Childcare and Early Years

Helen Hayes Excerpts

Wednesday 8th March 2023 Commons Chamber

[Siobhan Baillie]

I absolutely agree with my hon. Friend. We need to be able to focus on training and look at all the options, because the workforce are really keen on CPD. It is often quite a vocational profession: people grow up wanting to be childminders, often because they love kids. I mean, I come to this place for a rest—I could not do it. I have massive respect for that workforce, because I could not do what they do. Those people are in the job for a really good reason, but they often fall out of it because the pay is really low and there is not that ongoing professionalisation and earning of qualifications, or the building up of skills.

I am grateful to the DWP Select Committee, particularly the right hon. Member for East Ham (Sir Stephen Timms), because we have carried out a full investigation of the childcare element of universal credit. That has been really helpful, because we have discovered through evidence that the up-front payments are causing huge problems for parents on universal credit. Basically, what is happening is that every new term, parents are begging and borrowing to pay for that term’s childcare, and then they get 85% of that money back through universal credit. That is a really good offer, but families are getting into debt to make those up-front payments—not just once, but every single term—and then the money comes back through universal credit in dribs and drabs. It does not come back with a label saying, “This is for you to repay your childcare bill.”

That approach is causing real trouble, and as we have heard from other hon. Members, the cap has not been uprated. It is a really good offer from the Government and the DWP under universal credit, but only 13% of families are taking it up because it is a complete mess. I appreciate that it is not the responsibility of the Minister’s Department, but the fact that universal credit childcare claimants are not using this system, or they are using it and the money is paid all over the place, is having an impact on the childcare sector, which is directly under the Minister’s control. Again, I am really grateful to the whole of the DWP Committee for looking at that issue.

As we can see, this is not all about money: some of it is about regulation, safety and quality. Parental choice is high up there, but there are things we can do that are—to use an awful phrase—low-hanging fruit. I urge the Government to get things done. I have been putting a lot of pressure on the DFE, the DWP, No. 10 and the Treasury, particularly ahead of next week’s fiscal event, and I am also grateful to all the national newspapers that keep covering this area; The Sun, in particular, is very interested in the universal credit childcare issue. The support that it as well as the whole childcare sector in my constituency of Stroud has provided has been incredible. As all Opposition Members know—as the whole House knows—this issue is coming up on doorsteps. It is something that needs to be addressed, so the fact that we are looking very closely at funding is important.

I have had to be really hard-headed about this issue, trying to find solutions. I would absolutely love to do what some parties are doing: go around saying that we can provide universally free childcare from nine months to 11 years. I would love to be able to make that offer and say that that is going to happen very quickly, because parents are obviously very desperate at the moment to see change, but I do not think that would be the right thing to do. The hon. Member for Dulwich and West Norwood (Helen Hayes) and I had an exchange on this topic before, when I asked how much that policy is likely to cost. I know that the Labour party has not costed it yet, because it is working on other policies.

[Helen Hayes (Dulwich and West Norwood) (Lab)]

I am grateful to the hon. Member for giving way, because she mentioned the exchange we had recently in Westminster Hall. Can I be clear that it is not currently a Labour party costed pledge to provide universal childcare in that way? We believe there is a need for radical reform of the system, and we are working towards those proposals, and we will put forward our fully costed proposals to the country in due course.

[Siobhan Baillie]

I am grateful for that clarification, because the perception is, in all the trails and all the newspaper articles—a lot of people just see headlines and social media clips, or people standing up doing very short things—that universal free childcare is coming from the other side.

[Helen Hayes]

I would be grateful if the hon. Member could help not to reinforce inaccurate perceptions in everything she says in this House and, indeed, in Westminster Hall.

[Siobhan Baillie]

I would absolutely love to sit down with the hon. Member on the Front Bench and go through some of the newspaper articles I have seen coming from the Opposition, because ultimately, we have to be careful with parents. I do not want parents to be thinking, “Very soon, I will get free childcare, so I am not going to go back to work at the moment. I am going to wait for these big bang changes”, because ultimately it is very unlikely that universally free childcare from nine months to 11, or whatever is being trailed, will be fundamentally affordable to this country. It would not be sustainable and it would be incredibly difficult for the childcare sector to manage, particularly at the moment. I know I am possibly going to make myself unpopular in some quarters, and I am perhaps not giving parents exactly what they want, but it is important that at this stage—for the next week, I hope that this is what the Chancellor and the Treasury are talking about—we are making sure that we are funding and underpinning the childcare sector.

I give credit to the Women’s Budget Group—I think a number of Opposition Members have mentioned this—which has created a coalition of early education and childcare. The coalition has more than 30 bodies, including the Federation of Small Businesses, the CBI, Oxfam, Save the Children, Citizens Advice, the Early Years Alliance, the Fatherhood Institute and the Fawcett Society—loads of people that we have great respect for. The coalition’s ask is twofold at this stage. The first is for an increase to the baseline hourly rate of funding to reflect the true cost of provision. That is the much-feted free hours. They are not free—the taxpayer pays—and the childcare sector is clear that those hours have been underfunded. The Minister and I have had many conversations about this. I would like to see those hours brought up to scratch to ensure we have a motoring childcare sector alongside the stimulation of other things, such as childminders. The second thing that this learned coalition is asking for is reform of the universal credit childcare support to help parents return to work, which I have already mentioned.

The final point I would like to make—I realise I have been going on, but I am so passionate about this, and I am grateful for everyone’s involvement—is that I have met two childminder agencies called Koru Kids and Tiney. They are desperate to provide more childminders and people who can support families. Koru Kids told me that it puts adverts out for childminders and things called “home child carers”, who are effectively part-time nannies who can go into someone’s house. People can take their kids to childminders, but these people can go into people’s houses so that people can work shifts. They can do wraparound care and be flexible. It put out an advert to see how many people would like to apply and it got 75,000 applicants, the majority of whom were women. When it went through the analysis, a huge section were over-50s women or women who were not applying for other jobs. We are thinking about the economically inactive—the Secretary of State for Work and Pensions and the Chancellor of the Exchequer are looking at that—and this is a workforce we could stimulate to get people into jobs, playing a massively important part in our economy. These people have been overlooked.

My final point is on ratios. I am calling for the Government not to make changes to childcare ratios at this stage. It is important that they are investigated. It was never going to be suggested that there would be a change to safety. The Government are looking at the Scottish model, and I do not think anyone is suggesting there are unsafe settings up there. The research I have done with Onward demonstrates to me that the sector is not in a position to take a change to ratios. The sector is also telling us that it would not pass any changes on. As far as I can see, there is no evidence that changing the ratios would change the cost for parents, which is obviously a big focus. We have to be honest about that. If we changed the ratios, the political noise would also be so great that all the other good things that I hope we are going to do would be drowned out.

I thank everybody who is involved. I have had an exchange with the hon. Member for Dulwich and West Norwood, but I hope she knows how much we can all do in this area. It is important to be honest and realistic with parents, the sector and the country.

--- Later in debate ---

[David Simmonds]

My hon. Friend is absolutely correct to highlight the point about return on investment. As a Conservative politician, I always welcome it when I hear Ministers thinking not just about how much a particular course of action will cost the taxpayer, but about what the return is. As we know, one challenge in education—we see it throughout the departmental estimates and in local authority spending returns—is that how we count something is enormously significant in interpreting what it means. We have seen record spending in schools; we have also seen record numbers of children in schools. There are those who say that the issue is per capita spending; others will say that in aggregate the schools budget is larger than it has ever been. Of course, both arguments can be true at the same time. I am sure my hon. Friend the Minister will address the point about return on investment in her response, in the context of the overall school budget and the spend per child.

Let me turn to the method of distribution and how significant it is for the outcomes we want to see. The Department for Education sets out what its spending expectations are in its estimate and then allocates budgets to local authorities. The cash arrives somewhat later in the year, following counts of the number of children in a given area, which usually take place around autumn. Each local authority is then required, through its school forum, to hold a consultation with all those who have a stake in the distribution of that funding at a local level. The early years block forms part of a decision-making process where it is not just early years practitioners who are sat at the table, but the headteachers of big secondary schools, whose budgets tend to dominate the discussion, alongside headteachers of primary schools and representatives of the special educational needs system. That funding, which is ring-fenced within the local authority, is paid in due course to the providers, based on the returns of how many children are there.

It is interesting to note from the Department’s published figures that, in the most recent year for which numbers were available, there was a £55 million underspend nationally in the early years block. The money we allocate to early years is therefore effectively going unspent and being held within the dedicated schools grant at the local level. That might be partly to do with the fact that, because of parental concerns following the covid pandemic, a number of children who would have been expected to be in nursery had not yet started. That would account for it; and yet we see a consistent pattern, certainly since the creation of the dedicated schools grant, of high pressure on special educational needs and disability in particular, pretty much consistent spend of the schools block, exactly as we would expect, and the development of underspends in early years.

When we look at the research into the impact of how we spend that funding, it is worth looking at the flexibilities that we can create in the DSG element of early years funding, not least because, as a number of Members have alluded to, we have lost a significant number of childminders from the early years market, and there are new types of providers that are interested in entering the market, as my hon. Friend the Member for Stroud (Siobhan Baillie) described. I would argue that the fact that a local authority can only pay that money at a given rate, to a given provider and through a strictly determined DFE process means that it is not available to support the development of, for example, new entrants to the market and new types of providers that might like to set up. While we would clearly wish those new providers to fall within Ofsted’s remit, in order to guarantee quality, there is an opportunity to use those existing resources more flexibly, perhaps to develop the market a little further.

At the same time, it is welcome that it is not just DFE funding that finds its way to those providers. There is also the voucher scheme and tax-free childcare, on which I declare an interest as I am personally a beneficiary. Although the use of National Savings and Investments as the payment provider means it seems to take quite a lot longer for the many transfers to take place than would be the case with most other financial institutions, it works very effectively as a substantial subsidy towards the cost of childcare.

For children with special educational needs, there are additional forms of funding. There is the early years pupil premium. To the point my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) made so powerfully, in my time as a cabinet member for education, I saw the benefits to a whole variety of different outcomes from maintained nursery schools. The fact that there is within the DFE system the supplementary funding for maintained nursery schools is most welcome. In children’s centres and early years settings, it can be transformational for a child who may have quite profound disabilities to be able to access good-quality early education at the same time as other children. The disability access fund helps support children to access those settings, with additional money to provide equipment. I saw in my own children’s nursery settings medical equipment and additional technical equipment brought in to ensure that that child could have an equal place alongside their peers at the start of their life. That is incredibly important. I absolutely commend the Government for progressing that and ensuring it is seen by parents as a way of getting their child an equal start in life with their peers.

I want to turn to a point, raised previously my hon. Friend the Minister and a number of other colleagues, relating to an area where we have an opportunity to develop the early years market: schools as providers of early years services. A very large proportion of primary schools have school nurseries that take children earlier than the statutory school age. However, the vast majority of those schools will only offer parents a very limited number of hours, typically from 8.30 am to 11.30 am, and then maybe from midday to 3 pm or 3.30 pm. For most working parents, that will never be sufficient to make it a viable option. In practice, it means that they have to find all their childcare in the private sector, even though there is a state-funded school with top-quality facilities that their child is quite likely to start when they reach statutory school age, which is very close to their home. In practice, it is only parents who are not working, or children who are in a situation where perhaps a family member or a childminder can look after them full time, who are able to access those services.

I urge the Government to think about a more directional approach with schools. In school settings where a breakfast club and an afterschool club are already provided on site for children of statutory school age—so the school is open, staffed and operating during those periods—it is not acceptable to say that its early years facilities are only available for such limited periods. The taxpayer is putting the money in to ensure that these are good-quality settings with fully trained staff. We need to get those schools to the point where they are playing a much more significant part in the provision of early education and childcare. That would help to improve supply, potentially raise quality and reduce the cost to parents.

We are focusing on childcare and early years, but we must not forget that many parents will go through a significant period of their lives with one child who is pre-statutory school age and another child who is of statutory school age. In larger families, there might be quite a number of children. Constituents have told me about the challenges in managing a situation where there is a four-year-old through to a 15-year-old: everything from finding a family car with enough child-safe car seats to transport them around the place, through to trying to manage a normal working life. Schools already provide some of that patchwork, so expanding their offer, in particular ensuring that childcare around school-age children is of a high standard, high quality and as affordable as possible, needs to be a priority.

The Department has not always had the rosiest view of the capacity of local authorities, but it is my experience that the good ones, of which there are examples in every part of the country, have shown that when they have the flexibility they are very good at innovating and finding new ways of delivering these kinds of services. Where there is a new provider with a new model in the local area, they can use the resources available to them flexibly to enable that to go to scale and serve a much larger population of parents.

I would like to spend a moment on how we spend the money in this budget. Lots of Members have given good examples of the transformational effect of particular services. It remains an issue for us as a country—and for the international community—that the impact of interventions in early childhood and childhood more generally are not well-researched. Therefore, the decision making around that is not always very well-evidenced.

My experience of Sure Start is that when the programme was first implemented, it was very focused on capital expenditure on buildings. In the local authority, the direction to me was that my priority was to get the buildings constructed and opened by the deadlines—that was what mattered more than anything else. At the same time, some of the research that emerged as those programmes were evaluated showed that the evidence was mixed. A lot of the evaluations were carried out on the basis of whether parents felt that they had enjoyed their involvement with the children’s centre and whether they felt that it had been useful, rather than looking at the long-term metrics. Long-term metrics on obesity, for example, showed that they had had a positive impact. Other metrics showed that they had not. We cannot assume that because something was popular and well-liked, it was also effective at giving children the transformational opportunity intended.

In my experience, because Government deadlines for their opening had to be met, buildings were often provided on existing local authority-owned land adjacent to schools. The primary focus of the centres therefore became the school readiness of children who were going to attend a particular school, rather than the broader service of the community and the most vulnerable, which was the intention.

[Helen Hayes]

indicated dissent.

[David Simmonds]

The hon. Member shakes her head; I appreciate that the Labour party and the previous Labour Government were enormously attached to that, but it is right that it has been subject to scrutiny. For something intended to be a flagship, it was clear that the Sure Start programme did not reach the parts that other programmes could not reach, which was the crucial and core purpose for which it was set up. That is backed up by research from the United States.

The right hon. Member for South Northamptonshire (Dame Andrea Leadsom) referred to the Early Intervention Foundation. I urge the Government to make the best possible use of the now merged What Works centres, whose chief executive, Dr Jo Casebourne, was previously chief executive of the Early Intervention Foundation. The use of randomised controlled trials was strongly advocated at the outset of Sure Start, and was resisted by the then Government. There was a lot of debate about why that was, and certainly an active suspicion among researchers that the Government did not want any of that research to come back and point out that some interventions were not very effective and not a good use of taxpayer money.

An emerging substantial evidence base demonstrates that although some of the things that we spent money on in Sure Start did not achieve any useful purpose for the children who were supposed to be the beneficiaries, other programmes were effective. Commissioners, whether in the Department or in the local authority, need that information so that, given a choice to spend a given amount of taxpayer money, they can spend it on what will make the biggest possible difference in the life of a child. Evidence week is coming up in Parliament soon, and I hope that the Department and Ministers will have the opportunity to celebrate the use of evidence in the distribution of the funding that we are debating.

Let me give a good example. Several hon. Members have mentioned ratios, which Governments in the past have addressed. There is an enormous amount of guidance for local authorities and providers about how things are to be done, and it is a dull but worthwhile exercise to read the Department’s guidance on calculating ratios. It makes it very clear that, depending on how we choose to calculate them, we can produce very different figures suggesting very different things about the ratio of children to staff at a given site.

A setting can arrive at a number by dividing the total number of staff, or the full-time equivalent, by the number of children on the roll. Ofsted would probably encourage it to think instead about how many appropriately qualified adults per child are in the room—a different figure. Both approaches are fine within the DFE guidance, however, so those who believe that changing the ratios can completely transform the early years landscape and resource spread are perhaps barking up the wrong tree. It may well be that adjusting the guidance would help to address the issue.

--- Later in debate ---

[Helen Hayes (Dulwich and West Norwood) (Lab)]

I pay tribute to the hon. Member for Worcester (Mr Walker) for securing this important debate. I am grateful to every hon. Member who has spoken.

It is timely that this debate is being held on International Women’s Day—a day to celebrate the progress that has been made towards women’s equality, celebrate all those before us who have fought for it, and reflect on the work still to be done. This International Women’s Day, we read new data from the British Chambers of Commerce showing that two thirds of women with childcare responsibilities believe that they are being held back at work as a result of soaring costs, while the gender pay gap is getting worse. That is the reality after 13 years of Conservative Government, and it should give cause for sober reflection on the Government Benches.

The Department for Education has a vital role to play in supporting children in their early years through childcare and children’s social care and in supporting children with special educational needs and disabilities. As we have heard from many hon. Members this afternoon, however, all those services are stretched to breaking point, and the Government’s model of funding is contributing to that.

We heard from my hon. Friend the Member for Coventry North West (Taiwo Owatemi) about the appalling situation facing Georgie Porgies Pre-School, a nursery in her constituency. Like so many nurseries across the country, it is struggling to make ends meet and is at risk of closure.

The stories that we heard from my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom) about the experience of parents in the earliest years after the birth of a baby certainly chimed with me. I will never forget the image of my husband on the day we returned home from hospital with our first baby, standing in the living room with the baby in one hand and a book about babies in the other, and struggling to work out exactly what we had embarked on in life. I thank my right hon. Friend for those somewhat stressful and traumatic memories. She also described the costs of failing to provide early help and support for the most vulnerable children and their families, and paid tribute to my constituency predecessor, Baroness Jowell. I join her in that tribute, and in remembering Tessa on International Women’s Day.

My hon. Friend the Member for Putney (Fleur Anderson) supplied compelling evidence of the cost of living pressures on families resulting from the cost of childcare, and explained very clearly that the current situation is, whether we like it or not in this place, a consequence of political choices that have been made. My hon. Friend the Member for Hemsworth (Jon Trickett) highlighted the devastating impact of child poverty, increasing under this Government, on the most vulnerable children and their families.

The Government provide a subsidy for early years education and childcare, but the funding model is far too complex for parents, and it does not work for early years providers such as nurseries and childminders either. Families with children under 12 can gain access to support for childcare costs via tax-free childcare or universal credit, but both have very low levels of availability and take-up, and the two systems do not relate to each other. That creates particular problems for working parents on low incomes who want to increase their hours of work. Parents taking on too many additional hours run the risk of losing eligibility for the childcare costs component of universal credit, and having to apply to an entirely separate Government Department, His Majesty’s Revenue and Customs, for tax-free childcare.

The Work and Pensions Committee recently published a report on universal credit and childcare costs. It drew attention to the very low level of awareness of the universal credit childcare element, which is taken up by just 13% of potentially eligible parents, and also highlighted a number of other barriers to access to childcare for parents on low incomes, including the very high costs of childcare even after subsidy, the lack of flexibility for parents with non-standard or fluctuating hours, and the requirement for up-front payment for childcare, sometimes up to a term ahead.

In addition to universal credit and tax-free childcare, the Government operate a system of so-called free hours for two-year-olds, and also for three and four-year-olds. The two-year-olds’ free hours are focused on the families with the very lowest incomes, while the free hours for three and four-year-olds are available only to working families. There is a risk that some families accessing 15 hours a week of childcare for their two-year-old free of charge will find themselves without a place when the child reaches the age of three if they are not in work, which will make it even harder for them to find and sustain employment. It is an enormous problem that universal credit requires parents to arrange and pay for their childcare themselves and then reclaim reimbursement. In most cases, nurseries and childminders ask for fees in advance, and that can present a significant outlay for parents on very low incomes. Fluctuating hours at work, or fluctuating hours of childcare used, can then result in overpayments being recouped in arrears. This is an extremely difficult system for parents to manage, and it should therefore be no surprise that take-up is so low.

The Work and Pensions Committee emphasised the vital role that childcare plays in enabling parents to work, and the transformative impact that high-quality early years education can have on the lives of children and their families. The Committee concluded that the cost of childcare should never be a barrier to work, but we know that that is exactly what is currently happening. For the first time in decades, women are leaving the workplace or reducing their hours because they cannot afford the costs of childcare. More than 50% of parents responding to a survey by Pregnant Then Screwed said that they had been forced to reduce their hours at work owing to childcare costs. This particularly affects women, with Office for National Statistics data suggesting that almost three in 10 currently economically inactive women have left work to care for family, including children, compared with just 6% of men. Grandparents too are leaving employment to look after their grandchildren so that their adult sons and daughters can go to work. In a recent survey, one in four grandparents reported retiring early and others across the country are reducing their hours at work.

I referred to the free hours for two-year-olds and three and four-year-olds as “so-called free hours”, because of course they are not free for nurseries and childminders to deliver. The Government pay nurseries and childminders considerably less than it costs them to deliver those hours. As of 2021, the DFE paid just £4.89 per hour per child to providers, despite its own estimates suggesting that each place would cost £7.49 per hour to provide. That is a shortfall of £2.60 per child per hour, a gap that will only have grown as inflation has hit nurseries and other providers. The Government’s funding model does not work for nurseries and childminders, who are closing their doors in their droves. According to the National Day Nurseries Association, 5,400 nurseries, childminders and other providers closed in the year to August 2022, and this is set to rise even further as support for energy bills is withdrawn at the end of this month.

The Government have effectively set up a cross-subsidy model for childcare, with the unsubsidised places for under-two-year-olds being used to cover the unfunded costs of providing free hours to two-year-olds and over. The consequence is eye-wateringly high costs for parents of the youngest children. Last week, I met a constituent who was about to return to employment after maternity leave for her second child. She told me that the cost of childcare for her three-year-old and her one-year-old will be £2,700 a month. There are very few jobs that pay so well that employees have such a large amount of extra disposable income each month just waiting to be spent on childcare. It is no wonder that more and more women are concluding that they simply cannot afford to work under this Conservative Government. And of course the costs of childcare do not end when children start school, yet the Government provide next to no support to parents who need wraparound childcare at the start and end of the school day.

There is broad consensus on the issue of childcare and the need for reform. The CBI, the British Chambers of Commerce, the TUC, parents and providers all agree that childcare in the UK is broken, and we cannot wait any longer to reform it. Families cannot wait, and our economy cannot wait. Labour understands the urgency, which is why we have announced that a Labour Government would introduce fully funded breakfast clubs for all primary age children as the first step on the road to a childcare system fit for the 21st century that works for families, providers and our economy, and a childcare system that needs to work from the end of parental leave until the end of primary school.

When it comes to the most vulnerable children, this Government’s funding model does not work either. Labour established a network of Sure Start centres across the country, bringing together support for families with very young children and helping to build communities. The current Government decimated the funding for Sure Start, and since 2010, 1,300 centres have closed completely. Family hubs are a pale imitation in only a fraction of local authority areas, bringing services together under a brand but doing nothing to drive improvements in capacity or in quality. Support for children with special educational needs and disabilities is similarly stretched to breaking point. The Government’s announcement this week will do nothing to end the battle for support that so many parents have to endure, with even the patchy measures that have been announced not due to be implemented for at least two years. Our children deserve the best that we can offer, not this mess of piecemeal, incoherent funding, and not services that are being stretched to the limit. Labour put children first when we were last in government, and we will do so again.