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Education Committee publishes Government response to landmark childcare report

18 October 2023

The Education Committee has published the Government’s response to its report on supporting the childcare and early years sector. 

A brief summary of ministers’ response to the cross-party Committee’s report, published in July, is included below. The report made a total of 23 recommendations. 

The Government rejected the Committee’s recommendation that business rates should be scrapped for childcare settings, and that they should be zero-rated for VAT on their business purchases. Ministers said they had frozen business rates for the next five years and that rate relief schemes already provide discounts to childcare providers and others. The response said there are no plans to alter terms for VAT. It also rejected the call for a review of tax-free childcare, a policy controlled by the Treasury rather than the Department for Education.  

The Government did not fully accept the Committee’s call for it to work “with childcare providers and local authorities” to set the hourly funding rate that will be paid to childcare providers when the universal 30-hours childcare entitlements are rolled out. Witnesses to the inquiry said providers who are already struggling could otherwise be left insufficiently funded. The Department for Education’s (DfE’s) response said it recognises the importance of setting funding rates with local authorities, had uprated the hourly rate for 2023/24, and was providing additional funding via the early years supplementary grant. 

Agreeing with a Committee recommendation, the Government confirmed it will amend town planning legislation so that funding from the Infrastructure Levy, which property developers pay to local authorities after planning permission is given, can be used to pay for childcare facilities. 

There was a positive response to the Committee’s call for government to remove barriers faced by social housing residents whose tenancies block them from operating as childminders in their homes. DfE said it is “engaging with the Department for Levelling Up, Housing and Communities and a range of housing sector stakeholders including social and private landlords, to identify and reduce property related barriers to childminding”. 

DfE did not directly respond to MPs’ calls for it to prioritise career development of early years practitioners as a means of improving retainment of staff in the sector, and giving it parity of esteem with staff working in schools. The Department said it is developing a national campaign “to boost interest in the sector”. It also aims to boost recruitment with efforts to “remove barriers to entering the sector, by ensuring qualifications are suitable and easy to understand”, and by introducing new types of apprenticeship for becoming a childcare professional. 

In total the Government accepted fully four of the Select Committee’s recommendations, accepted a further 11 in part and rejected or failed to respond to eight. 

Chair comment

Education Committee Chair Robin Walker MP said:  

“We maintain that there is a powerful case for reviewing the funding levels for childcare settings, the working of tax free childcare and, given their vital contribution to the economy, the taxes they incur. We hope the Government is eyeing up ways to help the sector in its Autumn Statement, which will build on the positive announcements made in the spring.  

“We accept that not every one of our recommendations is in the gift of ministers at the Department of Education, but our report stressed and ministers have accepted the importance of cross departmental work on these issues. We shall continue to press for action across Government to support this vital sector. 

“Meanwhile it is encouraging that ministers are working on ways to boost recruitment and retention in the sector, and to remove unfair barriers that stand in the way of social housing tenants becoming childminders.” 

Further information

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