Q&A with Courteney Donaldson and Purnima Tanuku CBE, Executive Chair at NDNA

This is a transcript of the interview, which ties in with our Business Outlook 2025 report. 

Courteney: Hi, I’m Courteney Donaldson, Managing Director of Childcare & Education at Christie & Co. Today I’m joined by Purnima Tanuku, CBE and Executive Chair of the National Day Nurseries Association (NDNA).

Firstly, congratulations on being awarded your CBE and the New Year's Honours list. A fabulous accolade. It must've been such a wonderful surprise to learn.

Purnima: It was a complete shock because it wasn’t something I was expecting, but it was wonderful. I feel honoured and proud to represent such a wonderful sector, I think that's really what it's all about. I think the accolade is to everybody else who works so hard.

Courteney: And it's a year of change as well this year for you, because 20+ years as Chief Executive, there's been a transition in your role at NDNA. Would you like to tell us a little bit more about that?

Purnima: I can't believe I've been with NDNA for 20 years. Over that time, so much has changed. I think the organisation has grown. When I first joined, we never delivered any training, and we didn't have any e-learning or all these things that we've developed over the years. So, it's wonderful to have a great team of people who work behind the scenes in NDNA including our board people and the network chairs and all our trustees. So that's what really made us grow and expand our reach to support all our members.

Courteney: I think last year was quite a challenging year in terms of the expanded and extended rollout for early age entitlement provisions, still lobbying for business rates changes as well. I think notably, one of the most significant announcements for the sector last year, in the Budget, was the employer’s National Insurance contributions and the challenges around those.

What are you hearing from members on the ground about how they're going to be trying to step up to these challenges, particularly when finances are so tight and government funding is still under a lot of pressure in terms of other pressures that are on public purse strings?

Purnima: When we published our manifesto we had a number of us from the sector, and one of them was to really take a long look at the early education policy and look at not short-term fixes, but long-term vision and the strategy. of course, when the Budget was announced before the Budget was announced, we weren't really sure what was coming because the previous government already committed, in terms of the expansion programme, and how that is going to be changed how that's going to be delivered and what the funding is going to be. So that was a big kind of shock for everybody.

The NIC came as a real shock. DfE admitted that they weren't expecting this. So, although they claim that the funding rates actually include the increases in terms of cost of living and minimum wage and living wage, they do not include the NIC increases. So, we're talking about, on average, about a 4% increase for three and four-year-olds and slightly lower than that for two-year-olds.

And at a time when the costs for providers have gone up 15%, and that is the biggest, biggest issue and I think what’s also disappointing is business rates - the Chancellor has given business rates relief to other sectors like retail, and hospitality, a 40% reduction, but nurseries had absolutely nothing. So that was a really big disappointment. But at a time when the economic situation is really tough, yes, it's a slight increase, and yes, there are some positives, but we are trying to catch up with years of underfunding, chronic underfunding, which never kept pace with any increases. It’s like one step forward and ten steps backwards, and that's the kind of scenario that we are facing now.

Courteney: I think one of the positives, has been in terms of the earlier entitlement rollout, the increased demand from parents, but for providers, it's trying to balance that with increased demand from parents against the level of funding that's offered, particularly when NIC increases aren't reflected in the funding rates. Then obviously, most recently we've had the announcements around the supplementary guidance on the consumable charges, and I was quite intrigued to read that announcement, which was published just last week, whereby, from my memory, I'm sure it was DfE at an event in October last year, where DfE said, going forward, we acknowledge we'll be referring to the early years entitlement as ‘funded childcare provision’, and yet, part one of the new guidance released last week references free childcare.

Tell me more about these conversations you've been having with DfE, And the whole conversation around funding provision and free provision.

Purnima: I think we were really excited when the Minister's title changed to Minister of Early Education and Childcare, and also the word ‘free’ was taken out and the word ‘voluntary’ was taken out from the guidance. It's like almost like we're back to square one again because I think the issue here is a majority of providers are already following the guidance. They're already talking to parents, they make it very transparent in terms of what the challenges are. But, I think what the Government tried to do with this statutory guidance is stifle businesses because parents who know that their childcare bill is going to be reduced massively because of the funding, they are prepared to pay for the extra. So, the funding was never for meals, and activities and all the extras. Funding is for delivering early education and care and, of course, with the NIC we’re talking about, on average for a nursery, they have to find between £45,000 to £47,000. So, per member of staff, we're talking about over £2,500. Where are they going to find them?

So, when we carried out the survey, that we just published our survey and 96% of them said that their funding is not going to cover their costs, and also they're going to put up the fee of 10%. So, the unintended consequence of this guidance, again, of course, guidance has always been that charges are optional and voluntary, but now to say that this is what the guidance is going to be, it's completely voluntary and you can’t ask parents, but I think that the DfE communication is what really upset people because when you see DfE fee announcing that we are actually making childcare cheaper, and then Keir Starmer, earlier on when the Budget was announced, it was “rip off nurseries”. Words like that are not really what the sector expects for all the hard work that they do. Parents are not looking for cheap childcare. They're looking for high-quality early education and care where they can see their children thriving in wonderful surroundings and with qualified staff. That's what they want, they don't want cheap childcare. I think that that's something that kind of pitching it as that is not really something that the sector is going to be happy about.

Courteney: Over the past couple of years, NDNA has released your reports in terms of the high volume of closures, with over 415 nurseries, almost 20,000 early years places being lost in that two-year period. And also, there's a real nervousness that financial sustainability will come under further pressure in the year ahead.

What are you hearing from members in terms of how they are trying to encounter and balance the books so that they can remain open, because the Government is obviously trying to increase capacity and encourage parents to go back to work. A further 45,000 staff are going to be required to deliver the next entitlement extensions from September this year. So, how is NDNA supporting members to try and keep their heads above water, and what else can the Government do to support that?

Purnima: We've just launched a campaign just two weeks ago, I think the additional pressures that providers are facing now with all the cost increases - energy prices are still going up, and business rates are going up, and of course, all the other costs are increasing - yet, even though the Government increased some of the hourly rates, we're hearing the lowest increase of about 4.1%, from local authorities. But, again, every local authority is different. We already heard of two local authorities so far that are actually reducing their hourly rate compared to last year. As you know we've been carrying out Freedom of Information requests since 2018 - since then, the underfunding, that is the money that local authorities haven't spent on early education and childcare - is £365 million. That is £1 million a day since that FOI started.

Of course, they have some overspent as well, so what they're trying to do is make the budgets kind of work within local authorities. I think what was interesting is that there was a huge social media outcry about the statutory guidance. One thing really struck me, and one provider put it on social media, said that “my local authority is bankrupt and they are telling me how to run my business”, which is absolutely… because the government recently announced for 50 local authorities, like Birmingham, where they are really struggling with finance and they released millions of pounds. Of course, they're calling it a loan. But then if a private provider is making a loss, nobody's going to support them. They either have to close or go into bankruptcy, that is the only option that they have. So, I think these are the issues that providers are facing.

From April onwards, all these costs are going to go up, and that's when it will really hit them in terms of what that means to their business. Now, in terms of waiting lists, of course, people have got waiting lists until 2026/2027 because, from 9^th September, nine month olds will be able to access the funded hours, so parents want appropriate high-quality care for their children, but they may not be able to find it.

Courteney: The other consideration for the year ahead is the provision in schools. I think in the next few months we’re going to start to see where some of the grants have been allocated and where these new provisions in schools have been sort of set aside. Now there's been lots of discussion around childcare deserts and where the funds will be allocated to create new nursery provision. Are you hearing from members and the wider sector in terms of how those funds are being accessed and the partnership opportunity for nurseries to work with schools, has there been a good response to that?

Purnima: Well, the deadline for applications has finished and we still don't know how many schools have applied to set a provision. The 100 million the Government announced is to set up about 300 school-based provision. The criteria at the moment is that they have to demonstrate a need in that area, sufficiency assessments, and they'll have to work with the PVI providers locally. But, in practice, how that will translate is a bit of a worry. We're already looking at about seven or eight or so cases where we have to intervene with the local authority and the school, where they tried to set up a provision or apply for provision almost next door to a nursery, which means that nursery is going to go out of business. But, of course, I think the school-based provision issues are not just about having an empty classroom, you need to have, qualified staff.

You need to have the right environment and the right kind of equipment and everything. Also, the school-based provision is only 9am to 3pm, term time only in some cases. That's not what working parents need. Working parents need that flexibility from 9am to 5.30pm or 8.30am to 5.30pm, which the PVI providers are able to provide that.

So, I think schools may be really interested to apply for £150,000 of a grant, that sounds exciting. But, in the long- term, how are they going to maintain that provision? We've just heard in the news recently, that two local authorities have actually closed their school-based provision because they cannot fill the places. So, I think that's why they need to really look at it, it is very short-sighted to look at the kind of funding that's available now. They need to look at the long-term implications. But, most importantly, they need to work with the providers nearby. There are some really positive examples of that happening already. A number of people are already either delivering in a school or very near to the school. But, in some cases, like we heard the school said, “Right, thank you very much, you've done a good job so far, but we'll do that now.” So that's the kind of danger. In terms of the agreements and the contracts, all these needs to be looked at, and that's where we are advising our members as well.

Courteney: From a market perspective, there are lots of drivers that are fuelling interest and fuelling the appetite of groups to grow and gain market share. What positives do you see, what are the opportunities in this sector, and what do you think will be the standout features of positive points for this year ahead?

Purnima: In terms of the Budget, there are some positives. We have to acknowledge that, even though the increases are small increases, for example, for special education needs the hourly rate has gone up slightly and the earliest pupil premium has gone up slightly, although nowhere near the school people premium. So, there have been some steps, like when I said we are trying to play catch up, that's what's happening at the moment because EYPP – the Early Years Pupil Premium - we haven't had an increase for a long time and that's now being increased. On the workforce front, the DfE recently announced the kind of experience-based route for people who can be counted in the ratios that will help some of the workforce pressures and also the new teacher-led qualification for the apprenticeship, that would help as well. But all this needs investment from providers and investment from the Government. And, of course, what was happening now is in our survey when we asked them, how are you going to deal with the increased cost issue? They said, right, increasing fee 10% -that was the response. Also, they're going to cut down on other things like resources for example, staff training and materials for their nurseries. Of course, most importantly they can't cut on the staffing because they need to keep within ratios. So, that's the kind of dilemma that the providers are facing at the moment. So, yes, there are some positives, but the negatives at the moment are outweighing the positives. I think the Government wants to move quickly and fast, but that investment needs to go with it rather than just tinkering with some of the quick fixes. So I think the long-term vision is absolutely crucial to where they want to be within the next three years within the current Government, period. Also, how are they going to make it not only affordable for parents but make sure that the sector is sustainable to deliver that high-quality? So that's the big dilemma at the moment.

Courteney: In terms of trying to raise some extra funds or mitigate some overheads, I am mindful of business rates in England. Obviously, we're in a different position compared to Wales and Scotland. What are your thoughts, Purnima? Are we going to finally have some sort of sensible approach from government on business rates to create extra capital for providers?

Purnima: I hope so. This is a fight that we never going to give up, and I've said this for the last 20 years and we won that fight in Scotland and Wales. Wales recently announced that it used to be a three-year review, but now they announced they've abolished business rates for early years providers permanently, which is brilliant news. They also announced the funding rate to be £6.40 per hour which is very positive because sustainability issues in Wales are very, very acute. In Scotland, we got the business rates relief as well. So, I think, in England we were hoping at least we'll see a percentage of relief. But that didn't happen. But I think that's something that they really need to look at because, from September onwards, 80% of the funded places will be funded by the Government. So, the room to manoeuvre for providers in terms of their business is going to be very, very limited. If they want to see this as part of mainstream education, then this needs to be addressed because schools and school-based provisions now, won't be paying business rates because they're already covered. The NIC is also covered. So, whereas for the PVI sector, they will have to find that money.

During the campaign, I was visiting nurseries, all NDNA staff have been out and about visiting nurseries, and the first thing we hear is actually “I need to find x thousand pounds.” I need to find the bigger the nurseries, the more staff there are and, of course, the cost of NIC is going to really hit them. So, I think, again, in Scotland, a number of organisations will be part of that. We actually wrote to the Chancellor asking for a relief on NIC because that's something that, across the UK, everybody has to find that money. The only way they're going to find that money is to increase the fees or limit the number of places. Now, that goes against the Government policy in terms of supporting working parents. So that's really something that they need to look at very seriously indeed.

Courteney: Looking ahead to this summer, NDNA’s annual conference this year will be hosted in the city of Liverpool. Fabulous location for this year, and it's great to see being represented in the North after a number of years at Coventry. So, I think the conference and the awards are a great way in terms of celebrating the success and everyone's contribution in the sector. So, tell me about this year's conference and what speakers have you got lined up, and what are you looking forward to first and like?

Purnima: Absolutely. The conference is the real highlight for our members because there's so much going on at the moment and sometimes they want to just be out there with fellow providers and friends and be out there and not only just kind of take it all in, but network with people. But, most importantly, enjoy the awards as well. Bookings are going really fast. We got the Minister who's agreed to come and speak, we've got Ofsted and we've got a wonderful lineup of speakers, which will be brilliant. So, we're all looking forward to it and all the exhibition stands, I believe, are all booked up already. So, the team are already working really hard to be able to make that event so special for all our members as well. So, we're looking forward to that. And, this year we've invested a great deal in how we can enhance support to our members and the Maths Champion programme, for example, has been a huge success. We've now expanded and extended that to 800 practitioners. That's going extremely well. The Childcare Works programme, where we recruit people to be able to train them and put them back into nurseries to support the workforce. That's going really well in England as well because that's been very successful in Wales and of course, we launched the Institute of Early Years Education last year. That's really to raise the profile and the status of the workforce, that's something that we've invested to really support the sector. So, we're constantly looking at how we can enhance our support, not only in terms of lobbying on the policy issues across the UK but also in terms of their business costs and how we can help and support them with legal help and all the other support.

Courteney: Well, Purnima, thank you so much for joining us today. It's been great to catch up with you once again and gain insights from your perspective and the perspective of NDNA members as well. So, an interesting year ahead. We're looking forward to the conference, and I very much wish you all the best in your new role and your transition role from Chief Executive. I hope you have a wonderful year ahead. Thank you for your time and your contributions.

Purnima: Thank you very much, Courteney, for asking me again to come and do this. I think there are lots of challenges for the sector, as always, but we're here to support them, to help them, but also to acknowledge the wonderful work that they do, and it is something that we want to shout all the time. So, thank you very much for asking me to do this and pleasure.

To watch the full video interview, click here.