MPs launch inquiry into early years funding

Joe Lepper
Monday, November 5, 2018

A cross-party group of MPs has launched an inquiry into early years funding in response to increasing numbers of nursery closures and provider concerns about their financial future.

Birmingham has delayed the living wage element following backlash from the sector. Picture: Pre-school Learning Alliance
Birmingham has delayed the living wage element following backlash from the sector. Picture: Pre-school Learning Alliance

The all-party parliamentary group for childcare and early education has launched the inquiry after early years providers raised concerns with MPs regarding funding at a lobbying event in July.

Two sessions of the inquiry will take place this month, the first on 14 November with evidence from parents and providers about their experiences of accessing and delivering childcare.

The second will involve early years experts including the Pre-school Learning Alliance (PSLA), the National Day Nurseries Association (NDNA) and research agency Ceeda.

The launch of the inquiry follows the publication this week of an open letter from PSLA chief executive Neil Leitch to children's minister Nadhim Zahawi, over the failure of the recent budget to address early years funding.

"At a time when so many pre-schools, nurseries and childminders have voiced serious concerns about their long-term viability, this was a missed opportunity to safeguard the future of those providing such a vital service to childcare and families across the country," states the letter.

The letter calls for an uplift in rates for funded places, citing a PSLA survey from the summer of 1,600 providers which found that eight out of 10 believe that a failure to increase rates will have a negative impact on their financial position.

The PSLA also wants providers to receive more funding to meet minimum wage obligations. In last week's budget, Chancellor Philip Hammond announced that the national living wage hourly rate for those aged 25 and over will rise from £7.83 to £8.21 from next April.

"Of course, in theory, an increase to statutory minimum wage requirements should be a welcome policy development, ensuring that all employees receive a fair wage for the work they do," states the letter.

"The problem is that for the early years sector, such policy changes are not matched by increases in funding levels, putting providers under unsustainable pressure. With so many practitioners in the sector being paid at or near the statutory minimum, any increases to the national living/minimum wage inevitably have a huge impact on overall wage bills," it adds.

In September the NDNA revealed an increase in nursery closures since the introduction of the 30 hours childcare scheme. NDNA said 121 nurseries had closed between the scheme's September 2017 launch and August this year. Over the same period the previous year 73 settings closed. Last month Ceeda published a study that concluded the early years sector is being "systemically underfunded".

A DfE evaluation of the early implementation of 30 hours childcare in eight local authority areas, published in July 2017, highlighted the financial impact of delivering the extended offer.


APPG chair, Labour MP Tulip Siddiq, said: "There is clear evidence that the financial sustainability of the childcare sector is at risk.

"The government is right to have taken steps to support more children to benefit from high-quality childcare, but the delivery of key proposals are falling short of what is needed.

"The APPG has been told that childcare providers are closing in ever greater numbers, whilst others are struggling with business rates and staff recruitment and retention. This situation threatens the future of key government policies, such as 30 hours funded childcare.

"This inquiry will aim to bring together the evidence and experience of the sector, and make a series of positive and constructive recommendations to support every setting."

Leitch said the APPG inquiry "represents a vital chance for both providers and parents to get in front of parliamentarians and put across the impact of underfunding clearly and comprehensively".

He added: "We hope that those ministers and decision-makers responsible for the long-term sustainability of the childcare sector will be listening closely."

Department for Education spokesman said: "This government has made its commitment to high-quality early years provision very clear. By 2020 we will be spending around £6bn on childcare support - a record amount - which includes around £3.5bn which we plan to spend this year on our free early education entitlements.
"As a result of our Early Years National Funding Formula the total national average hourly funding rate to local authorities for three- and four-year-olds increased from £4.56 to nearly £5 and all local authorities saw seven per cent increases in their funding rates for two-year-olds."

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