Families face childcare barriers as councils report lack of sufficiency

New evidence has emerged on the problems early years providers in deprived areas are experiencing with the funded childcare scheme, with campaigners warning that some disadvantaged children will be unable to access places if the issues are not fixed soon.

Latest research from Coram Family and Childcare shows there has been a fall in the availability of childcare places generally over the past year and that this is particularly pronounced in disadvantaged areas, for children in receipt of the two-year-old entitlement and with special educational needs and disabilities (SEND).

Coram’s annual Childcare Survey, published in late March, found that there had been a decrease in the number of childcare providers in 2022 compared with last year largely driven by a continued decline in childminders. Despite this, the number of childcare places remained broadly the same.

The survey also revealed an increase in the number of local authorities reporting a shortage of childcare provision to meet demand, with the report authors saying this insufficiency can be in hours available, the location of the setting or the quality of provision. In England, 59 per cent of authorities reported having enough childcare “in all areas” available for parents working full time.

Two-year-old offer

Since 2014, the 40 per cent most disadvantaged two-year-olds in England have been eligible for 15 hours of funded childcare per week for 38 weeks of the year.

The Coram survey found that just 63 per cent of councils reported having sufficient places for two-year-olds in all areas in 2022 compared with 72 per cent a year earlier.

This is much lower than the 79 per cent of councils that reported having sufficient places in all areas for three- and four-year-olds (see graphics).

The shortage of two-year-old places varies across the country but the sufficiency problem is particularly acute in the East of England and South West regions. Only the North East region reported having sufficient provision for two-year-olds in all areas.

The survey also shows that one in five councils reported a decline in the number of places offered by providers, almost double the proportion that had seen a rise.

Meanwhile, 38 per cent of councils reported a decline in take up of two-year-old places among parents compared with 24 per cent that reported a rise.

The report highlights how the attainment gap experienced by children in disadvantaged areas has widened in recent years – research shows that disadvantaged children start school 4.5 months behind in their developmental outcomes – and describes government-funded childcare as a “key tool” in tackling this.

“It is essential that it is taken up by disadvantaged children who stand to benefit the most,” the report states.

“The pandemic has increased inequalities and further widened this gap with evidence showing that more children are starting school further behind, especially children from lower-income households. Just under a third of local authorities flagged concerns that changes that providers had made had impacted negatively on the quality of provision.”

In addition, the survey shows increasing gaps in childcare for children with SEND, with only 21 per cent of local authorities having enough childcare, down four percentage points from 2021.

Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA), says she is “very concerned” about the reduction in capacity generally, particularly in disadvantaged areas.

“These children have the most to gain from high-quality early education and care but are the most likely to be unable to access it due to a lack of places or affordability,” she says. “Without more investment, more nurseries will be reducing their funded places for two-year-olds.”

Tanuku adds that NDNA’s own research shows that more nurseries are closing and that settings in areas of disadvantage and where the funding rates are lowest are most susceptible to getting into financial difficulties (see box).

However, James Hempsall, director of early years consultancy Hempsall’s, says that less provision “does not automatically mean there is a lack of sufficiency” as factors such as fluctuating demand and workforce pressures can also influence this.

“I want to see more evidence of demand levels, and of families not being able to secure the provision they need and want,” he says. “I suspect costs and the type of available childcare to match changed needs will be at the root of this.”

Funding and costs

The survey reveals the continuing impact of the pandemic on childcare.

Some providers are struggling to remain sustainable with 14 per cent of local authorities reporting that at least a quarter of their group-based providers are facing severe financial difficulties, and that 17 per cent are seeing at least a quarter of their childminders experiencing the same challenges.

In total, 57 per cent of local authorities have seen childcare providers raise their prices and 30 per cent say providers have increased the number of children looked after by each staff member.

A third of local authorities also reported seeing an increase in permanent closures of childcare settings compared with last year.

Childcare organisations have warned for many years that government funding rates for the early education entitlements do not meet providers’ costs. But while these losses can be more easily offset for large national groups or settings in affluent areas that can charge top-up fees, that is much harder for providers in poorer communities.

Neil Leitch, chief executive of the Early Years Alliance, says: “Settings operating in more disadvantaged areas tend to be more reliant on early entitlement places, and therefore early entitlement funding – and with the gap between the cost of delivering places and early years funding rates growing ever wider, it’s clear that the pressure on these providers is becoming unsustainable.” Leitch adds that the situation is forcing some settings to restrict the number of funded childcare places for two-year-olds that they offer.

Both Leitch and Tanuku say that the national shortage of childcare staff is making it even harder for providers to offer places to two-year-olds and children with special needs due to the higher number of staff needed to look after them.

“I am seeing a widening of the polarisation of the sector,” says Hempsall. “The more commercial end of childcare is becoming stronger. It is bouncing back after the pandemic. At the other end, settings serving least advantaged families are under greater pressure to make ends meet. They themselves are disadvantaged by having to rely upon funded entitlements with fewer opportunities to generate income through paid-for services. It has been creeping up for years, now things have stepped up a gear.”

Coram makes a number of recommendations to boost childcare sufficiency, including a doubling of the early years premium – currently £300 a year – paid to providers to boost outcomes for the most disadvantaged children.

Hempsall says this is not ambitious enough and calls for the premium to be raised to the level paid to schools – £1,400 a year.

Disadvantage premium

“I would like to see a disadvantage premium, a generous one, to resource solutions to the additional needs in some areas,” he adds. “I also think more can be done to inform everyone about it, raise awareness of how it works, and ensure families get the support they need to take it up.”

Another option that appeals to Hempsall is to remove the targeting of the two-year-old entitlement altogether. “I advocate looking at the option of funding 25 hours per week for all two-, three- and four-year-olds,” he adds.

Tanuku calls for a review of the funding system, an increase in funding rates and more support for childcare businesses through the tax system.

“There is a real risk that if we continue along this trajectory we will have a generation of lost learners and that is just not acceptable,” she adds.

Coram also calls for the government to reallocate some of the £3.8bn of unspent Tax-Free Childcare funding.

Ellen Broomé, managing director of Coram Family and Childcare, says: “Many parents will be locked out of work or struggle to make ends meet as childcare prices continue to go up and the availability of places goes down. And the more vulnerable children will miss out the most on this boost to their development and outcomes.”

• Childcare survey www.coram.org.uk

CASE STUDY
PROVIDER STRUGGLES TO MAKE FUNDED CHILDCARE SCHEME SUMS ADD UP

Karen Lilley runs three settings in Plymouth, all in statistically deprived areas. She employs around 50 staff across the three “good” and “outstanding” rated settings and supports 250 families. Around 95 per cent of the children cared for at the settings receive the government-funded childcare entitlements and many have special educational needs or disabilities (SEND).

“I feel passionately that all children should have the same opportunity,” says Lilley. “We pride ourselves on being fully inclusive.

“We haven’t had to charge parents for any extras up to now but over the past 12 months we’ve seen costs rise and from April we are looking at a 9.8 per cent wage increase.”

Lilley says that the gap between income and costs will be £75,000 over the year which cannot be bridged by charging more to the five per cent of parents that pay for childcare. Consequently, she has reluctantly asked all parents to pay a £1.50 per session “consumable” contribution from April. “So far, I have had one parent out of the 250 come forward to say they are willing to pay it,” she says. “I will send out the invoices and pray as according to the government, this has to be a voluntary contribution.”

Lilley says that if the response from parents is disappointing, she will need to look at alternative action such as reducing staff numbers. She expects to have to use the company’s reserves to get through the year.

“If we don’t bring in extra money then we won’t be able to be as inclusive in the future,” she adds.

“We care for more than 51 children with SEND, 10 of whom need one-to-one care, but we cannot get this full amount back. Our authority is extremely supportive, but the money comes from central government, so their hands are tied to pay us more per child.”