Transparency demanded over childcare subsidy allocations

Government plans in the Childcare Bill to enable local authorities to subsidise childcare could end up causing “more harm than good” and lead to a reduction in the number of available childcare places, business leaders have warned.

Under the proposed duty on local authorities to ensure sufficient childcare in their area, councils could decide to subsidise childcare provision for certain groups of children and families. However in a report published this week, business pressure group CBI argues that unless these subsidies are made on a fair and transparent basis childcare providers could start to leave the market.

The CBI insists that lack of fair competition in the childcare sector means that services offered by private, voluntary and independent providers are becoming increasingly unsustainable. The government has already accepted that turnover and closure rates for childcare providers are high in comparison with other small businesses – although 626,000 new childcare places were created in England between 1999 and 2003, almost half as many closed over the same period.

The organisation argues that until the government takes a lead on developing the childcare market and creating a level playing field, children and parents will continue to miss out. It believes assessments of the impact on local childcare markets should be carried out before decisions are made on the scale and scope of any subsidies. 

Backing the CBI’s report, National Day Nurseries Association chief executive Purnima Tanuku said: “The duplication of childcare places and the lack of a partnership approach from some local authorities in the creation of children’s centres is endangering many day nurseries in the private and voluntary sectors.”

However, 4Children chief executive Anne Longfield insisted the Childcare Bill both recognised the role of the private and voluntary sector and called for the local authority to be considered as the last resort. “What needs to be highlighted at this point is the need for continued investment by government to provide childcare provision for all parents who need it,” she said.