Many private providers secured capital and revenue funding under the Government's Neighbourhood Nurseries Initiative (NNI) to create childcare places in disadvantaged areas.
With the initiative now completed and the remaining neighbourhood nurseries due to open this year, Early Years Development and Childcare Partnership (EYDCP) business support officers continue to advise providers on how to create viable operations, but have to tell them that funding options have been reduced and those that remain often have complicated strings attached.
Bolton EYDCP was instrumental in setting up 12 neighbourhood nurseries, including five privately-owned facilities (see box). But business support officer Paul Whitney says, 'Now NNI money is no longer there it is quite a shock. We still get phone calls asking about funds, but there is nothing like it on the horizon. We have got small amounts of money for things like sustainability, but it's not going to help somebody build a nursery in the way NNI did.'
His counterpart in Brighton, Jane Painter, agrees, 'funding doors have been closed' and the EYDCP role in helping private providers is now limited to advising them on where they can get business sponsorship and setting fees in line with the childcare element of the working tax credit (see box).
Finding funds
A detailed list of funding sources appears in the A to Z to Finding Funds, a directory of funding for early years education and childcare produced by the Sure Start Unit and Daycare Trust.
Many of the 24 fund sources mentioned are targeted at areas of disadvantage and, in the case of European funds, are linked to strict monitoring criteria. Quarterly returns of income and expenditure and evidence of childcare places and job opportunities created must be submitted.
Early years consultant Nathan Archer says the directory was a useful source for accessing funds when he worked as a business support officer for North East Lincolnshire EYDCP. He bid for money from the Single Regeneration Budget (SRB)and then matched it with cash from the European Regional Development Fund (ERDF). 'We wanted to take the burden of monitoring away from individual providers and then create a simpler application process so they could bid to the EYDCP for funding.'
Nurseries made best use of these funding arrangements and applications came from single-site providers outside disadvantaged areas. He says, 'We had applications ranging from ramps for disability access to the equivalent of a whole pre-school room.'
He adds that while prohibitive conditions make applications to the European Social Fund a daunting prospect, networks of private nurseries could club together to facilitate an ERDF bid. He also believes that 'local authorities should be more proactive in approaching nurseries to offer help in seeking funds'.
Business acumen
Sylvia Archer, director of the Children's House in Stallingborough, Lincolnshire, which accessed a patchwork of funds from the Countryside Agency, the SRB and the ERDF to support its neighbourhood nursery, says private providers need business acumen and local authority support.
Funding complexities were underlined in a recent report into childcare in Brighton. It revealed that 83 per cent of providers regarded fees from parents as the main source of funds, with 39 per cent indicating reliance on the nursery education grant. 'No childcare providers received a major financial contribution from the SRB, regional development agencies or European funding,' said the report, which was produced by the local council, EYDCP and Unison.
A joint report into the sustainability of childcare in London, by Greater London Enterprise and Daycare Trust, highlights the complexity of funding streams as 'particularly difficult to manage for small, independent providers'. It adds, 'The constant chasing of funds is a drain on limited staff resources, and uncertainty produces anxiety among staff, affecting morale, quality of care and staff retention.'
The report revealed that one nursery closes for every four that open and one-third of London EYDCP business support officers 'identified additional funding and financial support as the one key change that would improve childcare sustainability'.
Financial difficulties
Sure Start guidance for 2004-2006 confirms that from April any early years or childcare provider facing short- to medium-term financial difficulties can apply for sustainability funding from their local authority. A DfES spokesman says, 'They may be asked for an income and expenditure account and a viability plan to ensure the provision will be self- sustaining as sustainability funding cannot be paid long term.'
Stephen Burke, Daycare Trust director, says the debate around how childcare is to be made affordable and sustainable is 'coming to the crunch' and must raise the need for ongoing revenue funding which is not time-limited, a recommendation made by the Commons Select Committee on Work and Pensions.
As the Brighton report noted, private providers place a considerable reliance on the nursery education grant, which pays around 416 a child per 11-week term. It is supposed to be a guaranteed minimum entitlement for all three- and four-year-olds, but as Rosemary Murphy, National Day Nurseries Association chief executive, notes it is no longer ring-fenced and local authorities are implementing cuts.
The Department for Education and Skills (DfES) says that capital funding is available to private providers operating pre-school or playgroups for two-and-a-half hours a day who are willing to extend to full daycare of four hours or more.
Children's centres
By far the largest investment will go into the creation of children's centres. The DfES confirms that most of them will develop from existing Sure Start programmes, neighbourhood nurseries and early excellence centres, but local authorities have been asked to 'consider all the options in the maintained, voluntary and private sectors'. This has been done by North Tyneside EYDCP where a bid for six children's centres will have private provider involvement.
Meanwhile, regional development agency One North East is conducting a childcare survey which could pave the way for more funding support at local level. Senior strategy executive Oscar Watson says that it will look at provision, including unregulated childcare, sustainability and cost.
While private nurseries no longer have access to substantial capital and funding, the most pressing concern is the sustainability of existing nurseries. Ms Murphy says, 'The best way of supporting the business model is to ensure that childcare is affordable and parents are getting the support they need.'
However, as Mr Burke warns, 'Lots of families are not getting enough help and it's very difficult to organise provision on the basis of tax credits.'
Funding information
* A to Z to Finding Funds, a directory of funding for early years education and childcare can be found at: www.surestart.gov.uk/ surestartservices/funding.
* Business Link provides advice and services to small firms. It can help draw up a business plan or cash-flow forecast, www.business link.gov.uk.
* The Sure Start Unit has regional advisers based in Government offices for the regions who can help develop funding strategies.
* The New Opportunities Fund website, www.nof.org.uk, has information on tackling funding.
* Regional Development Agencies have information on local strategies.
Case studies: drumming up support
When Mai Kilburn went to Bolton EYDCP to discuss the height of children's toilets for her proposed new nursery, she was stunned to discover that she could apply for around 300,000 NNI grant aid.
'My jaw dropped when I heard the sums of money involved. I had just a week to do the business plan and complete all the forms,' she says.
She now runs the 60-place Hocus Pocus nursery with her mother and brother, having obtained a 94,000 capital grant and three years of revenue funding totalling around 216,000. Bolton Council gave them 1,200 for equipment and the EYDCP provided the nursery with a percussion kit.
Lynn Hoare says that she would have 'gone under' without financial backing for eight neighbourhood nursery places at the Pet's Corner nursery, Brighton. She says opening a new nursery in the area would now be impossible because of soaring property values, insufficient funding sources and the mound of bureaucracy associated with obtaining any financial support.