CEY1696

Written evidence submitted by Professor Gabriella Conti (University College London)

Summary

Experimenting with innovative social finance instruments might help sustaining the fiscal cost of EY provision, learning from the experience of the US and other countries in financing early childhood programs.
Experimenting with promising workforce strategies, such as teacher retention bonuses, might help solving the workforce crisis in the EY settings.
Understanding what parents value in EY settings, in addition to formal OFSTED ratings, is key: parental perceptions matter and drive actual childcare choices.
Evidence from the recent Sure Start evaluation shows that a model that combines universal services with an area-based focus on disadvantaged neighbourhoods can be a successful approach to early years interventions.

Introduction

Dr. Gabriella Conti is Professor in Economics in the Department of Economics and the Social Research Institute at University College London. Dr. Conti is also Research Fellow at the Institute of Fiscal Studies, Centre for Economic Policy Research and IZA Bonn. Dr. Conti’s research draws on both the biomedical and the social sciences with the aim of understanding the developmental origins of health inequalities, the role of child development as input in the production of lifecycle health and the behavioural and biological pathways through which early life shocks, investments and policies affect well-being throughout the life course.

This written evidence will focus on the following terms of reference, which are underlined.

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?

While many sources appear to agree on the complexity and low affordability of the current provision of childcare in England, there is less agreement on possible steps to improve it.
Pay for Success (PFS), also known as Social Impact Bonds (SIBs), was promoted by the Obama administration to tackle complex problems. “Through PFS, government (or another entity) enters into a contract to pay for concrete, measurable outcomes once they are achieved for specific people or communities in need. Instead of funding services regardless of the results, payments are made only if interventions actually achieve the outcomes agreed upon in advance.”(https://obamawhitehouse.archives.gov/administration/eop/sicp/initiatives/pay-for-success#:~:text=Pay%20for%20Success%20(PFS)%3A,once%20it%20produces%20those%20outcomes).
The first PFS project in early childhood education took place in Salt Lake County, Utah, in August 2013. Goldman Sachs’ Urban Investment Group and J.B. Pritzker invested a total of $7 million, in the Utah High Quality Preschool Program for up to 3,500 low-income 3- and 4-year-olds across five cohorts of around 600 children per year (Gustaffson-Wright, Gardiner & Putcha, 2015). If the program attained a level of pre-defined success, in this case measured by each student in that cohort who avoided special education in a single year, the investors received an annual repayment plus return on their investment. In fall of 2015, Goldman Sachs and Pritzker announced its success in helping 109 at-risk kindergartners avoid special education out of the 110 determined to be at-risk for special education before entering the program.
To date, 40 impact bonds have been contracted in the education sector (https://www.brookings.edu/blog/education-plus-development/2023/01/09/a-review-of-outcomes-based-financing-in-2022-and-beyond/). While England was the first country to introduce SIBs in 2010 (with the “Peterborough project”), they have not been applied to early childhood education. Social finance could be a concrete, feasible step to take to provide a much-needed solution to the funding of the EY provision, capitalizing on the lessons learnt in the US experience (Tse and Warner, 2020).

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?

EY providers face significant challenges, both in terms of recruitment and retention of qualified staff, which have been exacerbated by the pandemic (Early Years Alliance, 2021). One promising strategy involves retention bonuses.
In 2019, using funding from a federal Preschool Development Grant, Virginia piloted the Teacher Recognition Program, which offered early educators up to $1,500 if they remained teaching at their sites over an 8-month period. A RCT showed that early educators in the Teacher Recognition Program were 11 percentage points more likely to still be teaching at their sites by the end of the 8-month period. The effects were particularly pronounced among teachers at childcare centres. At centres with access to the financial incentives, 15% of teachers left, compared to 30% of teachers at centres without access to the incentives (Bassok et al., 2021).

To what extent does the early years system adequately prepare young children for their transition into primary education, particularly children from disadvantaged backgrounds.

The choice of sending the child to formal childcare is complex, and parents need to trade-off the costs and benefits of formal childcare against those of alternatives. While the role of monetary costs is extensively discussed and investigated, the importance of the benefits of childcare for child academic achievement has been examined only in relation to objective returns. However, what matters for the parents’ decision maker process is the subjective returns to formal childcare, i.e. as perceived by them. This is relevant since, insofar the EY system adequately prepares young children for the transition into primary education, but parents do not perceive this, it will affect negatively parental choices.
From a survey we carried out to understand why not all parents send their children to childcare in the spring/summer 2020 (both those eligible during the lockdown, and everyone once the centres re-opened), we asked parents their perceptions on the effectiveness of different types of investments (childcare, parental play (with child), and child play with friends) for a child the same age as their own to reach a Good Level of Development (Conti et al., 2022).[1] It emerged that, while parents believe that childcare, parental play (with child), and child play with friends all improve child development, parental play is perceived to improve child development the most, and to be a partial substitute for preschool (Figure 1).

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Figure 1 Parents' perceptions of returns to early investments

Interestingly, the quality of the early years settings available to the respondents at the Local Authority level as measured by the Office for Standards in Education (OFSTED) did not correlate with expected returns from childcare – indicating that parents did not consider the OFSTED ratings when thinking about the value of formal childcare settings. Evidence from the United States of America shows that low-SES parents are more likely to value a program's practical features, such as its pricing and accessibility, while high-SES parents are more likely to focus on the learning environment (Herbst et al., 2020).
Importantly, parents who perceived a greater return from formal childcare were more likely to send their child to childcare in the summer of 2020. In other words, parental beliefs were predictive of actual choices.

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.

Sure Start offered a range of services to support children and their parents integrated within each Local Programme or Children’s Centre.
In the most robust evaluation of the health effects of Sure Start to date (Cattan, Conti et al., 2022), we have shown that the availability of Sure Start centre in the first five years of life significantly improved health up to adolescence. More specifically, at age 5, an additional centre per thousand children prevented around 2,900 hospitalisations a year; for 11- to 15-year-olds, the total was over 13,150 prevented hospitalisations each year (Figure 2). Sure Start’s impacts on child health last well beyond the end of the programme itself. Indeed, some of the biggest impacts are only felt in adolescence, nearly a decade after children have ‘aged out’ of eligibility.

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Figure 2 Effect of an increase in Sure Start coverage on the probability of any hospitalization in the neighbourhood

While the full cost of providing Sure Start to all eligible children may not be recouped by including only the health returns, we find that the financial benefits from reducing hospitalisations offset approximately 31% of the cost of Sure Start provision. This figure is likely to underestimate the benefits of Sure Start since the programme may have affected many other outcomes beyond hospitalisations. Current work is studying impacts of Sure Start on educational outcomes, use of social care, and offending.
The benefits of Sure Start are not evenly distributed. The programme had bigger and long-lasting benefits for children in disadvantaged neighbourhoods (Figure 3). This suggests that Sure Start provision helped to reduce health inequalities. An important lesson for services such as Family Hubs is that a model that combines universal services with an area-based focus on disadvantaged neighbourhoods can be a successful approach to early years interventions.

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Figure 3 Effect of an increase in Sure Start coverage on any hospitalization

Policy recommendations

Consider experimenting with innovative social finance instruments to help sustaining the fiscal cost of EY provision, learning from the experience of the US and other countries in financing early childhood programs.
Consider experimenting with promising workforce strategies, such as teacher retention bonuses.
Place greater importance on what parents value in EY settings, in addition to formal OFSTED ratings: parental perceptions matter and drive actual formal childcare choices.
Evidence from the Sure Start evaluation shows that a model that combines universal services with an area-based focus on disadvantaged neighbourhoods can be a successful approach to early years interventions.

References

Bassok, D., Doromal, J. B., Michie, M., & Wong, V. (2021). The effects of financial incentives on teacher turnover in early childhood settings: Experimental evidence from Virginia. Retrived here: https://files.elfsightcdn.com/022b8cb9-839c-4bc2-992e-cefccb8e877e/6de6fd54-e921-4c88-a452-ad7cabccc362.pdf

Cattan, S., Conti, G., Farquharson, C., Ginja, R., & Pecher, M. (2022). The health effects of universal early childhood interventions: Evidence from Sure Start. IFS Working Paper. Retrieved at https://ifs.org.uk/publications/health-effects-universal-early-childhood-interventions-evidence-sure-start

Conti, G., Giannola, M., & Toppeta, A. (2022). Parental Beliefs, Perceived Health Risks, and Time Investment in Children: Evidence from COVID-19. IFS Working Paper. Retrieved at https://ifs.org.uk/publications/parental-beliefs-perceived-health-risks-and-time-investment-children-evidence-covid-19

Early Years Alliance (2021). Breaking Point: The impact of recruitment and retention challenges on the early years sector in England.

Gustafsson-Wright, E., Gardiner, S., & Putcha, V. (2015, July 9). The potential and limitations of impact bonds: Lessons from the first five years of experience worldwide.

Herbst, C. M., Desouza, K. C., Al-Ashri, S., Kandala, S. S., Khullar, M., & Bajaj, V. (2020). What do parents value in a child care provider? Evidence from Yelp consumer reviews. Early Childhood Research Quarterly, 51, 288-306.

Tse, A. E., & Warner, M. E. (2020). The razor’s edge: Social impact bonds and the financialization of early childhood services. Journal of urban affairs, 42(6), 816-832.

Annex

For the study on parental perceptions (Conti et al. 2022), we collected new survey data from a sample of over 500 first-time parents in England, during the course of the first COVID-19 wave. We interviewed the same parents twice: our baseline survey was administered on the 31st of May 2020, the day before nurseries and childcare centres were allowed to reopen, while our follow-up survey took place between July and August 2020.

January 2023

[1] The Good Level of Development (GLD) indicator is a performance measure used at the end of reception by the Department for Education to determine school readiness of preschool aged children, and falls within the Early Years Foundation Stage (EYFS) statutory framework.19 According to the EYFS profile 2022 handbook: “Children are defined as having reached a Good Level of Development (GLD) at the endof the EYFS if they have achieved at least the expected level for the Early Learning Goals (ELGs) in the prime areas of learning and the specific areas of mathematics and literacy. This helps teachers and parents to understand broadly what a child can do in relation to national expectations.” and “The EYFS profile is also used to inform parents about their child’s development.” (Department for Education (2022) p.6). Hence, we can assume parents to be reasonably familiar with the GLD concept. We asked parents “Imagine 100 children of the same age as yours, living in England”, and to report how many out of these children were expected to “Reach a good level of development (GLD) by September 2020” for each combination of high and low levels of each of the three types of investments.