Childcare and Early Years

Debate between Kit Malthouse and Robin Walker

Wednesday 8th March 2023 Commons Chamber

[Mr Walker]

My hon. Friend, on whose Select Committee—the Northern Ireland Affairs Committee—I am happy to serve, is absolutely right. I have learned a huge amount as a result of having children in childcare and early years settings and talking to the brilliant people who look after them. It is absolutely true that the people who work in this space provide that support. I also think that the Government’s family hubs intervention will be very welcome, particularly if there is outreach and support in the community.

When we take into account the stimulation for young minds, the benefits for parents and the impact on schools, the case for investment in early years becomes a win-win-win—and that is not all. We all know about the rising tide of demand for specialist and high needs support; the Minister was very frank about it in her statement on Monday. We all know that the early identification of need is vital to children’s life chances. Picking up challenges such as autism, speech and language difficulties and hearing or visual impairments early in a child’s life enormously increases their chances of managing their condition, getting the right specialist support in place and being able to engage with mainstream education.

If the Treasury ever wants to reduce the high needs deficits that beset our local authority budgets and simultaneously unleash the potential of more young people with special needs, it needs to understand that investment in early years and in the professions that can support, identify and meet needs in the early years is a must. Investment in the early years and childcare should therefore be a win to the power of four. There can be few sectors of the economy in which there is such obvious and compelling payback.

[Kit Malthouse (North West Hampshire) (Con)]

My hon. Friend is quite right to use the word “investment” in this context. Has he ever come across the Tangelo Park project in the United States, which has fascinated me for many years? A local philanthropist took over a neighbourhood in Florida that was plagued by crime and low achievement—what one would refer to as a rough neighbourhood. He made two offers to the population: he said that he would pay for universal, high-quality pre-school childcare and that anybody who got into college would get it free. Obviously people normally have to pay for college there, so that created an incentive. The project has been going for 20 years and has completely transformed the neighbourhood, which has become prosperous, crime-free and a lovely place to live. If we are interested in regeneration and levelling up across everything we do, investment is about not just the individual child and their family, but the area in which they live and their community’s sense of aspiration and purpose.

[Mr Walker]

My right hon. Friend makes an excellent point. We had a very interesting debate on the Levelling-up and Regeneration Bill about childcare as an infrastructural issue, which I think reflected those benefits. I agree that we need social entrepreneurs to invest and play a role in this space. The private, voluntary and independent sector, which currently dominates provision, is so vital. It is important for us to work with the sector and support it rather than placing it under the pressures that unfortunately we are seeing today.

This is a debate about departmental estimates, but I am first to recognise that not all spending on childcare and early years comes or needs to come from the Department for Education’s budget. Within that budget, however, we have seen welcome commitments to review and increase the local spending on funded hours. I am proud of this Government’s record of delivering both the targeted two-year-old offer for disadvantaged children and the 30 free hours for some working parents.

Evidence given to the Education Committee makes it all too clear, however, that those welcome steps are coming under real pressure from rising costs. Helen Donohoe of PACEY, the Professional Association for Childcare and Early Years, told us:

“The number of childminders has halved in 20 years. We project that by 2035 we will have only about 1,000 childminders left in the country. That is from 60,000 20 years ago”.

Dr Grenier, a nursery school headteacher, told us that

“roughly 10% of nursery schools have closed in the last 10 years and more are due to close soon.”

Kara Jewell, a nursery director, told us:

“In 2003 when I registered as a childminder our funding rate was £3.02 per hour. It is now set to go to £4.69, so our funding rate has gone up 55.3% in 20 years while the minimum wage has risen by 131.56%.”

Emma Gardner, who is quality manager for early years and childcare at Spring by Action for Children, told us:

“I certainly think that funded places in settings that take funded children will reduce dramatically because it is just not sustainable.”

Much of the potential for real investment in this space comes through the Treasury’s so-called tax-free childcare offer and the Department for Work and Pensions’ substantial contribution through universal credit. However, our Committee has heard that neither is working as effectively as it should, and that both need reform to meet the needs of parents today. The Early Years Alliance has suggested to our Committee that the tax-free childcare policy should be stopped and that the theoretical billions set aside for it should be invested in meeting the full costs of the so-called free hours. We have heard from others that the money could be better invested in extending the scope of the subsidised offers from three and four-year-olds down to one and two-year-olds.

Against that, it is worth bearing in mind that the tax-free childcare offer is currently the only part of the system that offers parents any support for children under two or over four, so cutting it off completely would come at the expense of many who use it. I also think that it is worth exploring the true potential of actual tax-free childcare. We could make it much more attractive for parents by allowing childcare costs to be claimed against taxation for the household, as many European countries do, rather than offering a 20% subsidy on cash placed in an account from post-tax income.

There are other ways for the Treasury to help the sector that I believe are worthy of immediate consideration. It could remove business rates from the PVI sector, which provides approximately 80% of childcare in this country. It could remove the unfair burden of VAT, which holds back investment. I know that such moves would come at a cost and that the Chancellor has a hugely difficult challenge in balancing the books after all the challenges of the pandemic, but I plead that he consider the huge benefit of supporting investment in this space and the enormous upsides of better stimulated children and of more parents returning to work.

If such reforms prove a bridge too far, I hope that the Chancellor will look urgently at the massive increases in rates facing many in the sector. The NDNA told our Committee:

“Business rate property revaluation from April 2023 has seen providers report bill increases of 40-50%”.

I received clear evidence of that last week from a passionate early years advocate in my constituency who has been made an MBE for her services to the sector. She is despairing at the proposed increase of 35% in the rates for her outstanding-rated Worcester provision, which is compounded by the fact that the local funding rate has increased by just 1% for two-year-olds and 5% for three and four-year-olds while the national living wage on which many of her staff are working has increased by 9.2%.

I will conclude my speech not by pre-empting the findings of our Committee’s inquiry further than I have done already, but by quoting directly from my constituent. In a recent letter to me, Alice Bennett MBE—the founder of the Worcester Early Years Centre and the recipient of an honour in recognition of her outstanding work in the early years sector—wrote:

“I appeal to you and your Government once again for urgent reform in this nation’s early years sector. We are facing the most challenging time in decades with settings closing and talented staff leaving in droves…We all know that 90% of a child’s brain development happens before the age of 5. The research and evidence for this is utterly convincing.”

She described investing in the sector as

“morally and ethically the right way forward, thereby ensuring that every child can realise their rights and entitlements to develop their full potential and to thrive and enjoy a meaningful existence in this world. Our sector is indeed very dedicated and hardworking but we cannot continue to work for peanuts and be subject to such punitive taxation. Our lifetime legacies of outstanding and irreplaceable nurseries will be forced to close without some form of sensible revision and financial interaction.”

There is a real case for responding to that call for help.

On International Women’s Day, we should celebrate the enormous contribution to this sector of female entrepreneurs—people who have invested a lifetime of learning and labour in supporting children’s development.

I believe that we have a Prime Minister and a Chancellor who recognise the case for education and early intervention, and I know that we have a Children’s Minister who is passionate about the value of childcare and early education. I am hopeful that next time we debate the departmental estimates, they will have enabled the Department of Education to deliver a sustained uplift in investment in early years, and to build on the Government’s overall record in this regard.