Early Years Education Funding

Wednesday 21st July 2021 Westminster Hall

11:00

[Yvonne Fovargue (in the Chair)]

Hon. Members will be aware that social distancing is no longer in operation, but I remind them that Mr Speaker has encouraged us to wear masks. Please clean your spaces before you use them and before you leave the room.

[Wera Hobhouse (Bath) (LD)]

I beg to move,

That this House has considered early years education funding.

It is a pleasure to serve with you in the Chair, Ms Fovargue.

I begin by saying a big thank you to early years providers for their efforts during the pandemic. Early years leaders and staff have risen to every challenge that the past year and a half has thrown at them. Time and again, they have put their health at risk to ensure that children are cared for and educated. They have truly put the needs of our children first. Each and every one of them, in Bath and throughout the country, deserves not only our thanks but our commitment to addressing the serious shortfall in early years funding.

I am delighted to have secured the debate, and I very much hope that the Minister will take on board the sector’s concerns. All the evidence points to the immense value of early years settings. They are about not only childcare—of course, that is extremely important—but education. The first five years of a child’s life are the most critical in shaping their development. Getting that right gives children the greatest chance of reaching their potential—a greater chance than is given by any other stage of their life.

Early years settings also provide long-term benefits for our economy. They remove barriers to employment and training, particularly for women, and help to close the attainment gap between children from low-income families and their more advantaged peers. Research shows that 40% of the gap in attainment outcomes is evident by the age of five.

Throughout the pandemic, I have been in regular contact with early years providers in my constituency. Far too often, they have felt like an afterthought. I pay tribute to First Steps Bath, which does excellent work in our local community to narrow the attainment gap.

Early years leaders are working hard to ensure that they can provide high-quality care and education. They are up to that challenge, but they need support from the Government. Their message to the Minister today is, “Acknowledge the value of early years education and pay what it costs to deliver it.”

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on initiating the debate. What she has referred to is replicated in my constituency of Strangford. In the past year, the pandemic has highlighted the issue, with many small children being looked after by private babysitters or family members, so I echo and support the hon. Lady’s request for further funding. Does she agree that there is certainly a need for that funding to ensure that adequate childcare and further opportunities for education are in place at a very critical time?

[Wera Hobhouse]

Absolutely—I think everybody in the room is agreed. We have all acknowledged that getting the early years right is right for the child, but is also right for us all, so the issue is to get the balance right. The Government are committed to levelling up, and this issue is part of that levelling-up agenda. It is not just about capital infrastructure projects; it is about getting the long-term funding to address our social inequalities.

Funding continues to be a widespread concern. The survey conducted by the Petitions Committee found that 72% of parents expect that the pandemic will have a major or moderate effect on their settings’ long-term financial sustainability. To this day, not enough progress has been made on delivering educational recovery resources. The majority of support that has already been announced has focused on school learning, and the Government continue to miss a crucial group of learners in early years. What has been the impact of that oversight? A recently published report by the National Day Nurseries Association reveals that nursery closures have increased by 35% in the past financial year, which affects more than 11,000 children’s places. What is more, the highest number of closures happen in the most deprived communities. High-quality early education is by far the single biggest factor in reducing the attainment gap and inequality.

My plea, again, is for the Government to look at levelling up the long-term funding stream for education for the more deprived communities in our country. They must make that an urgent priority, but the shortfall in early years funding existed long before the pandemic. Covid has simply widened the gap between the funding and what it costs to deliver. It has placed even more strain on an already fragile sector. Most providers say that they realistically need more than £6 an hour per child just to break even, let alone to reinvest in their business, and the funding rates simply do not match that. According to YMCA research, 80% of childcare settings cannot deliver childcare at the funding rate provided by their local authority.

In Bath and North East Somerset, our local council receives £5.59 an hour for two-year-olds. For children aged three or above, it receives just £4.48. Far too many settings are choosing between operating at a loss and subsidising the cost of delivery through feepaying families. In the private community, the majority of families access only funded childcare places, so that gap cannot be made up by feepaying families. All too often, there is no choice but for the providers to operate at a loss.

The other key funding challenge facing the early years sector relates to staff. Staffing is one of the biggest expenses that a childcare provider has, and amounts to about 70% of costs. Headteachers in my constituency have shared their concerns about staff retention rates. It is of course right that early years providers are able to pay their staff a proper wage, but they are struggling. Early years leaders are doing their best to acknowledge the efforts of their staff and give pay rises, but funding is not increasing at the same rate as the national living wage. During the past decade, there has been a long-term decrease in the number of people wanting to work in the early years sector. The cost of living in or commuting to Bath is making it more and more difficult for early years staff to work on low wages. More recently, the lack of vaccine priority for childcare staff has left many feeling overlooked and under-appreciated, which is such a shame.

Research from the National Day Nurseries Association suggests that the early years workforce has shrunk again by 2%. It is still making use of the coronavirus job retention scheme, as demand for places has not yet recovered. When it came to recruiting, 90% said that hiring level 3 qualified staff was difficult or very difficult. Even at apprentice level, 52% reported the same challenges.

When I spoke to an early years provider in my constituency earlier this year, I was told:

“Sadly, I feel that the Government do not value early years staff and do not see our professionalism and dedication to our role.”

It cannot be right that that dedicated workforce exists on minimum income while parents have to pay some of the highest childcare costs in Europe. Providers are not making money, and many of them are being forced to close. All that will make childcare more expensive and will create more employment barriers for parents, particularly mothers, and those from the most disadvantaged communities will be the worst affected.

There needs to be a total rethink of early years funding. The recent publication of the much-delayed freedom of information request from the Early Years Alliance confirmed that the Department for Education already knew that funding rates were insufficient. The result has been financial hardship for many providers and increased costs for parents. I hope the Minister will outline in her response what plans the Government have to correct that. I hope she will also outline the assessment she has made of the disproportionate impact on providers working in deprived communities.

The Government say that they understand parents’ concerns about the cost of childcare. I hope, then, that the Government will prioritise the early years sector for investment in the upcoming comprehensive spending review. It is absolutely essential that funding rates meet the costs of delivering high-quality education and care. The Government should go further, however. Will the Minister commit to a catch-up premium of £2,964 per child per year under the 30 hours entitlement? The early years sector has a vital role to play in meeting the needs of our children and supporting parents back into work. The Department must do all that it can to help them in that role.

Early years leaders in my constituency need to plan for the coming years, so they need certainty. Will the Minister commit to a meaningful review of early years funding that includes a multi-year funding settlement? Such a review should look to simplify the funding system so that the uptake of Government-funded places improves and funding follows the child. The review should also ensure that all allocations of early years funding consider the needs of children with special educational needs and disabilities across all settings.

Finally, the review should set out a clear vision for the early years and childcare workforce, which has so consistently put our children’s needs first throughout the pandemic. The review must reiterate the importance of achieving well-qualified, high-status and better-rewarded professionals. A review of that kind has broad cross-party support. It is also supported by the all-party parliamentary group for childcare and early education. I am pleased to see that the chair of that APPG, the hon. Member for Winchester (Steve Brine), is here to comment.

Early year settings and their staff are vital parts of our national infrastructure. They will play a pivotal role in our covid recovery, supporting parents back into work. They will help each child reach their full potential in the critical first five years of development.

11:12

[Steve Brine (Winchester) (Con)]

I thank the hon. Member for Bath (Wera Hobhouse) for allowing me to make a contribution.

I am speaking with two hats on today. First, as a Conservative MP, I am of course very proud of the work that the Government have done to support young families through the 30 hours entitlement. It is a landmark commitment and one that I fully support, but it has had some unintended consequences.

Secondly, I am chair of the all-party parliamentary group for childcare and early education, as the hon. Lady said. We represent the private, voluntary and independent nurseries that make up the vast majority of the early years sector. I am also a member of the all-party parliamentary group on nursery schools, nursery and reception classes, so I know that maintained nurseries, which are often overlooked in such debates, are also important.

The Minister will rightly highlight that the Government have put in place a significant package for parents and early years educators. Despite that, there are still significant funding shortfalls. Early Years Alliance data shows that there is a gap of £2.60 per child per hour for every 30-hours place. That is just under £3,000 per child per year. So our all-party parliamentary group is calling on the Treasury and the Department for Education to fully fund all 30-hours places. I repeat the call for the catch-up premium for the early years sector in the comprehensive spending review. There is a chance, when we do that, to address wider issues in the early years funding system.

The hon. Member for Bath mentioned the NDNA FOI request on the underspends in local authorities. We think that that totals around £62 million, which shows that money is not getting to where it is most needed. Tens of millions of pounds could fund the 30-hours places for 20,000 children under our proposed catch-up premium. The Treasury and the Department need to look into that underspend and pull it back. That is why we are asking for the meaningful review of early years funding, which would include a multi-year funding settlement to allow providers some certainty to allow them to plan over the coming years.

More funding for the sector would, of course, be welcome but we cannot pour water into broken plumbing. The failings of the system are already being felt. I repeat the point that 35% of nurseries closed between April 2020 and March 2021—an increase of 35%. They are coming out of the sector. It is a worry. I am proud of the work that we have done on the 30 hours. As we emerge from the pandemic, we need our early years sector—our fourth emergency service—more than ever.

The lockdown by stealth courtesy of the “ping” must end for us all—apparently, it will end on 16 August—but it must certainly end by exception for the early years sector, which, once again, feels that it is being left out. I know that the Government have suggested that they will not produce a list but will deal with it on a case-by-case basis, and today is an opportunity for the Government to deal with early years on that basis. I look forward very much to hearing from the Minister, as she has plenty of time to speak.

11:15

[The Parliamentary Under-Secretary of State for Education (Gillian Keegan)]

It is a pleasure to serve under your chairmanship, Ms Fovargue. I congratulate the hon. Member for Bath (Wera Hobhouse) on securing this debate. I am grateful for the opportunity to discuss this important topic, and it is great to be joined by the chair of the APPG on childcare and early education, my hon. Friend the Member for Winchester (Steve Brine).

Nurseries, childminders, teachers and parents have continued to support and educate our youngest children, providing crucial support throughout the pandemic. I would like to put on record our continued appreciation for their hard work. Taking a lead from my hon. Friend, I would also like to put on record our thanks to maintained nurseries in particular. I am a regular visitor to Chichester maintained nursery, which does a fantastic job, and I place on record my thanks to Ruth Campbell and the team at Chichester maintained nursery.

The early years experience is, as Members have said, a vital part of a child’s education, developing the cognitive, social and emotional skills that set them up for life. Evidence shows that high-quality childcare supports children’s development, prepares children for school and, of course, allows parents to balance work and family life. We are doing more than any previous Government to ensure that as many families as possible can access high-quality, affordable childcare. Some 96% of childcare settings in England are now rated “good” or “outstanding” by Ofsted. In 2019, 71.8% of children achieved a good level of development at the end of the early years foundation stage profile. That is where children have met the expected level across a wide range of learning areas, and compares to 51.7% in 2013—quite a remarkable achievement.

The Government invest heavily in high-quality early education. That includes the universal 15 hours of childcare for all three and four-year-olds, plus the additional 15 hours for working parents of three and four-year-olds. That was introduced in 2017 under a Conservative Government. The 15-hour early education entitlement for disadvantaged two-year-olds helps to improve the educational outcomes of disadvantaged children, to give them the best start in life. In fact, we have spent over £3.5 billion a year in each of the past three years on our early education entitlements, and we continue to support families with their childcare costs.

At the spending review last year, the Chancellor announced an extra £44 million for 2021-22, so that local authorities can increase hourly rates paid to childcare providers for the Government’s free childcare entitlement offers. At the same time, we increased the minimum funding floor, meaning that no council can receive less than £4.44 per hour for the three and four-year-old entitlements. To maximise the amount of funding reaching the frontline, we require local authorities to pass on to early years providers at least 95% of the Government funding for three and four-year-olds.

Further, we are varying our approach to funding the early years sector over this financial year to give local authorities and providers better certainty about their funding income. For the spring term 2021, we provided top-up funding for authorities that could demonstrate rising demand for free early education entitlements. For the next three terms, we will fund each authority based on attendance data they provide to us for each term. That will ensure that our funding aligns with attendance, which should provide very welcome reassurance for providers that funding for the entitlements will be commensurate with up-to-date data. The last 18 months have been particularly difficult. Nurseries, carers and parents have demonstrated a heroic effort in supporting the youngest members of our society. That is why we have provided significant support to the early years sector throughout the covid-19 pandemic.

Early years settings have had access to a range of business support packages during the pandemic, including the coronavirus job retention scheme, which is now extended to the end of September 2021. As long as their staff meet the criteria for the scheme, early years providers are still able to furlough them if they experience a drop in income. Findings from the childcare and early years provider and coronavirus survey have shown that in November and December 2020, 74% of the group-based providers had made use of the coronavirus job retention scheme at some point.

Eligible nurseries may also have qualified for business rates discounts to help reduce their bills. Eligible nurseries could get 100% off in the first three months of the 2021-22 tax year, with 66% off for the rest of that tax year. From 6 April, eligible nurseries have been able to access our new recovery loans, which were set out by the Chancellor on 3 March. Those help with access to loans and other types of finance, so that nurseries can recover from the pandemic. There has also been help for childminders, who are usually self-employed. The self-employment income support scheme has also been extended until the end of September 2021.

Our support for the sector goes wider than that. We are reforming our technical education. In September 2020 we introduced new T-levels, which are designed by industry experts and employers to bridge the gap between what they need and what young people can offer them. I am delighted that we have our first cohort of around 650 students now studying the T-level in education and childcare, which includes a large work placement. I thank the sector for its support for T-levels, which will provide a much-needed skills pipeline. Our investment in T-levels will benefit the early years sector.

[Wera Hobhouse]

Does the Minister not recognise that, however good the training is—and of course good, qualified staff are absolutely what our children need and our parents want—the qualification itself is not what brings staff into the sector? They must actually get wages so that they can pay their own bills. Unless we pay them more, we will not get staff into the sector, however good the training and qualifications are.

[Gillian Keegan]

Of course there is a relationship between pay and the work, work-life balance and type of job, but the sector still attracts a lot of young people. There is a lot of demand. In fact, the T-level in education and childcare is the biggest of the three T-levels that we have launched. There is the most demand for it.

In June, we announced £153 million of funding for training for early years staff to support our very youngest children’s learning and development, as part of a wider recovery package. In response to the pandemic, we announced £27 million to support children’s early language development, £17 million of which is to deliver the Nuffield early language intervention, or NELI, which is making a real, positive difference in schools up and down the country.

The Under-Secretary of State for Education, my hon. Friend the Member for Chelmsford (Vicky Ford), recently visited All Saints’ Church of England Primary School in Merton and spoke to staff delivering the NELI programme about the children’s increased confidence with language and communication. That excellent programme is proven to give children the equivalent of around three months of additional progress. Some 40% of primary schools have already signed up, helping 60,000 children in this academic year.

Funding of £10 million will support language development for pre-reception children in the next academic year. Children in reception year will also benefit from the Government’s £650 million catch-up premium for schools, which will ensure that they are supported to make up for any lost teaching time.

Thanks to the financial support provided by the Government, and the hard work of settings to remain open since June 2020, I am pleased to report that we have not seen or heard of a significant number of parents being unable to access the childcare that they need. In fact, the number of places available to parents seeking childcare has remained broadly stable since August 2015. The majority of eligible two, three and four-year-olds have continued to access free childcare, despite the challenges of the pandemic.

Since 2013, more than 1 million two-year-olds who otherwise might not have received any early education have benefited from the childcare entitlement. Ofsted data published on 30 June shows that there were 72,000 childcare providers registered with them on 31 March 2021—a dip of 4%, or 3,300, since 31 August 2020. The data shows that the dip is largely driven by a fall in childminders, not nurseries.

Numbers of childcare settings on non-domestic premises are fairly stable over time, with a drop of just 1% since 31 August 2015 and a decrease of 2%, which is 400, between 31 August 2020 and March 2021. As Members would expect, the Department continues to work with the early years sector to understand how it can best be supported to ensure that sufficient safe, appropriate and affordable childcare is available to all those families who need it now and in the longer term.

I welcome the interest of the hon. Member for Strangford (Jim Shannon), who has now left his place, and all hon. Members who joined this important debate. All the information and data that we collect is valuable because the Government obviously have to consider that in the forthcoming spending review.

[Steve Brine]

The Minister is coming to the end of her remarks. I quite like the point she made about there being places in the system and people being able to access those places, but they have been able to access them at great inconvenience to themselves. When Kings Worthy Pre-School in my constituency closes later this year, if indeed it does, people will access other places, but people who cannot drive will do so at huge expense and great personal cost. That is the issue: as suppliers come out of the system, it creates problems for parents. That is why we need a meaningful policy review.

[Gillian Keegan]

Of course, this is in the private sector. Places come in, there are mergers and acquisitions, businesses develop and businesses also exit the market. In fact, there were 3,929 settings left, but 2,108 new companies joined the market, providing 1.7 million places, so there is some volatility in the market. Clearly, if there is enough demand—that will obviously change over time, and demographics have an impact on that as well—the most important thing is to make sure that local authorities and parents can access childcare, and that there are sufficient places in the system. That churn will continue, because it is impacted by demographics, and obviously children move around the country.

I thank the hon. Member for Bath for scheduling this debate and for giving us the opportunity to discuss this vital issue, ahead of the spending review; it was very well timed. I hope she is reassured that the Government have the interests of children at the heart of our decision making. We are supporting our incredibly hard-working early years sector, and we appreciate it. It has risen so spectacularly to the extraordinary challenge presented by covid-19. We always look to continue to work with the sector to make sure that it continues to provide that fantastic service to families, parents and children across the country.

Question put and agreed to.

00:03

Sitting suspended.