Mr Robin Walker (Worcester) (Con)
I beg to move,
That this House has considered support for childcare and the early years.
I am grateful to the Backbench Business Committee for granting this debate early in this parliamentary sitting period and for allowing the Education Committee to continue its work on this vital area of policy. I am also grateful to my right hon. Friend the Member for Aldridge-Brownhills (Wendy Morton), recognising the pressure on parliamentary time today, for having withdrawn her equally important debate. I hope that she secures another one on that subject.
When I ran to be Chairman of the Education Committee, I proposed an inquiry into early education and childcare, and I was very glad to get the support of a substantial majority across the whole House, as well as from individual members of the Committee in pursuing that. As the parent of a five-year-old and two-year-old, I should perhaps declare a special personal interest in this area, but there is probably no single subject more vital to the future success of our children than their earliest experiences of education, and the stimulation, engagement and support they can receive through high-quality early years education and childcare.
As many others have argued, there is enormous economic benefit from investment in this space. However, the last time I troubled the Backbench Business Committee for time to debate it was in advance of the last Budget, when I was very glad that the Treasury accepted the case for major new financial commitments in this area. I said then that investment in childcare and early education would benefit multiple groups: parents who wish to work; schools to have properly socialised children ready to learn; children who benefit from better stimulation; and those with special educational needs with earlier identification. It is a win to the power of four.
Our inquiry was launched before the very significant expansion in the Government’s childcare offer and their plans for substantially increasing investment in the funded hours. It is important to note, however, that our oral evidence was taken both before and after the detail of the announcements became known. We heard both the relief of the sector at the scale of the commitment being made and also many of its ongoing concerns about the complexity of the many schemes of funding, the overall level of funding going into childcare, particularly for three and four-year-olds, and the many serious and ongoing pressures facing providers.
I am enormously grateful to the many expert witnesses, parents, providers, academics, campaigners, childminders and nursery practitioners who gave evidence to us. Indeed, it is worth noting that this inquiry received more written submissions than any other in the life of my Committee and, in so far as my Clerks recall, any other inquiry in the history of the Education Committee. I put on record my thanks to the Clerks of the Committee and their apprentice, who had to handle an unprecedented quantity of material with calm determination and expertise.
Due to the very important list of other debates that have taken place today, I will not have time to re-present every one of the 21 recommendations that we made in the report on the back of the more than 10,000 pieces of evidence. However, I want to remind the Minister of the pressing nature of the challenge, reflected in the enormous public response to our call for evidence, and I will focus on three key recommendations.
The affordability of childcare is a key concern for parents, and before the Budget it was becoming clear that the sector was facing a crisis of both affordability and availability. I have no doubt that the additional hundreds of millions in funding this year and next will make some difference, and that the roll-out of funded hours for the under-threes over the next few years will make a big difference for working parents, but I urge the Government to consider very carefully recommendations 6, 8 and 11, as well as overarching recommendations 1 and 2 on the need to work across Government to ensure adequate funding. The additional billions that the Government have committed over the long term will succeed only if the sector is properly supported in the short and medium term and if we continue to have strong and thriving early years education across the public, private and voluntary sectors.
I know the Department for Education is not able to make decisions on taxation, but I urge my hon. Friend the Minister to consider very carefully the case for our recommendation on exempting childcare providers from business rates and the payment of VAT on building costs. Not only are these taxes a false economy for the Treasury, as the DFE’s evidence admits these costs have to be taken into account in a setting’s funding rates, but they are a barrier to much-needed expansion to meet the Government’s own ambitions. Worse, many childcare businesses pointed out to the Committee that the size of their premises is a matter not of choice but of meeting regulatory standards required by Government and Ofsted guidelines. They therefore find themselves having to pay more in business rates not as a result of a commercial decision to expand but as a result of wishing to meet the space standards set by public bodies.
I raised nurseries’ pressing concerns about their rapidly increasing business rates bills in a previous debate but, as our unanimous recommendations suggest, fixing this problem and creating a level playing field among providers on rates and VAT should not be used as a cost-saving measure; it should be used to ensure that more resources are available for paying, upskilling and retaining expert staff. In support of this recommendation, written evidence from the National Education Union said:
“Business rates for nursery schools can be over £100,000 in some areas, so the absence of a rebate is a significant pressure on already overstretched budgets.”
Written evidence from the National Day Nurseries Association said:
“Business rate property revaluation from April 2023 has seen providers report bill increases of 40-50%.”
In a survey of NDNA members, 782 nurseries across England were asked what they would do if they no longer had to pay business rates: 61% said they would increase staff salaries; 49% said they would reduce losses in their business; and 40% said they would mitigate fee increases to parents. If affordability and quality are as important to the Government as availability, I believe that they should take account of this evidence. I know my hon. Friend the Minister is passionate about social mobility and the benefits of early years education, and I urge him to ensure this continues to be pressed with the Treasury.
We have heard strong arguments from the Treasury about the benefit to parents of being able to work, where there is affordable childcare provision. This has been a key rationale for the expansion of so-called free hours, which we have recommended should be called “funded hours,” down the age groups. It was a key rationale behind the very welcome changes to childcare costs within universal credit. However, in that context, I urge the Minister to press his Treasury colleagues on recommendation 11 for a fundamental review of the tax-free childcare system to improve both understanding and uptake.
Her Majesty’s Revenue and Customs tax-free childcare report and survey of 2021 found that 43% of people found the name confusing or unclear. Of these, 58% said it prevented them from looking into tax-free childcare and 54% said it prevented them from signing up to the scheme. The Institute for Fiscal Studies said that
“in the four years after introducing tax-free childcare, the government spent £2.3 billion less on the scheme than it had planned.”
In the written evidence we received from parents, they said:
“The tax free childcare system is confusing and onerous to use, and complicated to calculate.”
Childminders told us:
“Not enough parents know about Tax-Free-Childcare, especially not the self-employed. Many parents also find it…difficult to set up the payments.”
My biggest disappointment with the announcements made at the Budget is that the tax-free childcare system was not touched, yet we know that the theoretical benefits of this policy are not reaching a very substantial proportion of the parents it was designed to help.
Worse, in answer to my written parliamentary questions, we have seen that even those who have gone to the trouble of registering or re-registering for support through the current cumbersome system, only around half actually claim anything from it, which does not suggest a system that is living up to its promise.
The Select Committee made a number of other suggestions for supporting affordability for parents, not least our call in recommendation 13 for better support for stay-at-home parents.
The last area I want to press particularly hard with my colleague on the Front Bench is the logic of our recommendation on offering funded support to parents in training or study. The logic is that elsewhere across education policy the Government are going out of their way to encourage people to upskill, supporting lifelong learning and investing in the long-term productivity of our country by ensuring people are better skilled. It is, therefore, counterproductive to disincentivise parents from pursuing higher qualifications by making 30 hours of childcare available only to working families on a particular income, and explicitly not to those in study. The recent report by the all-party parliamentary group for students on the cost of living and its impact on students highlighted the severe challenges facing parents in study. Addressing that, as part of our recommendation 18, would make a massive difference to that group of parents.
Supporting the workforce, expanding family hubs, not just in some areas but across the whole country, expanding the early years pupil premium and investing in early intervention and training to identify and meet special educational needs are among the other key recommendations of our report. I could speak passionately in favour of every single one of our key recommendations and, when the Select Committee meets tomorrow, I look forward to the detailed consideration of the Government’s response, but I know many other Members want to speak in the debate.
I end by commending the whole report of my Committee to my hon. Friend the Minister. Having served in the Government, I appreciate that he may not be able to accept every one of our recommendations straight away, but I hope he will recognise the weight of evidence that sits behind them, the incredible importance of getting policy in this area right and the immense value of continuing to invest in our children.
Our Prime Minister has described education as
“the closest thing we have to a silver bullet”
for improving productivity. I welcome his commitment to making education the main funding priority in every spending review—early years education needs to be at the forefront of that. Having worked with my hon. Friend the Minister over a number of years, I know how passionate he is about evidence-based policy to improve life chances for children, closing the attainment gap and tackling disadvantage. There can be no greater impact on each of those than investing effectively in early years.
I am hugely grateful to colleagues from across the House who have supported the debate and I am delighted that we have a maiden speech to look forward to from one of the House’s newest Members. I commend this report and debate to my hon. Friend the Minister.
Mr Speaker
I remind Members that this is a maiden speech and there will be no interruptions.
The Parliamentary Under-Secretary of State for Education (David Johnston)
May I first congratulate my hon. Friend the Member for Worcester (Mr Walker), the Chair of the Education Committee? He has helped with the development of our policy in this area, and his Committee produced a good report that we have responded to. I am also grateful to him for relinquishing his time so that I have longer to respond to some of the points made in the debate.
I also congratulate the hon. Member for Selby and Ainsty (Keir Mather) on giving his maiden speech, which I thought he delivered with aplomb. He gave us a lovely portrait of his constituency, which I visited—on the losing side—a number of times earlier in the year. I have no doubt that he will be a strong advocate for his constituents.
May I also take the opportunity to pay tribute to the hard work and dedication of our early years and childcare workforce? Through challenges from the pandemic to the rising costs of living, they have worked tirelessly to provide care that allows children to flourish. Extensive evidence makes it clear—a number of hon. Members touched on this—that high quality early years education has a positive effect on the cognitive, behavioural and social development of children in both the short and long term. Building a strong foundation for every child is at the heart of the Government’s agenda, and it is critical to enabling children to succeed both at school and later in life. That is true for all children, but as hon. Members will know I have a particular interest in disadvantaged children, having run charities for them before I became an MP, and it is especially important to try to ensure that they get the right support in their earliest years, as my hon. Friend the Member for Stroud (Siobhan Baillie) touched on in her excellent speech.
High quality childcare is also fundamental to building a strong economy, allowing parents to enter employment, take on more hours or choose from a wider range of jobs. That is particularly important for mothers, whose employment rates and pay have been and continue to be disproportionately impacted by having children.
The Government have a strong track record of supporting parents with the cost of childcare, supporting disadvantaged children and ensuring that childcare is of high quality. In September 2010, we extended the three and four-year-old entitlement that parents typically take as 15 hours a week for 38 weeks of the year. In 2013, we introduced 15 free hours a week for disadvantaged two-year-olds. In 2017, the three and four-year-old entitlement was doubled to 30 hours a week. Now, recognising that childcare is one of the biggest costs facing working families today, the Government are making the largest single investment in childcare ever.
This investment—an additional £4.1 billion—will double the amount being spent by the Government on childcare so that by September 2025 all eligible working parents will be able to claim 30 hours of free childcare—I will come back to the word “free” in a minute—from when their child is nine months old until they start school. As hon. Members know, that will be rolled out in stages. From April, eligible parents of two-year-olds will be able to access 15 free hours. From September, eligible parents of children aged nine months and upwards will be able to do likewise. The full 30-hour entitlement will come in from September 2025.
Alex Cunningham
We are all going to welcome additional funding within childcare and the expansion of services, but surely we need a very clear workforce plan if we are actually going to deliver all this.
David Johnston
I am grateful to the hon. Member, because I am about to come on to workforce. However, just before I do so, alongside this we want to increase the supply of wrap-around care to enable families to work more, or flexible, hours. We are investing £289 million in start-up funding to provide local authorities with funding to set up wrap-around provision from 8 am to 6 pm in their areas. More broadly, local authorities are critical to delivering this expansion of childcare, and we are working closely with them to understand the challenges they face and ensure they have sufficient places to meet parental demand. We will shortly be appointing a contractor to support them in that work.
There have been some key themes in this debate, beginning with funding rates. By 2027-28, we expect to be spending more than £8 billion every year on childcare. We have already increased the funding paid to nurseries for the existing entitlement by £204 million this year, rising to £288 million next year. That means that the national average rate for three and four-year-olds has gone up to £5.62 an hour, and for two-year-olds it has gone up to £7.95 an hour from £6—an increase of a third. Those rates are informed by a survey of more than 10,000 providers that we carry out in order to understand the funding pressures they face. That said, I am very happy to meet both my hon. Friend the Member for Buckingham (Greg Smith), who raised issues in his constituency—there has been a 10.1% increase for providers there—and my hon. Friend the Member for Devizes (Danny Kruger), where there has been a 6.8% increase. I am happy to continue that discussion.
On quality and flexibility questions, it is worth first noting that we have some of the highest-quality childcare in the world, with 96% of early years settings rated good or outstanding. However, we are working with the sector to increase flexibility and remove unnecessary burdens. In September, as my hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory) touched on, we changed the ratios for two-year-olds. We are pushing landlords to be more flexible and to allow childminders to operate on their premises, and we will shortly announce our response to the recent consultation with the sector about the early years foundation stage, where we are hoping to make a series of changes to help practitioners more easily do their jobs while maintaining higher standards.
Delivering expansion is going to require a significant boost to the workforce, so it is key that we are able to encourage more people into this sector—to raise its status, as my hon. Friend the Member for Truro and Falmouth touched on. In the new year, we will launch a big recruitment campaign to encourage people to consider working in a nursery school or as a childminder. We are expanding the early years professional development programme: nearly 25,000 people are already undertaking apprenticeships in this sector, but we are looking at accelerated apprenticeships and degree apprenticeships and will also be running early years skills bootcamps from next year to try to get more people into the sector. A start-up grant scheme for childminders, which will provide £600 for those registering with Ofsted and £1,200 for those registering with a childminder agency, will also be starting shortly.
Very briefly, I will touch on some other points made by the Chair of the Select Committee. Our funding rates do take business rate costs into account, and in the autumn statement the Government announced a freeze to the business rates multiplier, a tax cut worth £9.3 billion over five years. Small business rate relief exists, as does relief for charities, but I am happy to look at the extreme cases that my hon. Friend set out. He is right to flag the issue of tax-free childcare, which can save parents up to £2,000 per year on the cost of childcare, or up to £4,000 for children with disabilities. We are trying to drive up the take-up of that through our Childcare Choices website. As for people in education and training, a big part of this offer is to try to encourage people into work: students are eligible for the universal 15 hours for three and four-year-olds and for the 30 free hours if they meet the income criteria, and there is also the childcare grant and the parents’ learning allowance. However, I have heard the point that my hon. Friend has made.
I think I have covered most of the points that people have made. A number of Members from Northern Ireland have spoken: obviously, this issue is devolved in Northern Ireland, but I will just say that next week, I am chairing a meeting of the British-Irish Council on the topic of childcare. I am sure we are going to discuss childcare in both Northern Ireland and the Republic.
I think I have covered most of Labour’s commentary. I would be a lot more amenable to criticism from the Labour party if it had any policy whatsoever in this area. As it does not and all it has done is commission a taskforce to tell it what to think, I will close the debate there.
Question put and agreed to.
Resolved,
That this House has considered support for childcare and the early years.