Funded places for two-year-olds: Flaws, risks - and solutions

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With the twos programme set to expand its offering this September, Dr Julian Grenier looks at some of the problems with the scheme and suggests how the Government might tackle them.


The Government's programme to offer free nursery places to eligible two-year-olds will double in size from 130,000 to 260,000 children in September 2014. While that expansion will be welcomed by many, there are some worrying flaws in the programme that still need to be addressed.

The programme began as a pilot in 2006, under the Labour Government, reaching more than 13,000 children in its first phase. However, the outcomes of this first phase were disappointing. The Government's own evaluation, published in 2009, found that 'on average the pilot did not significantly improve the cognitive and social development of the children receiving the free childcare'1.

In case there might have been longer-term benefits, not visible after just a year in nursery, the children were followed up again when they were five to see whether there was any evidence for improved outcomes. However, these findings were also disappointing, with the researchers surmising that 'there is no evidence that overall (the children) had better outcomes at age five, as measured by the Early Years Foundation Stage profile, than children who did not attend the pilot'2.

Given these early results, at a time of intense pressure on public spending, the coalition Government's decision to spend a further £755m on free places for two-year-olds might seem surprising. After all, three quarters of a billion pounds ring-fenced for early years is a huge sum, with huge potential benefits. What about spending it on workforce development? The most recent statistical survey from the Department for Education (DfE) reported that there are 25,500 full and sessional daycare settings in England3.

The average pay for staff in graduate-led settings is just under £15,000, while the average qualified early years teacher in school earns approximately £30,000. So if the funding were split equally between all the settings, each one would gain just under £30,000 - enough to implement the Nutbrown Review's recommendation that Early Years Professionals should be offered a pathway to obtain Qualified Teacher Status and receive equal pay.

The EPPE (Effective Provision of Pre-School Education) Project and the recent report from the Nuffield Foundation have both demonstrated a clear link between higher-qualified staff and better outcomes for disadvantaged children4. So it would surely be worth considering a substantial investment in staff training and qualifications?


There are arguments in favour of the Government's decision to spend the money on free places. Although the overall results of the pilot phase were unpromising, the researchers did demonstrate that children who attended a good-quality early years setting benefited. The problem was that there were too few of those good-quality settings for the impact to show in the statistics. So, you could argue that the solution is to ensure that all eligible children attend a good-quality setting.

However, the DfE's implementation of the scheme may jeopardise that aim. Significantly, it has prevented specialist local authority early years teams from making any judgements about the quality of settings, and determining which settings should be funded. It is now up to Ofsted alone to make judgements about quality.

This decision goes against the findings of research published in 2012 by the University of Oxford, which recommended that 'where possible, decisions around quality should encompass assessments made over time rather than on the basis of a single "snapshot". The knowledge of professionals who have supported settings over time can make an important contribution to assessing and improving quality, but this needs to be balanced against the need for commissioning decisions and quality measures to be transparent to both providers and parents'5.

However, the problems with the new system are not just about the accuracy of judgements on quality. The DfE requires local authorities to fund two-year-olds in any new setting once it has been registered by Ofsted. A new setting will be registered after an inspector has visited to check the suitability of the provider, the premises and all the other arrangements and plans for the provision. This is a thorough and demanding process. But it does not include seeing the provider in action.

Once registered, there is likely to be a time lag of at least six or seven months before the provision is inspected. That means a new setting might be registered in September, take funded two-year-olds on roll immediately, but not be inspected with children on roll until the early summer. By then, many of the children will have been on roll for the best part of their whole funded year. This is particularly concerning because the funded places are for disadvantaged twos, many of whom will be vulnerable.

There is no direct link between poverty and other disadvantages in early childhood, and many low-income families provide very well for their children. All the same, children growing up in poverty are likely to face multiple disadvantages. The Child Poverty Action Group has found that by the age of three, poorer children are approximately nine months behind children from more wealthy backgrounds in terms of their overall development, and that they are more likely to suffer from a chronic illness or disability6. What if, in addition to these disadvantages, they spend the best part of their third year of life - a very important phase in their development - in a poor-quality early years setting?


In the past, local authority teams would have regular contact with new settings and could detect problems quickly. They could offer speedy help and support or, as a last resort, withdraw funding. This was a system that could protect the best interests of vulnerable children. Now, it much less likely that problems will be noticed quickly.

For example, members of the national charity Early Education recently found that in some areas, the local specialist early years teams had been cut by half7. The teams have less capacity to visit new settings, they have less time to spend helping weaker nurseries, and their remit to keep an eye on quality has been removed. If they have concerns, they cannot actually do anything themselves: they can only make a complaint to Ofsted. Except in rare cases where there are serious shortcomings in safeguarding, even a complaint-driven inspection will not be published for several weeks.

It is not possible to make an accurate estimate of how many children might be affected by the DfE's strategy.

But to give a rough idea of the scale of the problem, Ofsted has found that about 2 per cent of early years settings are inadequate. This rises to 3 per cent in more disadvantaged areas, where there will be greater concentrations of eligible children. Similarly, 16 per cent of settings are merely satisfactory, rising to 20 per cent in more disadvantaged areas.

The number of free places for two-year-olds will increase by 130,000 in September 2014. If 2 per cent of those additional 130,000 children are placed in settings that are inadequate, that would mean that 2,600 of them will have a very poor experience next year; if 16 per cent are placed in settings where the quality is not good, then 26,000 of them will not benefit from their place.

That will be unfortunate for them and their families, and a waste of resources that could have been better spent elsewhere. Because of the delay between registration and inspection, and the DfE's decision to restrict the powers of local authorities, it will be too late to do anything to promote the interests of nearly 30,000 vulnerable children.

These figures are, of course, hypothetical, and no allowance has been made for children with childminders or those attending maintained schools. But they give a working impression of the risks.


There are two practical steps that the DfE could take to ensure better implementation of its policy. Firstly, local authorities should have their role in assessing and supporting quality returned to them. They should be able to suspend funding for children when there are concerns about quality.

It must be wrong that I can contact my local council if I am concerned about the welfare of the animals in a pet shop and it will take action, but if I tell the council I am worried about the care of children in a local nursery all it can do is phone Ofsted's helpline in Manchester. Local authority teams, with their strong local knowledge and connections, have a key role to play alongside Ofsted in ensuring safety and quality in the early years.

Secondly, the department should slow down the implementation of the policy, as recommended recently by the The Sutton Trust8. By slowing down the expansion of places, money could be freed up to achieve better levels of workforce qualification and training.

Early years settings have long been under-funded, and investment in practitioner training has not been sufficient. The DfE commissioned an independent report on early years qualifications, the Nutbrown Review, and then ignored its main findings. Instead of racing to achieve a high target figure, we should be working together to improve quality and to offer better opportunities to two-year-olds in nurseries.


1. early-education-pilot-for-2-year-old-children-evaluation

2. for-two-year-old-children-age-five-follow-up

3. childcare-and-early-years-providers-survey-2011




7. support-teams-cut-half-survey


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