Free Childcare

Ruth George Excerpts

Thursday 12th October 2017 Westminster Hall

[Ruth George (High Peak) (Lab)]

I beg to move,

That this House has considered the effects of 30 hours free childcare.

I am here now, Mr Rosindell—thank you.

We are all here because we want all our children to get the best possible start in life and to be as ready for school as they can be, and because we want working parents to know that they can rely on high-quality childcare in a fun, friendly and caring setting that is nearby. Those factors are important to ensure not just that our children are school-ready, but that they are happy and relaxed and make friends.

I have four children, aged between eight and 25. As a mum who has worked all my adult life, I can vouch for how important it is for a child to be happy with their nursery or childminder. There is nothing worse than having to leave a child when they are crying or unhappy. That happens with almost all young children in the first few days, but they soon settle down, trust the staff, make friends and have a great time. The only thing worse than leaving a crying child is getting back at the end of the day and finding that they have been unhappy all day.

I have been lucky in the rural area where I live to have had excellent and friendly childcare nearby for all my children. We all welcome the consistent work to drive up standards in early years, so that 95% of providers are now judged by Ofsted to be good or outstanding. We all want good-quality, affordable and sufficient childcare. Although the policy of 30 hours of funded care for three and four-year-olds aims to increase the affordability of care, the lack of Government funding has raised doubts across the country about affordability, quality and sufficiency.

Why has that policy been so underfunded? At the Conservative party’s childcare campaign day on Monday 15 April 2015, in the run-up to the general election, David Cameron said that he would create an extra 600,000 free childcare places if he was returned to power. That was certainly a popular policy. The weekend before that announcement, the Conservatives had been behind Labour in every poll, but the day after the announcement—16 April—they were ahead in every poll, except one that was tied. At the time, the BBC reported that Labour described the policy as “another unfunded announcement”. BBC political correspondent Carole Walker said that Mr Cameron was “likely to face questions” about how the Conservatives would ensure that sufficient childcare places were available. She was right about the questions, but not about the person who would be questioned.

The Conservatives said that the 30-hour offer would result in more than 600,000 extra 15-hour childcare places every year from 2017, and that it would be funded by reducing tax relief on pension contributions. However, when those changes to tax relief were announced in the 2015 summer Budget, we were told that they would fund Conservative cuts to inheritance tax, not childcare, so the extra 15 hours of supposedly free childcare for 600,000 children were left without any specific funding. It is no wonder that the number of places has reduced to a third of what was promised in 2015 and that providers have been left wondering where all the money has gone.

Concerns were raised as soon as the projected funding levels were announced. Some 62% of all early years providers surveyed by the Pre-school Learning Alliance in March 2017 said that the funding they will receive in 2017-18 is less than the hourly rate they charge parents and less than the hourly cost of delivering a funded place. It is not surprising that more than half—58%—expected that the 30-hour offer would have a negative impact on their businesses, and just 17% predicted a positive impact.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

My hon. Friend mentioned the Pre-school Learning Alliance. Some Government Members say that they have had enough of experts, but does she agree that they should listen more to groups on the ground, such as my constituent Jane Reddish and her group What About The Children? Its excellent report on the 30-hours policy raises many of the same concerns as my hon. Friend, specifically pertaining to the special developmental needs of nought to 36-month-olds. The Minister would be well advised to meet that group, as the shadow Minister, my hon. Friend the Member for Batley and Spen (Tracy Brabin), soon will.

[Ruth George]

I thank my hon. Friend for that intervention.

A survey of local authorities by the Family and Childcare Trust in February 2017 found that only a third thought that there would be enough childcare for three and four-year-olds using the 30-hour offer, while a third did not know whether there would be a reduction in care quality as a result of the offer’s roll-out. Some 44% of those local authorities said that the 30-hour offer would reduce the financial sustainability of some settings, so some childcare providers would go out of business. The survey found that the extension of free hours could compromise things that parents thought were priorities for high-quality childcare. That is important, because only high-quality childcare helps to boost children’s attainment and close the gap between disadvantaged children and their wealthier peers.

It was good that the Government introduced pilot schemes in September 2016 to see what would happen. The Minister has claimed that those pilot schemes were a great success. In response to the urgent question on 6 September from my hon. Friend the shadow Minister, when we were finally given some figures on the number of children registered for places, the Minister said:

“If we look at the pilot areas that have been delivering for a year now…we can see that 100% of their providers are delivering and 100% of the parents who wanted a place found one, despite some reservations being put on the record…at the very beginning. The pilots have demonstrated that we can deliver and we are delivering.”—[Official Report, 6 September 2017; Vol. 628, c. 163.]

However, some nurseries that were involved in the pilot tell a very different tale. The owner of Polly Anna’s Nursery in York, the only area on the lowest level of local authority funding—£4.30 an hour, of which £4 went to providers—said that he wrote to the Minister to say that although he was in favour of any Government measure to reduce the cost to families of their child’s early education and care and of any improvement to quality and staff qualifications, £4 an hour would represent an increase of only 2% a year in the 10 years from 2010, at a time when costs will have increased disproportionately.

[Mike Wood (Dudley South) (Con)]

Does the hon. Lady recognise that an independent study put the cost of providing childcare for three and four-year-olds at about £3.72 per hour, whereas the average amount that goes to a council is £4.94—significantly more?

[Ruth George]

I accept that a study was done in 2015. That was before we knew the outcome of business rate increases and before we had seen the impact on the sector of the national living wage policy and of auto-enrolment. All those things significantly increased the cost of nursery provision and were not known at the time the study was done, so it is erroneous to use those figures for funding projections up to 2020.

[The Minister for Children and Families (Mr Robert Goodwill)]

I thank the hon. Lady for giving way. The review of childcare costs was described as “thorough and wide-ranging” by the National Audit Office, so we believe we can base our costings on those figures. Does she disagree with the National Audit Office’s judgment?

[Ruth George]

In 2015, when those figures were done, they may well have been up to standard, but they do not represent the increase in costs that nurseries have seen in the past two years and certainly will see even more with the increase in auto-enrolment costs and the increase in the national living wage that will be ongoing up until 2020. They figures are utterly at odds with all the evidence that comes from local authorities and from the childcare provision sector, who have given ample evidence about their costs and the amount that they have to pay for the provision. In fact, a provider from the Minister’s own constituency wrote to tell him:

“I ask myself do I really want to continue working as a childcare provider when my wage will now match that of a supermarket worker without the responsibilities of a childcare provider, the paper work, Ofsted and book work. I am sad it had come to this.”

The fact that the Minister claimed he had not heard a peep from providers about their problems, either in the pilot areas, or with the full roll-out, has annoyed many of them. Hundreds of providers have peeped to the “Champagne Nurseries on Lemonade Funding” Facebook group to say that they certainly have peeped.

[Mr Goodwill]

May I suggest the hon. Lady looks at the record of what I actually said? I was listing the pilot areas and referring to Members of Parliament in the House and the fact they had not raised those issues with me during the period of the trial.

[Ruth George]

I am afraid I have copies of the emails from the providers in York and Scarborough that were sent during the pilot. They wrote to the Minister about their concerns to do with the pilot that they were participating in, so there seems to be a discrepancy there.

Despite numerous concerns being raised from the pilot areas, national organisations, local authorities and the sector itself, the Government have pressed ahead with the roll-out. My parliamentary questions in July asking for figures on the number of parents registered and on those who had successfully obtained a place went unanswered. Local authorities were forbidden from giving the figures for their own areas, even in response to freedom of information requests, so we had a total lack of information on what was happening up until September, except for reports from parents that they were struggling to register on the website. We heard from nurseries that they were unable to provide the 30 hours and from parents that they therefore could not find places.

In September, in response to an urgent question from my hon. Friend the Member for Batley and Spen (Tracy Brabin), we were told that 152,000 parents had secured a place, 71% of those who had registered. Despite the contrast with the 600,000 places that were promised originally by David Cameron when this vote-winning policy was announced, we were told that this was a great success. But that great success story still involved nearly a third of parents who had registered not having secured a place at the start of term in September. Some 64,000 children missed out on the important start-of- term activities where children learn to settle into their nursery or childcare place. When they start late, they always feel as if they are catching up, as routines are already established and friendships made. I hope the Minister will now update us on how many of those 64,000 children have now secured their place, albeit late.

Nurseries are struggling. They have seen huge increases in costs in recent years, as I mentioned earlier in response to Government Members. Until June I was on the board of a non-profit-making childcare provider, so I have seen the costs for myself. I set up the pension scheme that sees employers making contributions for their full-time staff. Those contributions are just 1% at the moment, but they will increase to 2% and then 3%, on top of wages. As a trade unionist, I also advised on a wages policy to properly reward all the staff and give incentives for attaining extra qualifications as well as making sure we always paid at least the national living wage.

Paying better wages is an excellent policy, but it needs to be funded, and the funding calculations simply do not take into account the fundamental cost and the increases for every childcare provider. That goes alongside the business rates, where most nurseries have seen a huge hike. It is no wonder the National Day Nurseries Association, from its survey in September, said that the 30-hours policy was in chaos. It said more than half of nurseries had had serious worries about having to increase fees for paid-for hours to unacceptable levels, and even about staying in business at all.

Nearly 300 nursery managers and owners completed the survey, which found that four fifths of those offering 30 hours were having to make additional charges for food and special sessions such as language or sports classes, or trips out. More than half of the respondents said parents understood additional services and were happy to pay, but a quarter said they were finding parents did not want to pay.

[Rosie Duffield (Canterbury) (Lab)]

My hon. Friend the Member for Batley and Spen (Tracy Brabin), the shadow Minister with responsibility for early years, has just chaired a panel with childcare providers and I have taken down some of the quotes from that meeting: “The system is complex, long-winded and many parents give up”; “It’s not free, so let’s stop calling it free”; “We are making a £5,000 loss every month”; and “This year I have lost 25% of my intake.” Does my hon. Friend agree that such quotes mean that the system is not currently fit for purpose?

[Ruth George]

Absolutely. I am sorry to have to agree with my hon. Friend.

When almost 80% of nurseries have spent time helping families to apply for the 30 hours, and with 14% saying this had taken more than five hours of staff time per week during the summer, it is no wonder that nurseries are struggling. The policy has had a huge impact in my constituency of High Peak. We have seen three nurseries close their doors over the summer as they simply could not make the finances work. Others have lost out significantly, even when taking on additional children from nurseries that have been lost.

A nursery in Buxton reports that it has lost £19,000 through charging for the meals it used to provide over the lunch period and charging for the additional hours that parents took on top of the 15 hours. Deborah from the Serpentine Nursery says:

“Having run my Early Years provision successfully for 35 years we have taken every change ‘on the chin’, risen to the challenge and carried on without any significant recognition except our Ofsted Outstanding. What other businesses are treated in such a shabby way!”

Flagg Nursery School, a very small village nursery just over my border, in a maintained setting, anticipates it will lose £20,000 a year owing to the lunchtime charges it cannot now make and the payment for the additional hours. The headteacher, Sarah, told me:

“Personally I think it is a great idea to offer 30 hours of childcare for working parents. We have always had children who have attended for the full week but in the past there was a charge. I just don’t feel that the hourly rate is sufficient and is not sustainable in the long term.”

In Furness Vale and New Mills, First Steps Nursery, where my daughter did some work experience, is now losing £10.50 per day per child. It says that if a child takes 30 hours a week, it loses £45 a week for each child. No wonder nurseries are worried about the quality of their provision. First Steps says:

“If we are to continue providing quality for children the rate given for funding needs to increase immensely. We offer our children Forest School and swimming lessons but in order to do this safely we have to have a high staff ratio. The amount we are given does NOT cover this and we are subsidising this so that the children can have the best.”

Flagg’s headteacher spoke of the quality of staff they could employ. She says that staff costs are the most important of all their costs:

“I feel that we ought to have experienced, highly qualified staff working in this sector as these are our most vulnerable children. Experience needs to be paid for though and underfunding could lead to children not being adequately cared for.”

Among my local maintained nurseries there was also concern that the extra 15 hours meant they could not offer places to children who qualified for only 15 hours. The head at New Mills nursery said that the initiative significantly reduces the ability to address the needs of the most disadvantaged children, and was a huge missed opportunity; the assumption is that that was overlooked, and that the initiative was driven by the childcare and working families agenda, not by the impact of quality education on the youngest, and some of the most vulnerable, members of society.

The children with the most need, such as the socially disadvantaged, are not eligible for the additional 15 hours of funding. Being good at closing the gap between disadvantaged children and their more advantaged peers is the very thing for which nursery schools have historically been recognised. Social mobility is an important issue that is not addressed by the 30 hours—something that in many ways contributes to increasing the gap between the poorest and better-off families. There are not enough places for all the children with 30 hours as well as those who qualify for just 15.

The headteacher at Hadfield Nursery School in the north end of my constituency says that the Government have underestimated the number of eligible parents and there are not the places to meet the demand. She is trying to signpost parents to other local providers, because her nursery cannot offer the full number of 30-hour places so they are trying to share them with other providers—15 hours each. It is a worry that as those nurseries have in effect to offer full-time places now, the impact has, again, been to reduce the offer of 15 hours. Those anecdotes from my constituency are backed up by the Sutton Trust, which says that the scheme was not adequately resourced, and the new funding formula will divert resources away from state nurseries disproportionately attended by disadvantaged children. Kitty Stewart, associate professor of social policy at the London School of Economics, said:

“To make up some of the funding gap, a new funding formula reallocates resources away from state nurseries disproportionately attended by disadvantaged children, and they may in the future struggle to afford a qualified teacher. To remove this advantage must be expected to have negative effects on social mobility.”

It is not only nurseries, but childminders, who are affected. They are already struggling. There are now 24% fewer childminders than in 2012—a drop of more than 10,000. Childminders often provide vital home-based care for younger children, or children who would struggle in a nursery setting. One of the childminders in my constituency commented:

“I personally feel that as a nation it is presumed that once a parent returns to work they send their children straight to nursery, when there are alternatives that can provide a more nurturing environment for babies and young children; and this needs to be emphasised—it’s not all about nurseries.”

However, such childminders cannot afford to run the 30-hour scheme, and so they lose out with respect to children coming to them.

What about the impact on parents? If they qualify and they can find a place, parents of three and four-year-olds will have a drop in their nursery fees, even if they have to pay some charges; but parents who qualify only for the 15 free hours, and parents of the most disadvantaged children, struggle to find even those free hours. That will be of huge detriment to their children’s life chances individually, and to social mobility as a whole. Parents with younger children will pick up the bill as charges for younger children have had to increase to make up the shortfall with respect to three and four-year-olds. A mum in my constituency, Emma from Buxton, says that her charges have increased by £230 a month for her one and two-year-old children, and she feels it is not worth her going to work any more. That will have an impact on the most disadvantaged children. Having two parents’ incomes, or having a single parent in work, is an important factor in improving children’s life chances. Emma is worried that the nursery will not even be able to stay open until the oldest child is three, because they are struggling so much to get by. She says:

“So in conclusion we are not much better off in the long run because of how the hours are being offered, and right now we are being crippled by the hike in price. Nurseries have to change their pricing policies in order to survive”,

but they cannot do that in the face of the funding situation.

I am particularly concerned about the impact on the quality of employment in early years, as I have mentioned. My daughter has just completed an early years degree, so I know how much goes into that qualification. She has gone on to do a teaching certificate, so I do not feel that I need to declare an interest, but at many of the nurseries where I have had meetings—particularly among the outstanding-rated ones—there is concern that they will not be able to afford to take on the skilled staff they need to maintain their good ratings. A third of the staff considered by the Sutton Trust, working in group-based childcare, lack English and/or maths at GCSE. Those staff are, unfortunately, the only ones that settings struggling with costs and underfunding will be able to afford. The trust’s chair, Sir Peter Lampl, said:

“Good quality early years provision is vital to narrow the gaps that leave too many youngsters behind by the time they start school. But it’s unlikely that the government’s policy to provide 30 hours…will provide this.”

It is a far cry from the high-quality childcare and fully qualified staff envisaged just a couple of years ago by the Chief Secretary to the Treasury, when she was Under-Secretary of State for Education. There seems to be no emphasis at all in the Government’s policies on quality of provision or of staffing, and that must be worrying with respect to children, progress with social mobility, and our future.

Underfunding of a policy that began with good intentions, although it may have been more about votes than quality childcare, is undermining what is needed throughout the country. I urge the Minister to look again, especially at the projected figures for the next financial year, now that the additional costs of business rates and of the living wage are clear. I want to thank all those who have consistently been raising the issue of the problems with funding, and especially those who set up and contribute to the “Champagne Nurseries on Lemonade Funding” Facebook group. They have been tireless champions of the best of champagne nursery provision, and excellent analysts of the impact of the funding levels.

I also thank the nursery owners and providers in my constituency, a rural area on which the policy has had a great impact. In small rural towns and villages, childcare, and the knowledge that children can go to nursery in their community and make friends in their area, without having to travel long distances, is particularly important. I particularly thank Kate Sebire, the owner of the outstanding-rated Sunshine Nursery School in my home town of Whaley Bridge, who has been bending my ear about the issue for many months. I hope that the Minister will meet childcare providers, listen to their concerns, and take heed of them when he visits the Chancellor for his pre-Budget discussions.

[Several hon. Members rose—]

--- Later in debate ---

[Andrew Rosindell (in the Chair)]

Does the hon. Member for High Peak wish to exercise a short right of reply at the end?

[Ruth George]

Yes, if there is time.

--- Later in debate ---

[Ruth George]

I thank all my colleagues who have made such excellent speeches and good points. I simply ask the Minister to revisit the costings and meet providers to learn from them, especially those in outstanding settings employing graduate and fully qualified staff in order to provide the best-quality childcare.