CEEDA DATA: 2017/18 annual report - Pressure and pride

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FUNDING

The extent to which Government-set funding rates don’t match the costs of delivering either of the two ‘free’ entitlements is laid bare, Ceeda’s annual report says.

The average cost of early education and childcare for two-year-olds is now £6.90, 32 per cent more than the average funding rate of £5.23 paid to PVIs for these places.

For three- and four-year-olds, average funding rates of £4.34 have increased by just 1.8 per cent in real terms since 2013/14, with average hourly costs 17 per cent higher than funding rates at £5.08.

The report notes, ‘A funding system factored on delivery costs for specific age groups assumes a market where each age group pays a price commensurate with the costs of delivery. This is not … the case with early years provision.’

It finds that the cost of delivering a place for under-twos is 46 per cent higher than the cost for a three- to four-year-old’s place. Yet the difference between the fees a setting charges for these two age groups averages just 7 per cent.

The total impact of this on the wider sector, taking into account how settings spread the high costs of two-year-old provision through the age range, is a funding deficit of £616.5 million, according to Ceeda’s findings.

Costs are higher still when 80 per cent of staff are qualified to Level 3 or above, and when provision is graduate led.

The report also notes that ‘the market’s ability to recoup costs across the customer base is increasingly challenged by the expansion of funded provision at rates which have failed to keep pace with costs’. This is also backed by other reports, including an inquiry by the Treasury Select Committee.

Funded hours now account for 58 per cent of a setting’s occupied hours on average. As expected, this has increased since the full roll-out of the 30 hours entitlement in September 2017, when it stood at 52 per cent. The proportion of funded versus private hours is captured above based on occupancy in a specific reference week in spring 2018 (see Figure 1).

This is placed into context by figures from the OECD last month, which show the UK falls way behind in terms of the proportion of early childhood education spending that comes from government. In the UK this is 30 per cent for children under the age of three – the OECD average is 72 per cent and the EU average 75 per cent. For children aged over three, the figure is 58 per cent in the UK compared with 83 and 86 per cent in the OECD and EU respectively. Most of the UK’s private childcare expenditure comes from parents.

STRUCTURE OF THE EARLY YEARS SECTOR

A total of 1.3 million places are provided by childminders and PVI settings. Overall, the number of non-domestic places has remained relatively stable, but the way these places are being provided has changed.

Ceeda estimates suggest the early years sector is consolidating fast. This year, 60 per cent of childcare providers are single sites – 18 percentage points less than in 2016, when DfE figures suggested the figure stood at 78 per cent.

Figures show that larger groups of all sizes have picked up the slack. Two-site operators have more than doubled their share of the market – from 6 to 13 per cent, while those with five to 19 sites have increased their share from 6 to 11 per cent (see Figure 2).

Ceeda notes that this data was arrived at using a new methodology, and a clearer picture will be provided by the next DfE provider survey, expected this November.

The market is demonstrating unprecedented levels of activity, with Busy Bees expanding 35 per cent over the past two years (to 361 settings, the largest group in the UK) and Tops Day Nurseries and Kids Planet increasing 59 and 56 per cent respectively. However, amid anecdotal reports of settings suffering due to funding levels and rising costs, some chains have made closures, most notably the Pre-school Learning Alliance’s closure of 23 of its 108 settings. Also, the number of childminders has plummeted 15,700 since 2012.

Deprivation

Families living in the wealthiest areas have more access to childcare than the poorest.

The report looks at the number of places per head of the population and finds that the North-East fares the worst – 0.24 places per head in just 770 settings. This contrasts with the South-East and North-West with the highest number of places per person – 0.36 (see Figure 3).

There is also a new inequity of access. In 2016 there were more places per head in the most deprived local authority areas then there are now, while the number of places per person has increased in the least deprived areas (see Figure 4). This may be linked to the fall in Children’s Centre provision – from 3,632 centres in 2009 to 2,632, according to a Sutton Trust report earlier this year.

The Ceeda report says, ‘These figures evidence a decline in equality of access to nursery and pre-school provision in the private and voluntary sector; provision which accommodates the needs of working parents and helps provide a bridge back to employment.’

It is also interesting to note how average hourly fees vary across the country. Fees for London are between 31 and 34 per cent higher than the rest of the country (see Figure 5).

WORKFORCE

The pipeline of early years staff has shrunk, ‘due in large part to the removal of functional skills as an alternative to GCSEs’ for Level 3 qualifications, notes the report. Between July-September 2012 and the same period in 2016 there was a drop of 41 per cent (20,820 to 12,325) in certifications of Level 3 childcare qualifications. There was a slight recovery to 13,275 in 2017, and the report notes the upward trend is continuing ‘though full recovery will take time if indeed it is ever achieved given the labour market and funding trends’ (see Figure 6).

In addition, there is stiff competition for new entrants to the childcare labour market. All qualifications are allocated to one of 15 sector subject areas. Within each area, there is a second tier, providing a further level of breakdown. Out of 50 ‘second-tier subject areas’, child development and well-being comes 21st in terms of the number of certificates awarded this year and last. Health and social care certificates outnumber early years by more than 22 to one (see Figure 7).

Previous Ceeda findings have shown that pay in the early years sector compares very poorly to the wider workforce. According to an ONS classification system, a nursery manager or owner should come under ‘professional occupation’. The average hourly rate of a professional in this group – £20.62 – is over £7 more than the £13.43 average for a nursery manager (taken from spring 2018 data) (see Figure 8).

Meanwhile, the average hourly pay rate for an early years practitioner without Qualified Teacher Status is £8.49. This job is classified in the occupational grouping of ‘caring, leisure and other services’, for which the average hourly rate is nearly £1 more at £9.41. Indeed, pay for an early years practitioner is just 2p more per hour than for ‘elementary occupations’ listed in Figure 8, such as cleaners and bar staff.

Job satisfaction

Staff churn stands at 14 per cent, according to the last DfE Childcare Provider survey. Ceeda data shows that despite the stresses on the system, there are high levels of job satisfaction – 90 per cent of staff agree their role is interesting and varied; 96 per cent say they are proud of what they do.

Out of the 81 per cent of respondents who shared their future plans with Ceeda researchers, 10 per cent were actively jobhunting and one per cent wanted to leave their current employment as soon as possible. Interestingly, staff at Level 6 were least likely to see a long-term future with their current employer.

The most common reasons for leaving the sector were lack of progression and pay, stress, and poor communication between staff and employers (see Figure 9).

• This data is taken from the About Early Years Annual Report, www.aboutearlyyears.co.uk/our-reports