Childcare Reform Package
(1 year, 4 months ago)
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The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)
My Lords, I shall now repeat a Statement made in another place. The Statement is as follows:
“With permission, Madam Deputy Speaker, I would like to make a Statement about the progress we have made towards delivering the genuinely radical childcare reforms announced in the Chancellor’s Spring Statement.
The Chancellor announced that from September 2025, working parents will be able to access 30 hours a week of childcare, for 38 weeks a year, from the term after their child turns nine months to when they start school. I am pleased to announce that from today, the Department for Work and Pensions has raised the amount working parents on universal credit can claim for their childcare to £951 a month for one child and £1,630 for two or more children. That is an increase of roughly 50% from the previous limits, which were £646 for one child or £1,108 for two or more children.
The Government are also helping eligible parents to cover the costs for the first month of childcare when they enter work or increase their working hours. Those parents will now receive up to 85% of the first month’s childcare costs back before next month’s bills are due, meaning that from then on they should have the money to pay for childcare one month in advance.
When I have spoken to families on universal credit, many have told me that they have struggled with up-front childcare bills, making it harder for them to get back into work. These childcare reforms support one of the Prime Minister’s five key priorities, to grow the economy, by giving families on universal credit up to £522 extra each month to cover childcare costs. This is a transformational package that is designed to remove as many barriers to work as possible.
The evidence is clear: the earliest years, before a child goes to school, are the most critical stage of a young child’s development. That is when they are learning most rapidly, and when the foundations are being laid for future success.
We are also committed to improving the availability of wraparound childcare. Reliable wraparound childcare, before and after school, helps parents to work and can offer children great activities around the school day. The education and care provided in childcare settings up and down the country is pivotal for children. Visiting and talking to nurseries, childminders and other providers is one of the best parts of my job. I wish to put on record my thanks for the hard work and dedication of the talented people who work in the sector.
I have travelled across the country visiting providers: from Chestnuts Childcare in Shirebrook to Kids Inc in Crowthorne; from Little Stars in Peterborough to Imagination Childcare in Moredon; from Curious Caterpillars in Stroud to Playsteps Day Nursery in Swindon; and from Bright Horizons in Didcot to Acorn Day Nursery in Emberton. I thank my honourable friends the Member for Peterborough, for Bolsover, for Bracknell, for North Swindon, for Stroud, for Milton Keynes North, for Cities of London and Westminster and others for hosting me on those visits. They all share my determination to get this right for parents and providers.
When I am out on those visits, I often hear how much of a lifeline the settings are for parents, allowing them to work and develop their own careers while providing the high-quality early education that gives our youngest children the best start in life.
I support the ambitious expansion of childcare support for working parents that the Chancellor announced in his Spring Statement. It represents the single biggest investment in childcare this country has ever seen. It will make sure that parents are able to access the high-quality, affordable childcare that they need.
Today’s changes are just one part of our genuinely radical plans. By 2028, we expect to be spending more than £8 billion per year on early years education, which is double what we spend now. This will build on the 30 hours of funded childcare for three to four year-olds that this Government introduced in 2017, extending the entitlement to eligible working parents of children aged from nine months old to when they start primary school. It will remove one of the largest hurdles that working parents face, and it will save parents £6,500 per year on average.
We have heard it loud and clear from the sector that getting the funding right is crucial. From this September, we will provide £204 million of extra funding for local authorities to increase the hourly rates that they pay providers, and we will make sure that rates continue to go up each year. That means that, from September, the average hourly rate for two year-olds will go from £6 per hour to around £8 per hour, and the average rate for three to four year-olds will be more than £5.50 per hour. From 2024-25, the average rate for under-twos will be around £11 per hour. We will confirm the September rates for each local authority before the summer break. We will also ask the sector for its views on how we should distribute the funding for the new entitlements from April 2024, including the rules that local authorities will have to follow when distributing the funding to providers.
Of course, money is not everything. We also want to boost the early years workforce, who are so crucial to the success of nurseries across the country. There are multiple ways that we are doing that. I have heard from many people who manage nurseries that the way we regulate staffing in settings is stopping providers from making the most effective use of their staff and giving their best people responsibilities that match their abilities. Likewise, childminders and nurseries have been telling us about barriers to delivering the education and care that they want for children. That is why we have launched a consultation on proposed changes to the early years foundation stage requirements.
Every single one of our proposals has come from conversations with people working in the sector. They will give settings more flexibility and help address some of those barriers, while maintaining high-quality provision and keeping our youngest children safe. Indeed, 96% of childcare providers in England were judged good or outstanding at their most recent inspection, which should give parents huge confidence in the standards of provision.
Some of the new measures will help free up staff to pursue professional development opportunities. We are investing up to £180 million in the early years education recovery programme, which offers a package of training, qualifications, expert guidance and targeted support for everyone working in the sector. To train people up, we need to get more people in, so we are also going full steam ahead with a new national campaign early next year to promote the sector and support the recruitment and retention of talented staff. We will also consider how to introduce new accelerated apprenticeship and degree apprenticeship routes, so that new entrants can build careers at all levels of the sector.
I wish to reassure Members that we will work closely with the sector to deliver these historic reforms, just as we did on previous successful rollouts of the 30 hours entitlement for three to four year-olds, the 15 hours entitlement for two year-olds from disadvantaged backgrounds, and the holiday activities and food programme. We cannot do this without early years providers, childminders and local authorities. We have a strong track record of working together to deliver childcare for parents, and I will be listening closely to them when considering our next steps. I commend this Statement to the House.”
Baroness Thornton (Lab)
I thank the Minister for repeating the Statement today. We need to congratulate the Government on arriving at the childcare party—possibly 10 years late but, as they say, better late than never. For many of us—for me, after 25 or 26 years—this recognition of the vital importance of childcare is very welcome. I realise that, for this Government, this is actually quite a radical Statement.
The reforms outlined reflect some of the changes to universal credit that the shadow Secretary of State, my honourable friend Jonathan Ashworth, has repeatedly called for, so of course we welcome them. But, as he has also warned Ministers, they do not go far enough in giving people the chances and choices to go back to work at the scale necessary to tackle the challenges.
On childcare, the Government’s fixation on a broken hours model leaves them, I believe, blind to the wider challenges around supply and demand for childcare and what might happen to the extraordinary structure of the market for extra hours as a result of this. We have to ask whether the announcement addresses the extra staff who will be needed to deliver the extra entitlement for parents that the Minister has announced. We have to wonder about the retention and upskilling of existing staff in the sector who, we have to say, are leaving in droves for work that is clearly more valued. We also have to wonder how to enrich childcare to drive up quality, make it part of our education system and deliver a foundation for achievement and success right through school and life. We have to ask whether it delivers the flexibility that parents need not merely to work but to get into work—to get the training and skills they need and that our companies, communities and country need.
My honourable friend Stephen Morgan MP, who spoke in the Commons on this, said:
“It is a promise of jam tomorrow”.—[Official Report, Commons, 28/6/23; col. 310.]
I think he might be a trifle harsh, but I certainly think it is a promise that brings with it some questions. When the 30 hours childcare entitlement is spread over a year, it is equivalent to 22 hours per week. The cliff edge in costs between government-funded hours and hours that parents have to pay full costs for therefore may create a barrier for parents wanting to work more hours. What is the Minister’s department doing to tackle the issue of the cliff edge?
What modelling has the department undertaken to estimate the number of additional staff required to deliver the increase in childcare hours entitlement announced in the Budget? There are currently two children for every Ofsted-registered early years childcare place in England, rising to 11 children in some areas. Does the Minister understand that parents simply cannot find the childcare they need, even if the funding is there? How will the Government help move people into work if those undertaking training, for example in nursing or health services, are excluded from accessing childcare hours entitlement?
Early years childcare is essential, not just for working parents but for children for their learning and development. What assessment have the Minister and her department undertaken on the impact of their changes to staffing ratios and qualifications required on the quality of early education that children will receive? How does the department intend to increase the uptake of the universal credit childcare entitlement among the thousands of eligible families missing out on this support due to the complexity and bureaucracy of the system?
As we approach the summer holidays, parents across the country are making plans for coping with summer childcare costs. In the case of those who are grandparents, we are working out how we will fit in the childcare we will need to do with the holidays we might want to take. This announcement will do nothing for thousands of families who cannot afford to pay childcare costs up front, so I would like some more detail from the Minister about how the Government intend to ensure that these parents are able to stay in work over the summer.
Research from the National Day Nurseries Association shows that nursery closures are up 50% in the last year, with poorer neighbourhoods seeing more closures. That is not going to help working parents. What steps are the Minister’s department going to take to retain staff within the childcare sector, using their experience and expertise and not simply focusing on getting more staff through the door?
The Minister’s press release yesterday highlighted the hourly funding the Government are giving providers caring for two year-olds, yet most children in childcare are aged three to four. The Minister mentioned them. Could the noble Baroness explain how the funding rate for three to four year-olds compares with the cost to providers of delivering an hour of childcare? This is definitely a start, and definitely more needs to be done.
Baroness Thornhill (LD)
I absolutely agree with every word the noble Baroness, Lady Thornton, has just said. As a grandmother of three grandchildren, from six months to six years-old, I say that this is a very pertinent issue for us and very much a topic of discussion within our household. It really takes me back, having always been a working mum myself, to how very different it is now from how it was then.
My daughter really does struggle with this, particularly with the cost. She and her husband are both modest-income earners, with wraparound care for the oldest grandchild—those hours at the beginning and end of school. It would be churlish not to say that this is very radical and very welcome. But, for her, it could not come soon enough. The questions were “When’s that happening, Mum? I’ve heard about this, when’s it actually going to be?”
I am sure that the Minister accepts that we have a childcare sector that is buckling under the pressure of inadequate funding for many years, and that many early years providers are being forced to close permanently, with the number of registered providers falling steadily since 2015.
I would like to know whether the Government have a proper picture of where the gaps are in childcare. The noble Baroness, Lady Thornton, talked about availability, and anecdotally I can certainly bear that out because I know some women are having to travel quite complicated distances to put one child in one provision and another child in another provision before going to work. There are definitely geographical gaps in the system. Do the Government have an overall picture of how many providers are teetering on the brink at the moment? That is certainly an issue.
On the existing entitlements for two, three and four year-olds, the Early Years Alliance and the Women’s Budget Group estimate that the current budget offer, however generous it seems when we hear the figures bandied about, is actually underfunded by £1.8 billion a year. I believe that the Government are providing only an extra £280 million this year and an extra £288 million next year. As I say, those sound like huge numbers but, in the light of the deficit, do we really feel that it is enough? Do we have any notion of how many providers we might lose by then?
The number of parents taking up the childcare element of universal credit concerns me; it appears very low, with only 13% of households getting the childcare element. Does the Minister agree that the department should perhaps explore why take-up is not higher and commit to publishing statistics so that progress in this area can be measured? Does she accept that, as this particular element has been frozen for seven years, and therefore obviously has failed to keep pace with inflation, we have in effect wasted seven years in getting a cohort of parents back into work?
I commend the plans for having a real career structure for nursery, but I echo what the noble Baroness, Lady Thornton, said about plans that the Government might have to restore childminding as a valuable part of the early years system. Perhaps they could look at replacing the current three different registration processes with a single childcare register and commissioning a practitioner-led review to simplify that regulation and reduce administrative burdens. That should attract new childminders, who love looking after children but are, I know, daunted by the paperwork. It need not mean lowering standards.
The question of summer childcare costs is crucial. Not everyone has grandparents who are willing or available—or indeed the money to pay for these courses, which, certainly in the area of Hertfordshire where I live, seem disproportionately expensive.
Baroness Barran (Con)
I thank both noble Baronesses for their generosity in welcoming our announcement. I am grateful for the reflection from the noble Baroness opposite that perhaps her colleague in the other place was a little harsh; I welcome her tone.
The noble Baroness, Lady Thornhill, suggested that the measure was radical for this Government. I would say it was radical for any Government. We are putting an extra £4 billion into the childcare system, raising it to a total of £8 billion. I think the House will agree with me that that is a radical move.
I contest the assertion that this Government have been late to the party. We introduced 30 hours of free childcare for three and four year-olds and 15 hours for disadvantaged two year-olds, so we have made tremendous progress. I do not recognise her assertion that people are leaving the sector in droves. There were 331,000 employees in the sector in 2018 and 334,000 in 2022, which by my maths is roughly unchanged.
The noble Baroness, Lady Thornton, commented that most children in childcare are aged three to four, but that is obviously a reflection of the free provision, and we very much expect that there will be a significant increase thanks to the new free offers. She asked how we have done our modelling. Part of that has come from the regular surveys that we do with about 10,000 providers and 6,000 parents, which have helped to inform both the levels of funding per hour that we are offering to providers and the nature of provision.
The noble Baroness, Lady Thornhill, mentioned the very important issue of wraparound childcare. The Government have already announced a £289 million investment to support local authorities, primary schools and private providers to improve the availability of wraparound childcare before and after school during term time. That funding will be available from January 2024, with access from September 2024. The noble Baroness looks a little unhappy at that, but I hope she would agree that it is important that we allow the sector to put in the capacity ahead of demand, rather than the other way around—otherwise, we will not be thanked for it.
The noble Baroness, Lady Thornhill, referred to the comments of the Early Years Alliance. As I said in relation to the point made by the noble Baroness, Lady Thornton, we consult very regularly with about 10,000 providers, and that has informed the levels of funding that we have set. I would counter the criticism from the Early Years Alliance with the comments of the chief executive of Pregnant Then Screwed, who said:
“Just 3 years ago, we would talk to Ministers about childcare and they would look at us like we were speaking Klingon. It was of no interest to those in power. To go from there to childcare being the main event in the Spring budget shows the power of collective action and we are elated to hear that the childcare sector will now receive a significant investment”.
I guess there is more than one view on our initiatives.
I turn now to the specific questions that the noble Baroness, Lady Thornton, raised. She asked what steps the Government are taking to address the cliff edge in costs between government-funded hours and hours for which parents have to pay. The context for this is that we are putting an additional £4 billion into the system. As I said in the repeat of the Statement, this will save households £650,000 a year, and they will get free childcare for younger children, as well as three and four year-olds. Childcare is a predictable cost; it is something that people can plan for. I am not saying that there is no pressure on households during the holidays; I am saying that the net pressure, given how much we are putting into the system, is reduced.
I also remind the House of the holiday activities and food programme, which 600,000 children accessed in the last year. The report back from those children was that 70% had experiences that they had never had otherwise—I am taking that in a positive way. It was a very valuable programme, and it is obviously part of this.
Both noble Baronesses questioned whether there would be enough capacity in the sector to deliver the increase that will be required. The Government do not underestimate, at all, the scale of the challenge in this area.
I referred to the accelerated apprenticeships and degree apprenticeships. We are obviously consulting on the early years and foundation stage framework, looking at different flexibilities for staff—not in any way diluting the quality of staff but allowing more flexibility in appropriate qualifications. For example, do you need a level 3 in maths to be a childminder of very young children? There might be other skills we should look for.
The noble Baroness, Lady Thornton, talked about difficulties in uptake, as did the noble Baroness, Lady Thornhill, specifically in relation to universal credit. I remind the House that the uptake for free childcare for three year-olds is 90%, and for disadvantaged two year-olds it is 72%. So there has been a big increase in uptake, including in the last year. Tax-free childcare was up by 14% in the last year. We are planning for the 2023-24 childcare choices campaign, and we want to continue to improve people’s understanding of the government childcare offer, including the measures announced in the Spring Budget.
I hope that I have addressed most of the points that both noble Baronesses raised.
Baroness Bottomley of Nettlestone (Con)
My Lords, I add my warmest congratulations on this Statement. I pay particular tribute to the Parliamentary Under-Secretary of State—the Minister reading it out—who made clear her enormous work programme in visiting all sorts of facilities. We know that my noble friend has also been closely involved. Behind that is our genuinely benign Chancellor, whom we ought to thank for his generous £4 billion package.
I am pleased that my noble friend mentioned the possibility of easing the requirement for a maths qualification at that level. I want to take up from the noble Baroness opposite the question of childminders. I have long believed that childminding is the most natural, personal, intimate and flexible form of childcare, but they have much less clout than the nurseries and others. The Select Committee heard from childminders that they were often paid only intermittently. I do not know what further guidance or steps can be taken to make sure that childminders are really valued and that the resources available get through to them, because they provide excellent, value-for-money childcare.
Baroness Barran (Con)
My noble friend makes, as ever, very good points. I am not sure what my right honourable friend the Chancellor would think of being described as “benign”, but I leave that to her to take a risk on. I apologise to the noble Baroness, Lady Thornhill; I do not think I addressed the points she raised about childminders. I echo the sentiments of both noble Baronesses about the important role that childminders play. We know that they have reduced in number in recent years, and I am aware of the issues about payment terms to which my noble friend refers. We are working with all local authorities and with the Local Government Association. Part of our consultation, which will start shortly, is looking exactly at our funding arrangements with local authorities—how much of the funding they retain, how much is passed on and, importantly, how quickly it is passed on, especially to small providers.
The Lord Bishop of St Albans
My Lords, I join others in congratulating His Majesty’s Government for what is a very forward-looking and exciting series of announcements. The research we have on the first 1,000 years and many other pieces of research show just how vital this is, and it absolutely plays into the last debate about our economy in the long run.
Will the Minister comment a little more on how we are going to recruit the people we will need? Anecdotally, as I go round, I hear that people are already trying to recruit and that it is not proving easy. There is a lot of competition. To touch on the issue of the maths qualification that the Minister mentioned, I wonder whether, as well as accelerated and degree-level apprenticeships, there will be quite a wide variety of ways into this, including training on the job, being paid while you are doing it and so on, so that we attract people who may have a set of skills that is absolutely ideal for this but who might otherwise be put off by what might feel like high hurdles for them to enter this important area of work.
Baroness Barran (Con)
I think the right reverend Prelate meant to mention the first 1,000 days, but I heard “the first 1,000 years”, which sounded very biblical.
A noble Lord
Baroness Barran (Con)
It is a very long view. Recruitment is extremely important and absolutely critical to the delivery of this programme. Obviously, apprenticeships offer an important way to learn and earn at the same time, whether they are degree apprenticeship or not. We will also start a major recruitment campaign early next year, working with local authorities all around the country. However, the right reverend Prelate touched on how we show that we really value this as a profession and how critical it is for the future of our children and the economy.
Baroness Bennett of Manor Castle (GP)
My Lords, like the Opposition Front Benches, I begin by commending the Government on significantly increasing spending in this area. I see that it is heading in the direction of Green Party policy, which is the provision of free early years education and childcare from age one to starting school.
The Minister may be aware of the excellent report published in March by the Women’s Budget Group, working with the Joseph Rowntree Foundation, which looked at the nature of the provision and what kind of organisations the money is going to. The report strongly recommended a move away from a market-based model towards a shared vision of public services for public good. We have just been talking about the importance of staff and attracting more staff into this sector. The report noted that 44% of early years professionals are reliant on state benefits to top up their salary or wages so that they are enough to meet their basic subsistence levels. That is 44% of people who work in the sector who are not paid enough to live.
I also note that, at the same time, many of those people are increasingly employed by—in fact the whole sector is dominated by—financialised large companies with highly complex financial structures that are thoroughly untransparent. It is reminiscent of the water sector that has been in the headlines so much this week. Will the Government take a serious look at where the money is going and how they can make sure that it is not for private profit but delivers real social value?
Baroness Barran (Con)
Unlike the noble Baroness, this Government do not feel that private profit is inherently evil. We cannot live in a world where, on the one hand, we say that the sector is underfunded so we give it enough money and, on the other, we are critical because we are worried that people operating in it, who might be small childminders running their own businesses from home, are able to move off benefits and live independently, as the noble Baroness suggested. I think we absolutely want to live in a country where we give local small entrepreneurs—which many people are who run nurseries and offer childminding services—the ability to pay their staff properly, make a decent return and provide an excellent service for children.
Lord Young of Cookham (Con)
My Lords, like other noble Lords, I very much welcome this Statement, which I see as rebalancing investment in education away from further and higher education and into early years—which is the best investment for both the child and society as a whole. Has my noble friend made any estimate of the number of people who will be able to return to work as a result of this welcome reform and what benefits the Treasury will recoup from that to offset some of the costs that she referred to?
Further to the questions asked by my noble friend Lady Bottomley and the right reverend Prelate on skills, does the Minister recognise the tension between on the one hand keeping costs down, both for families and for the taxpayer, and on the other hand the need to reward childminders appropriately, to attract more people into the workforce, to have a career structure and to ensure that people with appropriate qualifications are in early years so that children get the full benefit of the investment?
Baroness Barran (Con)
As ever, my noble friend speaks with great wisdom. The two parts of his question are linked. He is absolutely right that we cannot in any way compromise on quality, but we also need, as always, to ensure value for money for the taxpayer. One of the things that makes this policy affordable is the estimates from the Office for Budget Responsibility about the additional people joining the workforce as a result of this offer. The OBR has estimated that 65,000 people will go into the workforce as a result of this and a further 1.5 million will increase their hours by a small amount, which, aggregated, equates to a further 65,000 people. That is a really important boost to the country’s workforce, at a time when we need it very much. On how we ensure that we keep quality but also assure value for money, in addition to some of the issues around qualifications—I mentioned maths and whether that is needed—and giving additional routes into the sector, we are also changing the ratios of staff to children to mirror those in Scotland, so that that allows more flexibility, more capacity and better value for money.