Nursery Sector: Sustainability

Rachael Maskell Excerpts

Wednesday 10th October 2018 Westminster Hall

[Rachael Maskell (York Central) (Lab/Co-op)]

It is good to see you in the Chair, Mr Gapes, for such an important debate. I thank the hon. Member for Bolton West (Chris Green) for opening the debate so concisely and for raising many important issues.

First, I must declare an interest. My sister is an early years specialist and a teacher in a nursery, and she lobbies me every day about the sector, but in positive ways. She talks about how it should be reformed, improved, invested in and supported. There are fantastic examples in Scandinavian countries of the level of investment in early years. We are talking not about running a service on a shoestring, but about investing in young lives and making sure youngsters have the best start in life. That is what this debate is really about: ensuring that we put excellence right at the heart of early years. We need only look at the WAVE Trust’s work on “The 1001 Critical Days” to understand the importance of bringing that work into nurseries and then into early years education.

I have been working with the National Day Nurseries Association, and in the summer we met providers in my constituency. That is significant for the Minister because York was the first whole authority pilot for the new funding formula and the new system around early years. Not only the statutory sector but the voluntary and private sectors in York bring to bear the real-life experience of the impact of the pilot, so I want to reflect on that today. Of course, I am also here to problem-solve, so I trust that, between us, we will be able to find some solutions to the challenges.

We are talking not only about education for youngsters, but about the whole life experience—the holistic experience—for young people. I was reminded of the increasing need around language and communication skills that young people need, not least because children are often more screen-fed these days. We need to make sure that we have holistic services, which is where Sure Start and children’s centres came in in early years, and we need to make sure we do not lose that approach. With the Budget coming up and the announcement that austerity is at an end, I am sure the Minister will walk through an open door in making sure that we have the resources we need.

Let me go back to York, the early implementer. Talking to providers right across the spectrum, it is clear that serious financial stress is being placed on nurseries. The dedication of the sector and the creativity of people running businesses make the system work, which is what we would expect of professionals. They want the system to provide good, safe services that benefit children and make sure they have the best start in life. York did a lot of preparation through the pilot to ensure business sustainability, and it put business planning support in place for nurseries, which has helped with sustainability in these challenging times of not having the necessary resources. York has also set up a shared foundation partnership, a model where providers come together to talk about the challenges they face and to try to find solutions between them, often signposting families to providers that perhaps have some spare capacity.

However, right across the board, local authorities, private providers and voluntary sector providers are saying that the money is not enough. I want the Minister to understand that. Between £1 and £2 more per hour is needed. The National Day Nurseries Association says that we are £1.90 an hour short. Obviously we need to listen to that evidence base as we move forward.

Financial viability issues are putting real pressure on the sector. Of course, that has been increased by the national living wage coming in, minimum wage costs and auto-enrolment around pension contributions, particularly for providers that want to provide better pensions. We heard about business rates. A nursery provider in my constituency has two nurseries and has paid an increase in business rates of £11,000. That was just the increase. That in itself spells out the real pressure being put on nurseries, which of course still want to provide the best possible service.

In York we have a real challenge around the high cost of living, which means that recruitment and retention is an issue. Of course, when new staff are recruited, they have to go through mandatory training, and in York we want to provide good continuous professional development for staff as well. Often it is the higher paid, more qualified staff who are leaving the sector because of the pressures being put on, for instance, teachers and other professionals. The cost of training and upskilling is therefore also having a negative impact on those providing services.

We need to heed what the NDNA is saying regarding resources, and the Treasury Committee has highlighted how the data the Government used to cost affordability—the amount of money going to the programme—was old data. We therefore need to ensure that affordability is calculated in real time, addressing the real issues that nurseries face today.

We heard examples of how nurseries are being creative to get money, because they obviously need to maintain staffing levels and ensure that children have the best engaged education. We are talking often about £15 to £25 being raised per day. We heard the example of people charging over and above for lunches so that additional money can pay for resources, activities and equipment. Some of the money is going just towards basic staffing costs. This is about getting the essentials right and charging parents for it. So the offer is certainly not free—we need to clarify that—but we want it to be, and that is clearly Labour’s policy. I trust that the Government will step up to the plate.

Other nurseries are restricting the number of children who can be in receipt of the 30 days, or restricting the number of hours available, to ensure that they can balance the books. They are telling me that they now cannot afford to update things such as equipment that is getting old and tatty or other resources. That has a negative impact on a child’s growth and learning. It is important to note that, although we have an excellent education system in York, there is an attainment gap in areas of deprivation. The system is driving greater inequality, and there is concern about that. We are trying to address those issues, and take on board the impact that they are having on young lives.

Nurseries with children who have special educational needs and disabilities wanted me to highlight the impact that the situation is having on them. There is a lack of funding specifically for those children, particularly if they do not have a statement in place. It is also about provision. Often one parent will not work; they will stay at home and be the carer for the child. They therefore do not qualify for the additional hours, because both parents need to work. Alternatively, a single parent could be at home caring for that child, and would therefore be excluded. I ask that that rule is changed as well.

We need to ensure that we are not providing the minimum, but going for the best within the amount of investment we are putting into early years. The costs to the state of getting it wrong are enormous later on in life. We are paying for that now because things have not been put in place right through the education system. Let us put the investment where it really makes a difference.

[Barbara Keeley]

My hon. Friend has just introduced something that ties in with the situation in Salford that I outlined: the impact that our nurseries have on families of children with special educational needs. She also made a point earlier about language and communication. We are potentially losing £1.5 million out of the £3 million cost of running our five nurseries. However, the key point she raises is about the impact, if we cannot save them, that that will have later on education. Parents have told me just how much those nurseries are doing for families with children who have special educational needs.

[Rachael Maskell]

I thank my hon. Friend for that point. We really have to put the right investment in place for children with special educational needs. We need to give those children the start in life that any other child should expect. We also need to support parents. Parents do an amazing job looking after their children. Having the support of a nursery helps them in their work as well. It is vital that they are not excluded from the so-called “free” offer and that a new exemption is introduced by the Minister. I would be really interested to hear him commit to that today.

We mentioned business costs, which are important. We have heard that nurseries in Wales and Scotland are exempt from business rates. We trust that that can be introduced in England. That would make such a difference to nurseries. Nurseries based in schools and childminders and domestic child carers do not pay business rates, so why do nurseries have to? We also heard about VAT, where we need a level playing field.

The Minister has a real opportunity to reform the funding. York is the example to call on. Those working in the sector have shown dedication, but they are really struggling, and the viability of nurseries, as I saw when visiting them across my constituency this summer, is very fragile indeed. There is a real plea, which is the basis of today’s debate, for the Minister to go back and get the funding that is required. Otherwise, many nurseries could disappear, and that would jeopardise early years altogether.

--- Later in debate ---

[Nadhim Zahawi]

I shall give way later if I have time. The hon. Lady and the hon. Member for Burnley (Julie Cooper) mentioned maintained nurseries. The Secretary of State and I have both seen the incredible work that maintained nurseries deliver for their communities, and we have made £60 million a year of supplementary funding available at least until 2020. My message to local authorities is: do not take premature decisions on maintained nurseries. Many colleagues have made representations to me about the quality of maintained nurseries in their constituencies.

The hon. Member for Worsley and Eccles South (Barbara Keeley), who is no longer present, spoke about nurseries in Salford being forced to close as a result of funding rules. I met the hon. Lady and other colleagues to discuss the matter, but it is for the council to manage its local markets and to ensure appropriate provision for children with special educational need and/or disability. Councils may request exemption from the high pass-through rule, but Salford chose not to do that. My officials continue to discuss the matter with council officers. I am pleased that there are no 30-hour sufficiency issues in Salford.

The hon. Member for York Central (Rachael Maskell) made a strong speech about the early years workforce and professional development. As she said, staff training and development is associated with quality, and I have announced that we are investing £20 million in professional development and training for practitioners in disadvantaged areas of our country.

The attainment gap was mentioned by the hon. Members for York Central and for Burnley. I would say that we were in agreement. More than a quarter of children finished their reception year still without the early communication and reading skills that they need to thrive. The Government have ambitious plans to halve that number over the next 10 years. The Department is working closely with the sector to deliver on our commitment to reform the early years foundation stage profile. We know that those gaps can emerge much earlier in a child’s life, as the hon. Member for York Central rightly indicated, well before the child enters the reception year. That is why we have recently launched a capital bidding round of £30 million, inviting leading schools to come forward with projects to create new high-quality nursery places for two, three and four-year-olds, which I spoke about earlier.

The hon. Member for York Central also spoke about the need to put the right investment in place for children with SEND. A high-needs funding system provides funding to local authorities for children and young people with complex special educational needs, from age zero to 25. The total high-needs block of funding now stands at a record high of almost £6 billion in England. Every local authority will attract at least a 1% increase in core formula funding per head in 2019-20 compared with 2017-18. The support is there for children with SEND, and our disability access fund is worth £615 per child. Local authorities should also establish an SEN inclusion fund. I think I shall end there, unless colleagues wish to intervene.

[Rachael Maskell]

The Minister was asked about funding. He has heard from Members across the Chamber that funding does not match need. Will he set out the discussions he has had with the Treasury ahead of the Budget to ensure that we have the right amount of funding for nurseries? Can we expect an announcement on 29 October?

[Nadhim Zahawi]

I hope that I conveyed to the hon. Lady, even if I did not convince her, that we are looking at funding very closely—a real deep dive. We have included our own additional survey questions for providers and have taken a representative sample of providers so that we can begin to understand it. My hon. Friends the Members for Rugby and for Bolton West and Opposition Members have offered evidence that we will look at very closely. I assure the hon. Lady that we are doing the work to ensure that there is continued sufficiency and that providers are able to deliver the excellent service that many thousands of them deliver.

I thank my hon. Friend the Member for Bolton West for securing this debate and for his thoughtful contributions.