is the same idea suggested by the South Gloucestershire Private Nurseries Association in its protest letter. It stated, 'Vulnerable children's families could be supported by us through the local authority subsidising a small number of places in the private sector where vacancies already exist, thus providing cost-effective, good-quality care and education.'
By September the anguished cries from the private sector will be growing in volume. Rosemary Murphy fears that some will close while others will be forced to sell. A lot could hang on Margaret Hodge's speech to the Laing and Buisson conference.
Further information
* 'Childcare partners? The changing role of the private sector in delivering the National Childcare Strategy', Mayfair Conference Centre, London on Wednesday 8 September 2004, arranged by Laing and Buisson (395 plus 69.12 VAT, 020 7923 5348).