The Federation of Small Businesses (FSB), which has 1,200 members who own day nurseries, carried out a survey to assess the impact of the Government's Code of Practice for nursery education for three- and four-year-olds.
A parallel survey carried out with local authorities also revealed that many are ignoring the Government's insistence that nurseries should not charge any top-up fees and that the 12.5 hours a week entitlement should be free at the point of delivery.
Colin Willman, FSB chairman of education and training, told Nursery World that he knew of some local authorities that were breaching the guidelines and advising nurseries on how to invoice parents to charge for additional services during the 12.5-hour entitlement.
Based on responses from 247 nursery owners around England, the FSB is calling for the DCSF to carry out an urgent review of the Code, because not a single respondent believed the Code should stay in its current form.
The FSB heard from nurseries in more than 40 local authorities, which it said showed that the problem was now nationwide. They included Liverpool, Sheffield, Oxfordshire, Hampshire, North Tyneside, Kent, Cheshire, Leicestershire, Sussex, Suffolk, Birmingham and the London boroughs of Richmond and Greenwich.
The survey found the average nursery receives £3.64 per hour per child from the local authority to provide the NEG.
When asked what they would charge if they were able to, nurseries said they would charge an average of £4.70 per hour, even though the average cost to the business of providing the free early years entitlement is £4.69 per hour - leaving them with a profit of just 1p.
This showed that nursery owners are driven by a desire to run sustainable businesses rather than to make a profit, the FSB said.
Mr Willman warned that the Code of Practice had brought many nurseries to breaking point and that many of them were considering withdrawing from offering grant-funded places.
He said that January was the 'crunch month' for many nurseries, because they need to give parents a term's notice if they wish to withdraw from the Government-funded scheme, and many do not want to go into the next financial year in April facing more losses.
'If parents prefer not to send a child to a state-run nursery, the cost is going to be higher, because nurseries will be forced to pull out of the grant and charge commercial rates.'
COMMENTS BY NURSERY OWNERS SURVEYED
- 'The Government's vision to improve services for children, young people and their families to improve the outcomes for children ... cannot be achieved for £3.50 per hour - it is a slap in the face for those who work so hard and give so much.'
- 'The Government is trying to use us to pay for their policies.The stress this puts us under is intolerable.'
- 'I am considering strategies, where I will not take any three-year- olds or over. The Government should stop before a significant proportion of the sector opt out and there is no free entitlement.'