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Funding crisis looms for nurseries

Private nurseries could lose up to pound;100,000 a year because of changes to the way childcare places are funded, according to a charity.

The National Day Nurseries Association, which represents 2,300 nurseries, said that the changes could lead to hundreds having to close, because of the reforms spelt out in the Government's childcare Bill.

In the past, many of the 11,500 private nurseries in the UK have charged parents "top-up" fees to make up for the shortfall from funding provided by their local authority.

However, under a new code of practice published in April, these fees are banned and all means-tested council places must be free at the "point of delivery", forcing private nurseries to bridge funding gaps themselves.

The association's report revealed that one nursery in Bradford, West Yorkshire, receives just pound;8.40 per child from the local council for a two-and-a-half hour session which costs the nursery pound;14.50.

Another nursery in County Durham, with 84 children which employs several fully-qualified teachers, faces losses of pound;100,000 next year because of the shortfall.

Purnima Tanuku, chief executive of the charity, said: "It is a huge threat to nurseries. They are faced with a huge dilemma: they either continue to absorb the costs and risk bankruptcy or stop accepting local-authority-funded places and ask parents to pay the whole charge themselves, which means many parents will look elsewhere." It has called on the Department for Education and Skills to suspend the new code and carry out an investigation into the true cost of childcare.

The Montessori Schools Association, which represents nearly 700 early-years schools, said at least one had already closed because of the changes and others may follow.

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