Investment needed to support our vital childcare sector

The All-Party Parliamentary Group for Childcare and Early Education has published findings into the financial sustainability of childcare and early education settings in England. It makes several proposals outlined in the ‘steps to sustainability’ report which finds that the way in which the Government’s flagship childcare policy – 30 hours free childcare for three and four year olds – has been rolled out has exacerbated financial difficulties for childcare providers. Specifically, it found that there is around a 20% shortfall in funding per child. To ensure the childcare and early education sector can be fit for purpose, the report makes several recommendations within four key themes:

1. Funding

There is a significant body of evidence to demonstrate the financial challenges childcare providers are facing. It is estimated that there is at least a £662m gap in early years funding, causing difficulties for providers. Since the introduction of 30 hours free childcare, the number of settings that have closed has increased by 66% with the numbers of providers falling from 90,300 in 2016 to 81,500 in 2018. The report recommends that the Treasury and the Department for Education address the funding gap, conduct a cross-department annual review of costs and funding rates, and also deliver full business rates relief to providers as implemented in Scotland and Wales.

2. Supporting practitioners

Providers continue to face challenges with recruitment and retention. Childcare is a highly skilled profession but it is low paid and the need to improve pay for workers is vital. The report calls for providers to be supported to enhance recruitment and increase salaries for practitioners.

3. Social mobility

A key finding from the report is that settings in the most deprived areas of England are twice as likely to anticipate closure than settings in the most affluent areas. The report warns that this trend could lead to a situation where only wealthy families are able to access childcare services, leading to a reduction in educational opportunities for children and challenges for parents to access work. The report strongly recommends the need to prioritise closing the funding gap in deprived areas.

The report also recommends that Universal Credit should allow childcare payments to be made directly to childcare providers. The system has been widely criticised for its requirement for childcare costs to be paid upfront and costs then reimbursed. This policy can leave households waiting weeks, or months, to receive support they are entitled to with the cost of childcare. While the Government has said it has “no plans” to introduce a system of direct payments to providers, the report urges the Government to rethink this policy.

4. Long-term steps for sustainability

The report recommends that the Government establishes an independent early years commission to advise on current and future steps to be taken by the Government, local authorities and the sector to ensure financial sustainability, as well as quality and availability of services and places. The report urges the Government to begin a consultation with the sector as soon as possible to form a commission.

 Finally, the report recommends a campaign to champion the work of childcare providers. This is key to elevating the public perception of the childcare sector and promoting the value of early education. The report recommends that every MP visits a local childcare provider to speak to providers and parents.

Importance of the report

The report is based on significant research and evidence which demonstrate the challenges within the childcare and early education sector in England. Its publication is timely given the forthcoming Spending Review and new Prime Minister. The sector has welcomed the findings of the report and calls on the Government to urgently acknowledge difficulties facing the early years sector.

Employers For Childcare would also encourage MPs and MLAs to visit a childcare setting this summer during Parliamentary recess, to see first hand the great work providers are doing and also learn about the challenges they are facing.

What can we learn?

While the report focuses exclusively on England, we know that childcare providers in other parts of the UK are also experiencing similar issues.

For example, the annual Northern Ireland Childcare Survey 2019 found many providers report making a loss or just breaking even. This is not sustainable for any type of childcare provider, and investment is required to support them in providing high quality services. At a time of political instability we are concerned that Northern Ireland is falling further behind other UK jurisdictions. This is a situation which we believe is unacceptable and lets down everyone using and working in the childcare sector.

While we would welcome a move that would give working parents, and those seeking to get into work, access to funded early years education and childcare in Northern Ireland, this report demonstrates several issues with 30 hours free childcare scheme. It is clear that learning must be taken on board, and if this, or a similar model, is to be introduced in Northern Ireland then appropriate funding must be available to ensure it can work sustainably both for families and childcare providers.