CEY1139
Written evidence submitted by the Early Years Alliance
How affordable and easy to understand is the current provision of childcare in England and what steps, if any, could be taken to improve it, especially in relation to families living within the most deprived areas in England?
Years of government underfunding for the early entitlement offers for two- three- and four-year-olds have left many nurseries, pre-schools and childminding settings with no choice but to increase fees and/or introduce additional charges to plug the gap between government funding levels and the actual cost of delivering early education and care.
As a result, despite a wide range of support schemes and offers, many parents of children attending early years settings – including those accessing so-called ‘free childcare’ – have found themselves struggling to be able to afford the rising cost of early years places.
Government policy documents published following a Freedom of Information request filed by the Alliance revealed that the government has been knowingly underfunding the early years sector for years. They state that, at the time of the 2015 Spending Review, government officials predicted the true hourly cost to providers of delivering an early entitlement place for a three or four-year-old would reach £7.49 by 2020/21. In comparison, during the 2020/21 financial year, the average hourly funding rate for a three- and four-year-old place was £4.89 (Source: Ceeda) – a shortfall of £2.60 per hour.
The 2021 Spending Review and the resulting Budget, delivered at the end of October 2021, did see a larger investment in early entitlements, with annual increases announced for each of the following three years: £160m in 2022/23, £180m in 2023/24 and £170m in 2024/25, with an additional £20m investment for 2023/24 announced in December 2022.
However, this funding is likely to entirely fail to cover sizeable increases to delivery costs to early years providers. For example, in April 2022, the national living wage increased from £8.91 to £9.50, marking a 27% increase since 2017, compared to an estimated early years funding increase of just 7% over the same period.
In addition, in the 2022 Autumn Statement, the government, despite confirming a record increase to the national minimum and living wages that is set to come into effect from April 2023, did not announce any further support or investment into the sector. This is despite the fact that recent analysis from the IFS estimates that the total funding for the "free childcare” offers will be 8% lower in real terms in 2024-25 than in 2022.
This continued lack of adequate funding, alongside wider inflationary pressures and sharp increases in energy costs has resulted – and will continue to result – in significant increases in the hourly cost to providers of delivering early years places. As a result, even these more substantial settlements are likely to have a limited impact on the gap between government funding for early entitlement offers, and the cost to providers of delivering them.
The stark underfunding of the sector is made all the clearer when comparing the funding the early years sector receives to other parts of the education sector. According to the IFS, the early years sector receives substantially less funding per child (£4,200 per pupil) compared to primary (£5,800 per pupil) and secondary (£6,600 per pupil) education. Similarly, the early years pupil premium is around a third of its primary counterpart.
These ongoing financial pressures have resulted in a steady rise in setting closures. According to Ofsted figures, between 31 August 2021 to 31 August 2022 (the most recent available data), there was a net overall decrease of around 5,400 early years providers (predominantly childminding settings), representing 8% of the sector.
The combination of underfunding and rising costs is also acutely affecting families from disadvantaged backgrounds. While existing early entitlement offers reduces costs to some extent, it does not prevent parents from being charged additional costs as such as meals, sun creams, nappies and day trips, which are not covered by the offers.
As such, the continued underfunding of the early years sector risks the development of a two-tier system in which those children whose families can afford to pay for ‘optional’ extras benefit over those children whose families cannot. This is because, for example, providers may prioritise places for families willing to purchase more hours and/or additional services over those who only want/can afford to take up their ‘free hours’.
In addition, a recent joint survey conducted by the Alliance and a London-based nursery group of 500 early years providers found that half of respondents (56%) have been forced to pass rising food costs on to parents, with nearly one in three (28%) having to charge families higher fees for meals and snacks and the same proportion (28%) forced to charge families more for early years places to enable them to be able to cover the cost of food.
These results are particularly concerning in light of the fact that these challenges come at a time when early years professionals are reporting growing signs of food insecurity (i.e. a lack of reliable access to sufficient affordable, nutritious food) among families. In total, just under half (49%) of providers say children and/or families at their settings were showing signs of food insecurity, with respondents noting an increase in the number of children arriving at their setting hungry.
Furthermore, in a DfE survey released in August 2022, almost half (45%) of families surveyed who were earning under £10,000 per year found it difficult or very difficult to meet their early years costs. This fell to just 13% with families earning £45,000 or more.
To protect the long-term sustainability of the early years sector, and ensure the provision of affordable, accessible – and crucially, high-quality – childcare and early education, the Early Years Alliance continues to call for the government to commission a wholesale, independent review of early years funding and to introduce a mechanism to ensure any future uplifts to the national minimum and living wages are accounted for through an automatic adjustment to the entitlement funding rates.
To ensure that families on lower incomes are able to access and afford early years education, we also recommend further analysis to be undertaken to ascertain the level of correlation between areas experiencing a large decline in early years place numbers and areas of greater deprivation. In addition, the Early Years Pupil Premium should be increased to match primary school levels.
Are the current entitlements providing parents/carers with sufficient childcare, and to what extent are childcare costs affecting parents/carers from returning to work full-time?
The price rises that have resulted from the chronic underfunding of the early years sector have had a clear impact on parents and families.
A survey on early years costs carried out by Coram Family and Childcare in 2022 found that compared to 2021, parents are now paying 2.5% more for early years provision for children under two; 2% more for children aged two; and 3.5% more for three- and four-year-olds.
In addition, a survey of nearly 27,000 parents of young children carried out by campaign group Pregnant then Screwed in March 2022 found that 62% say that the cost of early years provision is now the same or more than their rent/mortgage, rising to 73% for single parents, and 73% for parents working full-time.
In addition, 43% of mothers said that the cost of early years provision has made them consider leaving their job and 40% said they have had to work fewer hours than they would like because of early years costs.
The availability of early years provision is also causing significant challenges for parents and carers, with 41% saying there is a waiting list of six months or more at their local early years provider and 19% saying they have experienced the closure of their local early years setting in the last 12 months.
Whether the current Tax-Free Childcare scheme, and support for childcare from the benefits and tax credit system, is working effectively or whether these subsidies could be better used within other childcare subsidies.
While we recognise the need to support families with the cost of early years places, we believe that tax-free childcare is a wholly regressive scheme as it favours families already spending the most money on early years provision, as the more parents spend, the more support they get.
What’s more, as of May 2022, the scheme was being used by less than half of eligible families, and since its launch in 2017, the government has spent around £2.4bn less on the tax-free childcare scheme than it originally budgeted.
This is money that the government has already prepared to spend to support parents to access childcare and early education. If this money was redirected into the early years sector via better funding for early entitlement offers, this could have a transformative impact on the affordability of care and education in this country.
What challenges do early years providers face in terms of workforce, including recruiting, and retaining qualified staff, and the barriers faced by individuals joining the profession? To what extent has the Covid-19 pandemic exacerbated workforce challenges?
The sector is facing a catastrophic recruitment and retention crisis with significant staff turnover and a high reliance on bank or agency staff. This is resulting is less reliable, flexible childcare for parents and less consistent, lower quality early education for children.
An Early Years Alliance survey on sector staffing carried out in October 2021, which received just under 1,400 responses, found that 84% of respondents said they were finding it difficult to recruit suitable new early years staff, with a majority (60%) finding it very difficult, while half (49%) said they had had to use bank or agency staff over the previous six months to ensure sufficiency of staff.
Without urgent government action, these pressures are only likely to increase, with more than a third (35%) of respondents saying that they were actively considering leaving the sector. Of those, the most commonly-cited reasons were feeling undervalued by government (77%), job-related stress (72%) and poor pay (57%).
It is likely that this has had a direct impact on the availability and accessibility of places, with the survey also finding that 49% of respondents have had to stop taking on new children due to a lack of sufficient staff in the six months prior to the survey.
Further, despite a wealth of research highlighting the importance of staff for quality early years provision, the early years workforce is largely on minimum or close to minimum wage – mainly due to historic underfunding leaving settings unable to pay their staff higher wages. This is a significant barrier both recruiting new staff into the sector and retaining existing educators as they can find better paid, more flexible and less stressful positions in other sectors. Independent research group Ceeda’s Early Years Workforce Survey 2019 reported an average salary of just £9.00 an hour for Level 3 qualified early years staff (source: Ceeda).
The recruitment and retention challenges were worsened by the Covid-19 pandemic, during which time early years providers were asked to remain open to all families when schools and colleges were instructed to remain closed, with delayed access to home lateral flow tests, severally limited financial support and patchy and often delayed government guidance. It is notable that 66% of the Alliance’s October 2021 staffing survey respondents who were actively considering leaving the sector said that their experience of working in the sector during the pandemic had increased the likelihood of them leaving. As put by one respondent: “I don't think I have, or will, recover from those terrible months of turmoil. I am perpetually exhausted and feel utterly unappreciated and unsupported."
Whether the Early Childhood Education and Care (ECEC) system is meeting the needs of pupils with Special Educational Needs or Disabilities (SEND), and the improvements that could be made to better support young children with SEND within early years provisions.
The current process of applying for funding to support children with SEND in the early years is overly complex and slow, and often only available for children over the age of two. The Alliance’s Too Little, Too Late report, based on an online survey carried out in January and February 2022, also highlighted the impact of underfunding on the provision of care and education for children with special educational needs and/or disabilities (SEND) in early years settings.
It found that 92% of respondents had to fund additional support for children with SEND out of their own pockets, with 53% saying they did so ‘regularly’. Nearly a quarter (23%) cited delays receiving SEND funding and of those that do receive dedicated SEND funding, an overwhelming majority (87%) said that funding, alongside their early years rate, isn’t enough to provide the quality of care for children with SEND that they want.
In addition, 74% of respondents reported an increase in the number of children with formally identified SEND at their setting over the past two years, while 82% reported an increase in the number of children who they felt may have SEND that has not yet been formally identified over the same period.
Unsurprisingly, the Covid-19 crisis has also taken a toll, with 60% of respondents delivering places to children with SEND stating that the pandemic has had a negative impact on their ability to deliver care and education to those children, and around one in six (17%) describing that impact as ‘very negative’.
As a result, to ensure that the SEND system is fit-for-purpose and that providers are able to continue delivering quality care and education to children with SEND, the Early Years Alliance has recommended that the government takes the following steps:
The government should look to review and overhaul the SEND funding application process, to ensure the burden on providers is minimal, that support in making applications is available as needed and that there is a broadly consistent process across local authorities. This should include minimising requirements for providers ‘re-applying’ for funding for a child whose needs or required support measures have not changed.
Once an application for SEND funding has been approved, any payments should be backdated to the day that the setting in question started to deliver a place for the child or children, to ensure that no provider is left to cover this period out of their own pocket. If this application process is improved as per the previous recommendation, the length of time needing to be backdated will be greatly reduced.
All providers should be clear on what funding is available to which children in their care. As such, the government should ensure that all local authorities provide clear, accessible information to providers on funding levels and eligibility criteria in their area, particularly those who use a ‘tiered’ system of funding dependent on levels of need.
To what extent does the early years system adequately prepare young children for their transition into primary education, particularly children from disadvantaged backgrounds.
The Early Years Foundation Stage (EYFS) Framework sets standards for the learning, development and care of children from birth to five-years-old. As such, it covers both the early years system and the child’s first year of primary education (i.e. reception). At the Alliance we believe that the overarching principles of the EYFS should underpin provision regardless of where it takes place, and in this sense, the child’s transition to school from their early years provision should be seamless and smooth.
This consistency of provision is especially vital when looking at the impact of early education on children from disadvantaged backgrounds. A report from the Study of Early Education and Development (SEED), which followed 5,000 children from birth up to the age of seven, found that attending high-quality early childhood education and care (ECEC) between the ages of two and four is associated with better academic results in Key Stage 1 maths, Key Stage 1 science, and combined Key Stage 1 English and maths in Year 2.
Early educators pride themselves on ensuring that children develop well in vital areas of learning and development, placing emphasis on the Characteristics of Effective Learning by ensuring that children have opportunities for playing and exploring, active learning, and creating and thinking critically. If a child is confident in speech and language, showing signs of positive physical development overall, and can build and maintain positive relationships then it increases the likelihood that they will thrive in later life. This focus should be a running thread from the early years through to primary school and is not the responsibility of one more than the other.
As such, it is vital that early years providers and primary schools are able to develop strong relationships to ensure a child’s transition to primary school is as smooth as possible.
The extent to which the reduction of Sure Start Children’s Centres has affected children and families, particularly children from disadvantaged backgrounds, and the role of Family Hubs.
The reduction in Sure Start Children’s Centres has had a significant impact on families from disadvantage backgrounds. These centres ensured that services and support for families during the first 1,001 critical days of a child’s life and beyond, was in place. This included access to health and wider professionals who could support the parenting journey and the Healthy Child Programme.
Families knew where to go in their local area to get advice, support and access health and universal child development services, many of which provided non-stigmatising access to early help at the earliest point. Sure Start Children’s Centres provided a hub for the community and brought families together as part of a wider community cohesion approach. Inclusions and accessibility were at the forefront of the delivery ethos.
However, the decision to move funding coming into the Early Intervention Grant locally, and the removal of this ringfencing, prompted a gradual but steady decline in funding for children’s centres as other localised priorities emerged. The government’s decision to remove the children’s centre inspection regime in September 2015 while it carried out a consultation on the future of these centres, which was subsequently shelved, demonstrated a lack of political focus on the most important period in a child’s life.
Many local authorities who still valued children’s centres moved to more targeted provision, and many centres closed as a result. The impact of the pandemic and sector-wide underfunding exacerbated this, prompting some services to change, and in some instances end. Overall, the demise of children centres in areas across the country have seen children’s long-term outcomes reduced.
Alliance analysis of government statistics published in June 2022 found that:
When looking at the impact that the closure of Sure Start Children’s Centres have had, we have noted:
The introduction of Family Hubs brings hope that there is some understanding of the importance of service and support for families. However, we know this funding is not available for all areas and it still requires a long-term, cross-party vision for the importance of the early years to be realised.
As we move more to a digital era, we also must remember the importance of face-to-face contact. Alongside the relationships with other families, supportive, empowering educators can make a lasting impact on a child’s outcomes and life chances.
It is vital that the government understands the importance of the early years and how it can impact a lifetime if we don’t get it right at the earliest point. To quote the Princess of Wales, “If we are going to create a healthier and happier society for future generations, we must start by understanding and acknowledging the unique importance of the first five years of life.”
January 2023