CEY0027

Written evidence submitted by Puffins of Exeter

We are a small group provider of early years education and care, based in the South West. We have 5 nurseries, employ around 100 staff and care for children from hundreds of families.

Affordability

We keep costs as low as we can, and try to provide everything that is needed to care for the children placed in our care, with no additional charges for nappies, food, etc. However, a full time place for children aged under 3 in our nurseries is currently almost £1,200 per month. Parents on universal credit may get some of this subsidised. Others can benefit from the tax free childcare scheme, but even with this the cost is over £900pm. This is simply not affordable for the majority of families in the South West. Mothers are choosing to remain at home, and are lost to the workforce. The forced career break affects their potential earnings, training and promotion opportunities. There are three significant factors that affect the high cost of childcare:

1. Nurseries in England get no rates relief. In Scotland and Wales, nurseries get full relief. In addition to this, the recent changes to how rates are calculated have resulted in significant increases in rates (around 30% over our business for 23/24). These costs are added to fees.
2. Nurseries are VAT exempt, which means that we pay VAT on all of our purchases but cannot offset these. If they were zero rated, then VAT could be claimed back. This cost is added to fees.
3. Funding for the early years entitlement is way below that which is required to deliver the service. The amount received by early years providers is significantly less than that paid to the local authorities, because local authorities skim a percentage to pay for their admin. We estimate that we lose at least £2 for every funded hour we provide. This cost is added to the fees for non-funded children.

Funding entitlements

As mentioned above, the funding rates paid directly to providers are not anywhere near the cost of providing the childcare. This is not an unsubstantiated claim – the government itself has reports confirming this to be the case.

The tax-free childcare system helps, but for many families still leaves the childcare unaffordable.

Very little support is available via the universal credit system to help a family with a modest income. Women find that childcare costs take up almost all of their take home pay, making it uneconomical to return to work.

Childcare should be better subsidised from day one, allowing women to resume their careers and rejoin the workforce.

Staffing

Childcare staff are paid close to minimum wage, yet have a very responsible job. They can earn more stacking shelves at Aldi. Providers have borne 9% + increases in wages driven by NMW increases, whilst funding increases average 2 to 3%. They cannot afford to pay staff more. Staff are leaving the sector in droves. Level 3 qualified staff are very difficult to find, and a significant factor in this is the requirement for maths and English at grade c or equivalent in order to be deemed qualified. This requirement was imposed on employers, and has had no discernible benefit – quite the contrary, it is a barrier to entry.

The value and quality of early years education, and how effectively it prepares children for starting school

The first 4 years of a child’s life is the most important time for child development. The importance of this is ignored by the government. Well-funded, quality childcare can make a big difference.

How early education is provided to young children with special educational needs and disabilities (SEND)

Again, massively underfunded. The number of children with speech and language delays has increased since the pandemic and the current wait time in our area for a referral for a speech and language assessment is 93 weeks.

The current government proposal to relax ratios for two-year-olds in nursery and pre-school settings

Early Years workers are at or near minimum wage, and this proposal would increase their workload by 25%. You work out what will happen.

January 2023