NDNA Cymru said that because of this parents were having to move their child between different settings to access the Foundation Phase, disrupting continuity of care.
A child might start the day with their grandparents, go for a two-hour session at a nursery school and then spend the rest of the day at a private or voluntary nursery.
Sixty-four per cent of nurseries that are not delivering Foundation Phase places had chosen not to take part in the scheme, while 36 per cent had applied to deliver places but been turned down by their local authority.
Reasons given for not offering the places include, ‘Funding for three-and four-year-olds is not an option in our area. We as a nursery and parents are not given the funding or option to choose.’
Another nursery owner said, ‘The fees paid would place an increased strain on meeting costs that are only half our private rates.’
The mean hourly rate nurseries receive for the Foundation Phase is £3.31 an hour.
Eight in ten nurseries said the rate does not cover their costs.
Of those nurseries that do offer part-time places, more than eight in ten reported making losses on average of £500 per child a year.
The Business Performance Survey also found that occupancy levels are dropping, with an average occupancy level of 69 per cent.
The results of the membership survey by NDNA Cymru, taken in May and June, show that just 38 per cent of nursery businesses in Wales will make any profit this year and suggest that a significant proportion of nurseries will be operating at a loss.
The NDNA warned that this was a concern for the long-term sustainability and availability of childcare in Wales.
Low occupancy levels are borne out by changing patterns to the way that parents use nurseries.
More than half of the nurseries surveyed have seen parents delaying sending their child to nursery until a later age.
More than eight in ten nurseries said there were more part-time children and nearly seven in ten said that parents have also cut back on the number of hours children are in formal childcare, relying more on family and friends.
Four in ten settings said that parental debt had increased or increased significantly in the past year.
A decline in occupancy has also impacted on staffing levels, with five per cent of nurseries reporting making redundancies and 38 per cent of nurseries reducing staff hours in the past six months.
Purnima Tanuku, chief executive of the NDNA, said, ‘Due to nearly half of nurseries not being involved in the delivery of Foundation Phase places, NDNA Cymru has heard of instances where children are transferred between several childcare settings in a day. This lack of continuity is disruptive for children.’
She added, ‘Local authorities must support nurseries to deliver the Foundation Phase and hourly rates must cover costs. To secure the involvement and long-term sustainability of nurseries in these programmes, local authorities must ensure providers are funded at a viable level. Parents should have the right to choose where their child accesses their Foundation Phase entitlement to minimise disruption and support families with the continuity of care for children in their early years.’