Extra £44m funding will cover living wage rise, minister says in early years debate

Speaking at the Westminster debate on 3 December, initiated by MP Steve Brine, chair of the APPG for childcare and early education, Ms Ford made the claim after hearing from MPs across the country about the fragile state of the sector which Mr Brine said is experiencing a form of ‘market failure’.

She said that the extra £44m announced in the spending review that local authorities will be able to pay to childcare providers in 2021 to 2022 to increase hourly rates for the 30 hours offer will, in turn, cover national living wage increases.

Ms Ford told MPs, ‘For the next financial year, colleagues should understand that there will be a demographic change, and as a result of falling birth rates there will be fewer children in the early years age group. Therefore, the total early years entitlement spend in 2021-22 may be less than in 2020-21.’

She added, ‘However, for 2021-22, the Chancellor has announced a further £44 million, which means that local authorities will be able to increase hourly rates paid to childcare providers for the Government’s free childcare offers. That will pay for a rate increase that is higher than the cost that nurseries may face from the uplift to the national living wage in April.’

‘Further details and information on how the money will be distributed will be made available as soon as possible,’ she said.

NDNA chief executive Purnima Tanuku said that this was an important debate at a ‘vital time’ for the sector.

She added, ‘We heard from MPs the vital examples of the reality on the ground for providers... The minister recognised the importance of the sector and promised that the funding increases for next year would cover National Living Wage increases. We will be asking the Department for Education to show its working out when the rates are published.

‘However, providers and practitioners need more than warm words, we need to see action now from the Government to prevent a growing crisis. We need to see emergency funding this year, a decision on spring term funding before it’s too late and the business rates holiday for nurseries made permanent.’


BRINGING TOGETHER THE SECTOR

During the debate, several MPs made speeches about the maintained sector and the PVI sector.

Stephen Timms, MP for East Ham, welcomed the additional £60m funding for maintained nurseries in the spending review, and said he had hoped that the minister would announce a long-term settlement for maintained nurseries today.

Theresa Villiers, MP for Chipping Barnet, said that nursery schools ‘simply cannot hold out much longer’ and that the situation was becoming ‘desperate’.

But Ms Ford said that the Government’s commitment to the long-term funding of maintained nursery schools is ‘unchanged’ and they are ‘still considering what is required’ to ensure a clear long-term picture of funding for all maintained nursery schools.

She added, ‘We will say more about that soon.’

Tulip Siddiq, shadow minister for children and early years, painted a bleak picture of the future of nurseries and early years settings.

She said, ‘The reality is that without better support, and a new approach, thousands of them may not have a future at all.

‘Survey after survey shows that the early years sector is on the brink of collapse. One in six providers expect to close by Christmas, rising to one in four in the most deprived areas. Recent research from the Department for Education shows around half of all nurseries, pre-schools and childminders were unlikely to be sustainable for more than a year.

‘There has been a net loss of 14,000 childcare providers in the last five years as a result of the chronic underfunding of early years entitlements. We could lose at least that many again within this year if fears are not allayed, and action is not taken immediately.’

OVERHAUL OF THE SYSTEM

Mr Brine led the debate by reiterating a statement that he had previously made in the House of Commons, ‘The sector is experiencing a form of market failure—I stand by that—but that could also be a social failure if we get this wrong. In reality, the financial implications have often meant closures in the most disadvantaged areas, as providers have been forced to cross-subsidise their income—often unsuccessfully—with parental fees.

‘The sector has struggled to make ends meet for years, and many providers feel that they have reach the end of the road as we reach the end of 2020.’

He called for a ‘complete overhaul’ of the current system with a funding mechanism to ‘increase funding rates in line with the rising costs of delivering childcare’.

He added, ‘Statutory wage rises, increases in pension contributions and inflation rates all erode the balance that providers must maintain to remain financially viable.’

Mr Brine concluded the debate by summing up the speeches that covered ‘every aspect of the sector’, from the 389 maintained nurseries to the 20,000 or so in the PVI sector, along with the childminders and children’s centres.

His message was clear. ‘We need to see the sector as a whole. All providers across the sector look after SEND children. All understand that a plan for jobs needs a plan for childcare. The consistent theme has been that we have to close the gap between what it costs to provide the childcare and what providers receive to provide it. Unless we close that gap, we will continue to have this discussion.’

The Future of Nurseries and Early Years debate took place on 3 December and was initiated by Steve Brine, MP for Winchester, Theresa Villiers, and Jack Dromey, MP for Birmingham, Erdington.