Written evidence submitted by Save the Children UK

summary

Save the Children UK’s (SCUK) response draws heavily on two reports we have written in partnership with IPPR and Sam Freedman about our shared vision for a ‘childcare guarantee’ – universally accessible, affordable childcare from the end of parental leave to the end of primary school in England. Our first report sets out the case for a childcare guarantee, and the second report sets out a plan for delivering one. Our submission also draws evidence from the programmes SCUK funds, and conversations we have had with parents and carers[1] raising children while on a low income. 

There are four key issues with childcare provision:

1)      A childcare market failing to deliver on quality or access

2)      A gap in childcare provision for parents from the end of parental leave to the start of the free hours offer

3)      High up-front childcare costs and steep trade-offs for parents getting into or progressing in work

4)      A lack of reliable wrap around care for children through primary school

We recommend a simplified scheme for parents based on two core offers:

1. Extended free available hours
2. Subsidised additional hours, with a subsidy rate that varies by household income

The delivery of this, on a basis that delivers high quality care on a sustainable basis, will require a significant uplift to the funding settlement currently offered to providers, alongside significant new regulations on quality of care.

1)      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?

England’s childcare system is confusing for parents, and overall costs are too high. Once parents have reached the end of parental leave, they have a long, expensive wait until their children turn two or three where they will be entitled to free hours. The issues persist when a child starts school, as wrap-around and holiday care is patchy, unreliable, and expensive.

Affordability

Typical net childcare costs in the UK are the second highest in the developed world, and fees have risen by an estimated £2,000 per year in cash terms and have almost doubled for parents with a child under two since 2010.[2] And yet childcare staff are poorly paid, and providers are struggling to keep their doors open across the country. One of the main reasons for this is that running costs for nurseries are rising, but UK Government funding for free entitlement hours continues to fall short. Nurseries attempt to fill the funding gap by cross-subsidising funded hours through paid-for hours (increasing the price they charge for paid-for hours to make up the funding gap created by the too-low funding of the free entitlement), and by charging expensive top up fees for things like snacks, meals, and nappies. This leads to nursery places which are not funded becoming even more expensive. Research also points to variation by region and reductions to services and budgets – which often adversely affect poorer areas.

Childcare is unaffordable for the average person. Even after qualifying for the 15/30 hours ‘free’ childcare hours. In my borough you still have to pay a ‘top up fee’ which means £120 a month just for 15 hours a week.

Parent, South East, three children

Completely unaffordable. Wages are 9.50 set to rise to about 10. But childcare is 5 an hour. So, for example my shift in summer is 11-4: I earn £48 but pay childcare 9-5, which is £45. My bus fare to work and back is £5.30 so I'm already out of pocket working.                                                     Parent, East of England, one child

Parents have spoken to us about almost wishing away the years before their children start school, as nursery fees are so expensive and a constant worry.

Another barrier to parents accessing affordable childcare is the upfront costs associated with the childcare element of Universal Credit (UC). This is discussed in more detail in our response to question three.

Ease of understanding

England’s childcare system is made up of seven different schemes which support parents with childcare costs based on the parent’s income and the age of their children.  Many families really struggle to navigate their way through the different schemes and entitlements, with the two year old entitlement having a particularly low take up as its availability is not communicated well to families.

Childcare is really expensive… I think the system isn't designed to [function properly] and it's hard for ordinary people to understand how [to access] free hours … that really stops people going into work. If you choose to continue to work, it will then put you into a vicious poverty cycle.

Parent, South East, one child

What could change

The current system is not working, for parents, children, or providers, so the steps that need to be taken are substantial. Small tweaks will not be sufficient to create a system that works. Creating an affordable and coherent childcare system requires thinking about all the challenges the sector has collectively. There needs to be adequate funding that is easy to access, simple to use, and offers support when parents need it. The market needs to be actively designed and regulated to make best use of this funding. And this market needs to be far more focussed on quality, particularly around workforce improvement, than it is now.

A summary of these recommendations, and the order in which they should be introduced, are outlined in the diagram below:

2)      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 current entitlements do not provide parents or carers with sufficient childcare in terms of:

• A lack of provision between the end of parental leave and the start of free hours
• A lack of provision of before- and after-school care
• A lack of provision in certain parts of the country – especially in relation to childminders
• A lack of flexible care that works around different job patterns
• The flawed funding settlement means that extra hours of care beyond the funding entitlement are too expensive

When we ask parents how childcare costs are impacting their ability to return to full-time work, they often respond that the current childcare system is preventing them from returning to or progressing in work.:

Yes, lack of childcare is currently stopping me from working as my little one is only 1 which means I’m not eligible for 15 hours until she turns 2.                                                         Parent, South East, three children

Lack of flexible childcare can make working really hard, more so for people doing shifts, not being able to rely on friends or family. Childcare over school holidays is so stressful to find and pay for.

            Parent, North West, two children

They used to go to childcare a few years back when I was working full-time, but I cut back the hours, it wasn't financially working for me because I had to pay for meals for the two of them … and the bus ... it was too expensive.                                                                                                      Parent, Northern Ireland, three children

Parents told us about the hoops that they must jump through to access the childcare element of UC, and others were unaware of some of the entitlements on offer. One of the parents we spoke to at a food pantry SCUK supports was a highly trained professional who stopped work to look after her kids. She is now separated from her ex-partner and wants to move into work to support her family. However, it has been impossible to find the right combination of flexible work and affordable childcare. When we asked her about accessing childcare she responded:

What am I supposed to do? How am I supposed to access that?                                          

Parent, North West, five children

For families like hers – where there are multiple young children, all of whom would need some form of childcare while she was in work (from nurseries to wraparound support in schools), the system is not working at all. The cost of childcare, plus the lack of provision that would work with her job, means parents like her are unable to move into work. 

Another parent we spoke to at the pantry talked about the issues she faced in relation to childcare. She had four children, one of whom had special educational needs, and explained how the provisions of care for each of her children was different. Her two daughters are under four, and her sons are both in school. One of her sons could attend a free after school club at his school, but the other son, who attended a school for children with special educational needs, was not offered any additional care at all. The girls’ nursery hours were completely different to the care either of the boys received. All the different pick-up times would have been impossible for her to manage with her other responsibilities, and so the son could not attend the free after-school club meaning both boys lost out on any additional care and development. The different offers for all her children meant she was unable to work, as she could not find a job that was sufficiently flexible.

The current entitlements are not providing parents or carers with sufficient childcare, and in many cases prevent parents from being able to move back into both part-time and full-time work. Thanks in large part to the cost of childcare, parents face high marginal tax rates when looking to return to work after parental leave. IPPR conducted modelling on this for our childcare report and found that a second earner on UC earning £15 per hour can expect withdrawal rates that exceed 100% – meaning parents are actually losing out on money when moving into full time work[3]. While these rates are not quite so high for parents not on UC, IPPR’s model of a higher earning couple shows that the second earner, when returning into full-time work, could see withdrawal rates of up to 90%. (See detail in figures 1 and 2 below.)

3)      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.

For those who access it, the current tax-free childcare scheme can work relatively well. It is simpler than the scheme for reclaiming childcare costs through UC, and parents receive the support at the time of paying, rather than a month later as with UC. However, last year only 20% of eligible families used the scheme. This low take-up suggests it is difficult to navigate, and that parents are not well-informed about the offer.

Support for childcare through the benefits and tax credit system is also not working effectively. Parents who claim UC can have 85 percent of their childcare costs reimbursed. However, research by SCUK[4] and other organisations has shown that having to pay costs upfront prevents parents from taking on work or increasing their hours, and has even caused parents to drop out of work altogether. Average childcare costs are over £1,000 per month for a full-time place for a child under three, and parents who are out of work or on low incomes do not have the money to pay these costs out of their own pocket. They therefore face a choice between taking on debt or being blocked from work altogether. These findings were echoed in the Work and Pensions Committee’s 2022 report into this issue[5], where it concluded that upfront costs are a barrier to work and recommended establishing a direct payment system modelled on those used elsewhere, or removing childcare support should from UC entirely, with a solution based on a single childcare account.

Together with IPPR, we support the idea of taking the childcare element out of UC, and suggest introducing an affordable hours scheme that builds on the current tax free childcare system’s ease of use. This would involve replacing the tax-free childcare scheme with a simplified affordable hours scheme for hours above the 30 core hours offer. All parents accessing childcare support after parental leave would receive this under the same umbrella scheme, so the childcare element of UC would also be rolled down, and support for all parents would come through this scheme instead. Under this proposal 95 per cent of costs for parents in receipt of UC should be repaid through this co-payment system (eventually replacing the UC childcare element), and up to 60 per cent of costs for parents earning above the UC taper, up to an earnings cap. This system would also continue to support families with children with a disability who incur additional care costs. IPPR estimate such a scheme would cost an extra £2.7 billion, in addition to current spending on the tax-free childcare system and the childcare element of UC.

4)      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?

There is an urgent need for a nationally coordinated funding review and workforce strategy to put providers on a sustainable footing. We know that early years’ providers are facing significant and intensifying workforce challenges. The childcare workforce is characterised by low pay, a lack of training, and a lack of progression opportunities with providers often hamstrung by insufficient Government funding settlements for free hours entitlements.

We support and echo the full response IPPR is providing to this question which is based on the findings in our Childcare Guarantee reports.

5)      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.

There is a desperate lack of early years provision for pupils with Special Educational Needs or Disabilities (SEND). Any specialist support that remains is being increasingly pushed into mainstream service as funding cuts have led to the closure of SEND providers. Lots of children with SEND are excluded from the system, and where they are included, we have frequently heard stories of funding problems making it hard for providers to meet these children’s needs.

In North Tyneside, for example, where SCUK has a presence through Wallsend Children’s Community, there is no early years SEND provision at all. Mainstream nurseries are forced to take on high numbers of children with SEND, without significant funding increases, and are struggling to meet these children’s needs.[6] As the Department for Education’s SEND Review summarised:

“For both families and providers, the review has identified there is significant inconsistency in how needs are met. Decisions are too often made based on where a child or young person lives or is educated, not on their needs. This cycle starts in early years and mainstream schools, where despite best endeavours, settings are often ill-equipped to identify and support children and young people. Inconsistent practice makes this worse.”[7]

Children with SEND are especially in need of support through the Early Years Education and Care (ECEC) system. Families, which include children with disabilities, are more likely to be financially disadvantaged: the poverty rate for families where an adult or a child is disabled is 44%.[8] Families we spoke to at Wallsend Children’s Community felt that the welfare system does not meet the costs of caring for children with a disability, and that this was exacerbated by Covid-19. The pandemic also meant that many children with SEND faced withdrawn support in outpatient assessments, delayed support plans and closure of respite care, meaning that families are now in need of more support than they were before the pandemic.[9] The ECEC system is supposed to be somewhere where these children can gain the additional support they need, but too often this is not the case.

SCUK provides an Early Years Grant scheme, where we work with local partners such as schools and charities, to provide a mix of supermarket vouchers, basic goods such as a replacement oven or a new child’s bed, together with toys and learning packs. One of the application questions, which referral partners must respond ‘yes’ to for families to be eligible for the grant is:

To ensure we are supporting children in most need, based on your professional judgement, can you confirm that there is a child /children in the family who is/are at risk of falling further behind in their early learning and development?

21% of families who received support through this scheme contained one or more children with a disability. This is much higher than the general population, which the Family Resources Survey estimates at 9%.[10]  Our data suggests that children with SEND are disproportionately likely to be falling behind in their early learning and development, which is indicative of a lack of support within the ECEC system. 

We support the recommendations made by the Children’s Commissioner to provide appropriate training for the early years’ workforce, to increase the number of staff with an accredited early years level 3 SENCO qualification, and to increase the availability of speech and language therapists.[11] In addition to this, providers need an adequate funding settlement that corresponds to levels of need.

6)      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 dismantling of support through the closure of so many Sure Start Children’s Centres (SSCC) has, according to staff who work closely with children, resulted in:

1. A lack of understanding among families for where to go to for support
2. An increase in the stigma families feel when accessing services, as there are now fewer universal services
3. An increase to families dropping off the local health visitors’ radar, and therefore missing out on support they may be eligible for.

Research into the closure of SSCC has found that services are increasingly ‘hollowed out’ and no longer in ‘pram-pushing distance’ – meaning families need to use transport to access childcare services.[12] We know that the benefits of SSCC went beyond the immediate development effects for children and included a wider range of social and emotional benefits, including in health outcomes. Children who attended SSCC reported significantly lower rates of hospitalisation as teenagers than those who did not,[13] and cuts to spending on SSCC were associated with increased childhood obesity.[14]

Family Hubs have the potential to play a significant role in ensuring positive outcomes for children from disadvantaged backgrounds[15]. We welcome the Government’s approach of funding based on factors including deprivation, as these areas are currently more likely to see poor early years outcomes.[16] We note that Family Hub’s will support children up to the age of 19, rather than up to the age of four as with SSCC. If Family Hubs are to function properly, there will need to be a significant increase in funding, and the focus should be moved away from online support, which we know parents on lower incomes are less likely to access.

Save the Children UK    

Founded in the UK in 1919, SCUK is a global organisation helping children to survive and thrive in 120 countries, including here in the UK. In response to cost of living crisis, we have scaled up our Early Years Grants Programme. In 2022 we delivered almost 2,000 grants to UK families, reaching 3,500 children. Through this programme and our work at children’s centres, in food pantries, and in conversations with parents, we have heard stories of extreme hardship: families hit by job losses and rising costs, unable to afford the basics that they and their children need.  We also work with parents and providers on issues surrounding childcare. In 2022 we worked closely with IPPR and Sam Freedman to set out a shared vision for a childcare guarantee: a right to childcare from the end of parental leave to the end of primary school:  Making the case for a childcare guarantee. 

January 2023