I beg to move,
That this House has considered e-petition 586700, relating to funding and affordability of childcare.
The petition is about the need for an independent review of childcare funding so that we can really think through what we want our childcare and early education sector to be, and what we hope it can do for the families who need it and for us as a society. So many economic and social benefits flow from the sector that it is difficult to summarise in the time we have, but I think most of us would agree on three key reasons why it is so important to support high quality early education.
First, we know from international evidence that so many important life outcomes—from health to wealth and wellbeing—have their origins in the early years. Quality early education can benefit children’s academic and social development, and evidence shows that those benefits are often stronger for children from disadvantaged families, as it starts them off on a more equal footing with their peers when they go to school.
Secondly, access to childcare is crucial for working parents. Closures during the pandemic have served as a real reminder of just how important it is. The pre-school years are a particularly significant time for new mothers: regrettably, decisions around their childcare in that short period can have a huge impact on their lifetime earnings and, consequently, on the gender pay gap.
Finally, helping with the cost of childcare and early education is one of the best ways for the Government to ensure that families with young children—particularly
those on low incomes—are not financially crippled by high costs. As the petitioners point out, childcare in the UK is expensive. Statistics from the OECD show that, however we look at it, we are close to the top of the list of developed countries for childcare costs.
I think that most of us would agree on what we want our early years sector to deliver and on those broad criteria, but some may place different emphasis on them. Analysing whether we are meeting those objectives, and how we can improve on them, is a huge task that touches on many complex areas, such as funding, training, accountability and outcomes. I do not think this House has the expertise or the time to cover those in depth, which is why we need an independent review.
During the debate, I want to look specifically at funding, which is the focus of the petition. In that key area, there is strong evidence that we are letting down children, parents and providers, and I will make the case to support the petitioners’ call for an independent review. Determining the right level of funding for the early years is of course the subject of long-running disputes between the Government and sector representatives, but it goes to the heart of what early years really means to us as a country.
Childcare is as necessary for parents to get to work as the roads and the rail network, so why do we not approach and fund it as the vital infrastructure investment that it clearly is? I am sure the Minister will point out that spending on free entitlements—the 15 and 30-hour entitlements for three and four-year-olds, and disadvantaged two-year-olds—has more than doubled to around £3.4 billion since 2010, but it is important to look at what has driven that increase. Most of it has come from successive expansions of eligibility, which are of course hugely welcome. However, what providers are concerned about is a discrepancy between the cost per hour of delivering the free entitlements and the funding per hour that they receive.
The Institute for Fiscal Studies’ latest annual report on education spending shows that funding per hour of childcare is now only about 13% higher in real terms than in 2004, despite an increase of about 150% in total spending. In recent years, funding per hour has declined from its 2017-18 peak, showing that even the modest increase introduced alongside the 30-hour entitlement in 2017 has not been maintained.
Even more importantly, we know that it is not enough just to provide for the costs of delivering childcare. The Department for Education’s publication in June of a much-delayed freedom of information response to the Early Years Alliance showed that the Government were aware of the consequences of introducing the 30 hours policy with an insufficient level of investment. Ministers knew that the investment would meet only around two thirds of costs—meaning higher costs for parents—and force early years staff to look after the maximum legal ratio of children, with significant impacts on quality. With a lack of proper investment in the free entitlement, providers are forced to cover their costs by charging more for the non-funded hours. That means spiralling costs for parents and carers, whose fees have risen three times faster than earnings since 2008—and that is just the average. For the parents of two-year-olds in some parts of the country, childcare costs have risen seven times faster than their wages.
As a working mother both before and since becoming an MP, I have my own experiences of the heart-wrenching stress and pressure of getting the right childcare and support, and of the enormous costs. Our childcare costs are now the highest of almost any developed country. In a Petitions Committee survey earlier this year, 77% of parents agreed or strongly agreed that cost had prevented them from getting the kind of childcare they really needed. One respondent said:
“I do not have the option to have family or friends look after my child when I return to work and I can’t afford to not be in work, but childcare costs more than my mortgage for full time hours.”
Another commented:
“My wages will just about cover our childcare costs, therefore I am basically working only to ‘hold my place’ until my baby is old enough not to need childcare i.e., once she starts school.”
That has a huge impact on the gender pay gap. Clearly, it is still by and large women who take on most of the responsibility for childcare. Research by Pregnant Then Screwed found that 62% of women who returned to work worked fewer hours, changed jobs or stopped working because of childcare costs. Sadly, we know that the resulting loss of wages has a long-term impact on far too many women.
Properly funded childcare also means ensuring that providers have the money to pay and train their staff appropriately. I want to thank early years staff and management for their efforts over the last 18 months. Most staff have worked through the entire pandemic, and many settings have kept their doors open the entire time, looking after the children of key workers and others and keeping our country moving through this international crisis. Early years staff and management deserve our thanks and appreciation, and our commitment to tackle the serious issues raised by the petitioners.
According to research by Nursery World, one in 10 childcare workers relies on foodbanks, and 45% claim some form of benefit. One in eight earns less than £5 an hour, meaning that staff turnover is high, which can impact on the quality of care, the quality of education and the stability provided for children. We also know that in the past decade, there has been a long-term decrease in the number of people who want to work in the early years sector. One nursery manager told me just how difficult it is to retain staff, particularly in a setting with a disadvantaged intake and a high incidence of special educational needs.
Employees feel that they are sacrificing any semblance of work-life balance for minimum wage, leading to higher absence rates and higher staff turnover. That means that a child’s key worker might change to someone both they and their parents are unfamiliar with multiple times in a year, affecting the quality of education that they receive. It also means that settings are regularly thrown into chaos because they cannot recruit fast enough to fill the gaps. I was told that, at least once a month, staffing issues mean that nurseries hope that not every parent will bring their child to nursery, because if every child attended there would be no way to maintain the required legal ratios. It is shocking that this is what some settings face, and it shows how badly off track we have got.
It cannot be right that while staff are poorly paid and parents pay high costs, the sector’s biggest customer, the Government, get away with paying what they know is insufficient funding. Deciding on the right level of funding and the best way to provide it is, of course, not an easy task, and I think that speaks to the need for a comprehensive, independent expert review to consider the matter in detail. Our answer to the crucial funding question speaks to what we want our early years sector to be.
Is it the state’s role to provide the minimum funding to cover, or just about cover, basic costs so that parents can at least return to work? That would mean maxed-out ratios, stressed-out staff, higher costs for parents, and providers that are unwilling to provide childcare as cheaply as possible being driven out of the market. Or are the benefits of a more generous childcare and early years education system worth it? That is what I would argue, as it means that we can unlock greater productivity, put a big dent in the gender pay gap, narrow the attainment gap at school and, in the long run, reduce other social problems such as poor mental health, unemployment and crime.
Unfortunately, in their written response to the petition, the Government said that there are no plans to commission a review of childcare funding, but I do not think that the Minister should be so quick to dismiss the petitioners’ concerns. We need a childcare system that helps not only to make the lives of families and their children better, but to make our economy work. With both parents and providers struggling and with early years staff undervalued and underpaid, childcare is becoming a big political issue, and it is not going away any time soon. I urge the Government to consider the petitioners’ request for an independent review so that we can get this right for everybody who would benefit from it.