CEY1568
Written evidence submitted by the National Day Nurseries Association (NDNA)
1.1. National Day Nurseries Association (NDNA) is the national charity representing private, voluntary and independent (PVI) children’s nurseries across the UK.
1.2. We represent a network of over 20,000 nurseries and their practitioners and we support the CPD in the early years sector, delivering training to over 40,000 practitioners a year. We work with all governments across the UK in policy development, providing insight and intelligence from the sector. We support our members to deliver the best possible early childhood education and care to some of our youngest and most disadvantaged children.
1.3. The PVI sector represents 65% of the early years sector, 72% of the early years workforce and delivers 85% of the total childcare places on the Early Years Register. Currently the majority of nurseries and pre-schools are still standalone single sites. Providers can run groups of settings and these range in size from two settings to groups of over 300 nurseries. Around 8% of PVI nurseries are in large groups.
2.1. Any Government policy on early education and childcare has to put the child at the centre of what it is trying to achieve for them to work for children, families and providers.
2.2. Early years settings are not just childcare. They educate children from nought to five and make a difference that lasts a lifetime. A child’s first five years are crucial to their development and lifelong learning.
2.3. Children’s brains develop connections faster in the first five years than at any other time in their lives – 90% of child’s brain development occurs by age five. This is the time when the foundations for learning, health and behaviour throughout life are formulated.
3.1. Evidence, including the EPPSE study, shows that high quality early education is effective at improving children’s outcomes especially for the most disadvantaged children.
3.2. On education, the Levelling-Up White Paper set out a mission to ensure that, “By 2030, the number of primary school children achieving the expected standard in reading, writing and maths will have significantly increased.”
3.3. Research analysed by the Education Policy Institute showed that around 40% of the disadvantage gap at age 16 has already emerged by age five.
3.4. The Economist Professor James Heckman created The Heckman Curve, which illustrates “that the highest rate of economic returns comes from the earliest investments in children”.
3.5. It is clear the ambitions to improve outcomes for school-aged children will not succeed without a focus on early education and care. Investing in our children is crucial to their life chances as opportunities missed at this stage of their learning and development can never be fully made up in later life.
4.1. The latest ONS statistics show relatively low unemployment and high vacancies. At the same time, there are 64,000 more women who are economically inactive compared to the same period last year. Of these, 35,000 say that family caring responsibilities are the reason they are economically inactive. Lack of opportunities to work is holding back the economy.
4.2. Investing in sufficient high quality childcare could boost the whole economy: if women had adequate access to childcare they could increase their earnings by between £7.6bn to £10.9bn. The UK female labour market participation is 75% compared to men’s 83%.
4.3. With low unemployment, high vacancies and a growing group of parents saying they are unable to work, there are clear economic benefits to investing in children’s early years.
4.4. At the same time, failing children in the early years costs them and society. Inadequate support for early years care and education costs England more than £16 billion every year.
4.5. Policy Recommendation - The DfE should bring forward an independent and comprehensive review of early years policy that sets out the aims for the policy and a clear and funded strategy for delivering on these. The review should ensure that early childhood education and care is seen as an integral part of children's development and educational experience.
5.1. The current support landscape for families is complex with at least six different forms of support offered through three different governmental bodies or departments. It is also complex for councils to predict demand for, and fund, places across the academic and financial year.
5.2. This complexity means not all government support for early years gets spent on children in the sector and that not all parents and families are accessing the support they are entitled to.
5.3. The National Audit Office found that the more deprived an area is, the lower the take-up of the entitlements. Awareness of some schemes is a challenge, with just 54% of eligible families aware of Tax Free Childcare (TFC)
5.4. Some families also express concern that taking up one strand of support, like TFC, may impact their ability to access others, like funded hours. NDNA members report that their staff sometimes have to act like benefit advisers, helping families navigate their eligibility or access to other forms of support.
5.5. Lack of awareness and understanding of schemes has led to underspends of £2.4 billion in TFC budgets since the policy was launched
5.6. NDNA conducts research into council budgeting for the early years block of the dedicated schools grant (DSG). We ask councils for their outturn figures at the end of given financial years and whether they were over or underspent against their original budget.
5.7. Over the three years of conducting this research we have tracked underspends of more than £180 million.
5.8. This means that public money, which has been designated by the Government to deliver childcare support, is still not reaching families, children or providers on the frontline.
5.9. There is added complexity for families and around eligibility as children do not become eligible for funded places until the term after their third birthday. A more technical and family focussed funding mechanism could account for eligibility from children’s third birthday.
5.10. While this will benefit children’s development, it must also follow that underfunding is addressed so providers are not put under more financial pressure.
5.11. Policy Recommendation
6.1. The early years sector remains in crisis - NDNA’s Nursery Sustainability Research revealed:
6.2. OECD data shows that parents in the UK pay a high proportion of income in childcare costs compared to other developed countries. This is because the UK has one of the lowest rates of investment in early education and care. OECD data also shows that the UK spends less per child aged 0-5 on early years than Lithuania, Estonia or Slovenia.
6.3. The current funding model does not cover providers’ costs in delivering the hours promised to parents as ‘free’. Statutory guidance allows providers to make additional charges for consumables and activities. This is necessary for provider sustainability but goes against the claim of delivering free childcare places. It also risks making it more difficult for children from disadvantaged families to access places if they cannot afford additional charges.
6.4. Describing the funded places as subsidised childcare would allow parents to benefit from reduced childcare costs for those places and hours but would more accurately reflect the level of resource that Government provides.
6.5. NDNA is currently conducting research with members about upcoming cost increases from April 2023 and how that will impact on fees to parents. We will update the Committee on the findings. However already:
6.6. The DfE has announced an additional £20m of funding for early years on top of a planned £20m uplift set in 2021. A £40m increase to a £3.7 billion budget is equivalent to a 1.1% uplift. By incorporating other funding pots into early years, councils will receive an average uplift of 3.4% in their early years hourly rates with a minimum floor of 1%.
6.7. Since 2017 the National and Living Wage rates have increased by between 35% to 46%. For three years the hourly rates paid to councils did not increase and the cumulative impact has been a 13% increase in hourly rates since 2017.
6.8. As well as not covering providers’ costs, additional funding for children in early years is not in line with the support offered in primary schools. There is no provision for free meals in funded childcare places.
6.9. The Early Years Pupil Premium (EYPP) is currently £342 per child per year. For a child in primary school Pupil Premium (PP) is £1,385. Under the proposed uplift for 2023/24 this gap will grow as the EYPP will increase by £11 to £353 per year, while the PP increases by £70 to £1,455.
6.10. Nursery and childcare provider are closing at a faster rate than ever as a result of underfunding and rising costs.
6.11. NDNA tracks the closure of nurseries over time. The summer term of 2022 saw a 65% increase in closures compared with the same period in 2021. Nursery closures are more likely to occur in areas of deprivation with 15% of closures in 2021/22 happening in the 10% most deprived areas of England.
6.12. Ofsted’s latest figures have shown that there has been a consistent reduction in the number of early education and childcare providers.
6.13. At August 31 2022 there were:
6.14. In addition to underfunded places, nurseries in England must pay business rates. Voluntary run organisations are eligible for an 80% discount and small businesses can get relief but this does not apply to the majority of private day nurseries. Schools and academies either have their business rates factored into their funding or can claim these costs back.
6.15. In England, the average bill is now £13,267: the equivalent of delivering places for five children, based on the lowest hourly funding rate of £4.61.
6.16. NDNA asked nurseries in the survey what the impact would be if they no longer had to pay business rates.
6.17. Another additional cost facing PVI providers is the application of VAT. Nursery businesses make predominantly VAT-exempt supplies: childcare. However, they have to pay VAT on the goods and services they procure. Academies and Free Schools are able to reclaim VAT paid that is associated with the provision of free education.
6.18. Policy Recommendations:
7.1. The dedication and hard-work of staff in the early years sector is vital to the development of our children and what they can achieve at later stages in their education. A 2019 Oxford University study confirmed that staff qualifications, effective CPD and better staff-to-child ratios were the key drivers in delivering higher quality early education and childcare.
7.2. NDNA’s workforce surveys between 2015 and 2019 tracked a downward trajectory in the proportion of early years staff holding a Level 3 Qualification. This decreased from 83% in 2015/16 to 52% in 2019. Our joint work with the EPI found that in May 2021 the proportion of Level 3 staff was 57%.
7.3. Statistics on qualification levels published by the DfE exclude apprentices from their data and our research suggest these make up 7-10% of the workforce in England.
7.4. NDNA and the Education Policy Institute tracked the impact of Covid-19 on the early years workforce up to May 2021. Our work found that 96% of respondents were trying to recruit Level 3 qualified staff, of these 90% said it ‘difficult’ / ‘very difficult’. Even taking on apprentices was ‘difficult’ or ‘very difficult’ according to 52% of employers.
7.5. The recruitment challenges have led some nurseries to close permanently as they are unable to safely staff settings. Others have informed us of temporary closures, or settings that have had to reduce intake or capacity in parts of the nursery so staff can be redeployed.
7.6. Any investment in upskilling the early years workforce must take into account the need for capacity in settings to be able to backfill roles that allows staff to take up training.
7.7. Early years staff face a range of pressures. Research into staff wellbeing found that 52% report workload as a source of stress, 39% report paperwork stress, 33% were worried about their employers’ sustainability and 27% were worried about Ofsted.
7.8. Policy Recommendations
a) the recruitment and retention challenges in early years
b) the level of qualified staff in the sector, the skills of new entrants and increased practical support for nurseries to upskill their staff
8.1. In May 2022 the Government consulted on increasing the number of children that can be looked after by each staff member, moving from 1:4 to 1:5 for two-year-olds.
8.2. NDNA and our members strongly oppose the proposal for two-year-olds. Research shows how important adults’ time and relationships with children are to their development.
8.3. Many elements drive high quality in early years settings including staff qualification and training, curriculum and pedagogy, but the number of adults is one of the structural factors. Research commissioned by the DfE found that for private nurseries, “Having a higher overall staff to child ratio was the strongest predictor of process quality.”
8.4. Changing the ratios would also work against other policy changes in this area. The Government made changes to the EYFS in September 2021 aimed at increasing the time practitioners spend with children. Spending less time with children may increase developmental delays that can arise due to lack of time with skilled practitioners.
8.5. We risk further damage to an already overstretched sector if regulations are changed without a full view of how that impacts other areas of the system.
8.6. When the Government announced their plans they indicated parents could save £40 a week as a result. This would not be achieved for three main reasons:
8.7. On regulation of the early years sector Ofsted have produced a number of reports to highlight concerns about staffing and the importance of early education for children affected by Covid lockdowns who have delayed language and communication skills as well as personal, social and emotional development.
8.8. Providers recognise that Ofsted have an important role in regulating the delivery of high quality and safe early education and childcare, with children’s wellbeing and outcomes at the heart of the policy.
8.9. However, the experience of inspections can be highly inconsistent and Ofsted’s current complaints process, whereby inspectors review their own initial decisions, does not give providers a process that is consistently fair, transparent and proportionate.
January 2023
7