CEY0642

Written evidence submitted by Dr Nathan Archer

Dr Nathan Archer, Carnegie School of Education, Leeds Beckett University

I am an academic with twenty-five years’ experience in practice, policy and research in Early Childhood Education and Care (ECEC) in England. I have undertaken ECEC policy reviews for Nuffield Foundation, Sutton Trust and Early Education. I have also undertaken UKRI funded and British Educational Research Association funded research on early childhood education and care.

I draw on recent policy reviews I have written and co-written, as well as other research to inform this submission. I would be happy to provide further information on this work in writing or to discuss it with Committee members at a future evidence session.

Childcare Entitlements – affordability and availability

1. Early education and care are increasingly unaffordable for many. Coram Family and Childcare annual Survey 2022 found that price increases since 2021 for a part time (25 hours) place in a nursery for children in Great Britain, were 2.5 per cent for those aged under two, 2.0 per cent for two-year-olds and 3.5 per cent for three- to four-year-olds using the free entitlement. This is likely to be followed by more significant fee increases in 2023 with providers experiencing fuel costs rises (and imminent business support reduction for this) and 9.7% increase in National Living Wage from April 2023.

2. Evidence suggests long term underfunding of childcare entitlements is resulting in increased fees to parents on non-funded hours. Childcare providers are heavily reliant on income from parent fees to recoup this shortfall, and these fees are typically charged at a higher rate as a form of cross-subsidy (i.e., covering the shortfall in funding on ‘free’ hours). This can mean fees are sometimes beyond the reach of low-income families. This tension between affordability for parents and the sustainability of provision is the subject of ongoing debate. However, as a result, questions remain about affordability for parents on low income and the resulting inequity of access and thereby outcomes for all children.

3. Data received by the Early Years Alliance (EYA) in response to a Freedom of Information request to the DfE confirmed that the funding rate given to local authorities in England is two-thirds of what the government predicted would be needed to fully fund the scheme (EYA 2021). This shortfall in funding is having a detrimental effect on the sustainability of provision—it is estimated that 35% of nursery closures in 2018 were in areas that are among the 30% most deprived wards in England. By comparison, 14% of nursery closures were in communities in the 20% most affluent areas in England (NDNA 2019).

4. Entitlement funding needs to be recalculated given recent cost pressures and fully meet the costs of providers in delivering government entitlement hours.

Funding Complexity

5. Provision is funded in multiple, highly complex ways. This is comprised of supply-side funding through the free entitlements, which is paid direct to early childhood education and care providers and demand-side funding to reduce the costs of childcare for parents through the benefit system or through tax-free childcare and employer childcare vouchers. Archer and Merrick (2020) found: ‘The complexity of the application system is also perceived as a barrier to access. The multiplicity of supply- and demand-led funding streams for parents with varying eligibility criteria (the 2-year-old entitlement, the universal 15 hours for 3- and 4-year-olds, the 30 hours, Tax Free Childcare, Tax Credits for Childcare, Universal Credit for Childcare or Care to Learn funding) are a further challenge:

…the layered nature of older and new entitlements… a complex system of provision and support made it difficult for parents to navigate. (NatCen2017 p.29)’

6. The intricacy of this funding regime also proves challenging for some families to navigate and may impact on the take-up of provision.

Wholesale review of funding model

7. Archer and Oppenheim (2022) called for a whole-system review of early childhood services which articulates a clarity of purpose, and which meets the needs of both young children and their families and makes a difference to disadvantaged children in particular. Given the weight of evidence highlighting the complexities and inefficiencies of current programmes, the time is right for a wholesale evaluation of the purpose and provision of early education and care, learning from what has and has not worked over the last two decades, to create a national early years strategy. This would include a detailed review of funding arrangements with foci on quality for children, equity of access and affordability for parents and sustainability for settings. A similar review and strategy for provision and funding has been undertaken in Ireland.  New supply-side core funding payments in the Irish model are designed to support quality (including improved staff pay), sustainability, and enhanced public management, with conditions on fee control and cost transparency, incorporating funding for administration, and to support employment of graduate staff.

Sufficiency and Barriers to Parental Employment

8. In some cases, policies designed to increase provision for working parents have inadvertently accentuated disadvantage, such as the 30-hour policy, which effectively gives children of higher-earning parents double the amount of funded early education than many disadvantaged children. (Archer and Oppenheim 2021)

9. Availability of childcare has fallen sharply as the sector grapples with ongoing uncertainty and disruption.  57% of local authorities now report having enough childcare places available for children under 2, down from 72% in 2021, and only 59% report having enough childcare available for parents working full time, down from 68% last year, – limiting many parents’ ability to work. (Coram Family and Childcare 2022). 31% of parents called for more affordable childcare in DfE survey (2021).

10. In the short term a review of entitlement costs and payment to providers at appropriate cost-covering levels will support sustainability of existing providers and potentially attract new providers to the sector, thereby maintaining sufficient places.

Efficacy of demand side funding

11. The changing pattern of demand-side funding in recent years (such as changes to childcare element of Universal Credit and the advent of Tax Free Childcare) has led to a shift away from low-income families to middle- and higher earners. In the most recent year, support for middle- and higher-earners overtook support for low-income families for the first time. (Stewart and Reader 2021).

12. The Tax-Free Childcare fund is reportedly underutilised. Between 2017-20 the government spent £385 million on tax-free childcare, compared to its initial forecast of £2.1 billion.[1] This calls into question the efficacy of the scheme and whether its intended aims of reducing childcare costs and increasing access are being fully realised.

13. Awareness amongst families appears to be a persistent problem. DfE 2021 found that ‘among working families (dual-working couple families and working lone parent families) with a child aged under 12, just over half (51%) were unaware of the scheme, 30% were aware but had not applied for the scheme, 17% had applied for the scheme and used it to pay a provider, and 2% had applied for the scheme but had not used it to pay a provider.’

14. These funds would arguably be better routed to fund existing entitlements at adequate levels and potentially expand current early years entitlements. Moreover, international examples (e.g. Ireland and Norway models) have moved to a ‘supply side’ funding approach in which funds are paid directly to settings. This has benefits for providers in securing predictability and thereby stability of income. This approach potentially also offers policy makers some levers on staff pay (with a pay scale framework becoming a condition of accepting funding) and potentially a cap on fees for parents, thereby addressing the affordability challenge.

Early years provision and the workforce

15. The recognition of the importance of early childhood education and care is not matched by the rewards for those working in the system (Archer and Oppenheim 2021). The average wage in the sector was £7.42 an hour in 2018, compared to £11.37 an hour across the female workforce and in 2019, 45% of childcare workers were claiming state benefits or tax credits (Social Mobility Commission 2020). In October 2021 the Early Years Alliance surveyed early years settings to find

•         More than eight in 10 of settings are finding it difficult to recruit staff
•         Around half have had to limit the number of, or stop taking on, new children at their setting over the six months prior to the survey
•         Over a third of respondents are actively considering leaving the sector
•         One in six believe that staffing shortages are likely to force their setting to close permanently within a year.

16. COVID-19 has exacerbated many of pre-existing challenges for nursery practitioners and data from Hardy et al (2022) reveal a workforce overworked, neglected in policy terms and increasingly likely to leave the profession. Hardy et al (2021) found:

• Morale is extremely low and there has been a net loss of workers in the sector during the pandemic, leading to an intensified recruitment and retention crisis
• Lack of sick pay was a serious occupational hazard during COVID-19 and a major cause of lost income for workers across the sector

17. LaValle et al (2022) also found providers are experiencing unprecedented difficulties in recruiting and retaining suitable staff in a tight labour market. This represents a considerable risk to the quality of provision and possibly also the number of places or hours they can offer. These workforce challenges pose significant risks to both the quality and sufficiency of ECEC.

18. In England, a simplified framework of qualifications, a plan for graduate level leaders and higher pay would be valuable improvements. These developments would not only provide a pipeline of future staff members, but would help to ensure further quality care and education for children (Archer 2022). Creation of sustainable and progressive career paths in early years, pay progression reflecting skills and experience needs to be backed up by government sector-wide pay framework and supported by sufficient funding.

19. International policy analysis affords policy makers the information to consider what might be learned for future plans for the provision of quality, flexible and sustainable early childhood education and care. A summary of strategic initiatives from Scotland, Wales, Ireland and Australia  on policy responses connected to workforce COVID-related challenges are detailed in Hardy et al (2022).

DISCLAIMER

This written submission contains the views of the individual author. Responsibility for any errors therefore lies solely with the author: Dr Nathan Archer.

January 2023