Early Years Education Funding

Jim Shannon Excerpts

Wednesday 21st July 2021 Westminster Hall

[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.