Membership organisations the National Day Nurseries Association and the Pre-school Learning Alliance, which also runs 120 settings, told peers of the challenges faced by the childcare sector.
The committee's inquiry is focusing on the affordability of childcare for pre-school children, from birth to five.
Asked what role the state should play in the childcare market, Neil Leitch, chief executive of the Alliance said, ‘The primary objective of the state should be to ensure it’s adequately funded and what’s right for the child.’
He was concerned, he said, that the sector was ‘being led down a path dictated by economics.’
Both stressed the serious under-funding of the funded early education places for two-, three- and four-year-olds.
Asked whether there was anything childcare providers could do to keep costs down, Mr Leitch said, 'I would struggle to answer that', citing the low-paid wages of many in the workforce.
Purnima Tanuku, chief executive of the NDNA, said the lowest rate for a funded place for three-and four-year-olds that NDNA knew of based on rates from 100 local authorities, was £2.80 an hour in one local authority that had made ‘severe budget cuts’, despite the Department for Education maintaining the budget.
The early years element of the funding should be ringfenced she said, because part of the problem was the ‘one lone voice of an early years provider’ on local authority schools forums, which decide how the Dedicated Schools grant is spent.
Asked whether the aim of childcare policy was to enable parental employment or provide better child development, Mr Leitch commented, ‘I’ve never had a conversation [with a provider] about getting parents back to work.’
Asked about childcare costs, both highlighted increasing pressure on providers’ costs including rising business rates and rents.
Mr Leitch gave an example of one setting managed by the Alliance on a school site that had seen its rent rise by 300 per cent.
Ms Tanuku said that she knew of business rates rising by 25 per cent in some areas and that small and medium-sized businesses were treated by some local authorities as if they were prive with 'a big P'.
Mr Leitch said that the only mechanism the Government had put forward to tackle costs were the proposals in ‘More Great Childcare’ to change ratios.
Referring to the ratios debate he said that the changes would have generated 50 per cent more money for providers on two-year-old places and 60 per cent more for three-and four-year-olds for minimum costs, but ‘the sector had rejected the offer.’
‘We have proven the point [as a sector] that we put child development before money,’ he said.
Ms Tanuku said that there needed to be a balance of experienced and younger staff. 'Early years Teachers are still not equal in terms of qualified teacher status. We need to enthuse people coming into childcare that there is a career path and structure.'
Mr Leitch said, 'A graduate-led workforce does not need to be unique to the school environment.'
The Government's real motivation seemed to be 'to put increasing numbers [of children] into the school environment because we can. By all means let's upskill the workforce but not use it as a decoy to push children into schools.'
Earlier the committee heard from parent organisations about the challenges faced by working parents when choosing, finding and paying for childcare.
Julie McCarthy, head of policy, research and communications, from Working Families told peers that education was not the main driver for parents when choosing childcare, who were ‘looking for childcare that allows them to work flexibly’ and ‘to allow them to spend time with their child.’
Cost, location and logistics were the main reasons parents chose childcare, as well as ‘quality and affordability’ and for their children ‘to have fun and be well looked after’.
This was echoed by Caroline Davey, director of policy, advice and communications from Gingerbread, who added that parents ‘want not to have duplicate childcare’, citing an example of one caller to their helpline who was juggling three different providers.
Anand Shukla, chief executive of the Family and Childcare Trust said, ‘Many more mothers would like to work as long as they can successfully combine work and family life.’
Asked about financial support for parents, Mr Shukla highlighted the confusion that he said already existed about the help available to parents through vouchers and tax credits and said that he was concerned about how parents would be informed about tax free childcare.
He also said that he believed that there was ‘a huge amount of confusion’ among parents about what they would be entitled to under the tax-free childcare scheme, with a common misunderstanding among parents that they would be entitled to £2,000 off the cost of their childcare, as opposed to 20 per cent off the cost of childcare up to £2,000.
All agreed that what was needed was a simpler funding system, with Mr Shukla favouring financial support for parents paid direct to providers.