Nadhim Zahawi promises 'deep dive' into nursery costs

While many MPs raised concerns about funding pressures and closures during the Westminster Hall debate yesterday (11 October), Mr Zahawi said, ‘There are sad examples of providers closing’ but 'there is no evidence of widespread closure in the non-domestic childcare market.’

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He also said that in addition to official research, the Department for Education has also commissioned independent research, which would include visits to providers, about their business costs.

Mr Zahawi cited Ofsted statistics published in June, which showed that childcare places have been stable since 2012, adding, ‘We have not heard of any eligible parents not being able to access the 30 hours.’

In response shadow early years minister Tracy Brabin said, ‘When ministers say there is no evidence, I have spoken to providers who say they are not offering any places at all.’

Mr Zahawi replied, ‘We have not heard of any eligible parents not being able to access the 30 hours,’ adding that nurseries do not have to offer the 30 hours, but ‘a sizeable majority have increased the free hours to parents with no evidence of any impact on their funding’.

Both Conservative and Labour MPs took part in the debate on childcare sustainability. The motion was tabled by Chris Green, the Conservative MP for Bolton North West, who had surveyed nurseries in his constituency. Mr Green said he had received ‘a strong response’ from nearly all the nurseries, concerned about the funding of 30-hour childcare, business rates, and VAT.

He also stressed that nurseries could charge for consumables and meals, and that Government guidance was clear on this.

On the issue of business rates the minister said that local authorities have been able to offer discounts to childcare providers since 2015, but only two local authorities had done so.

On the issue of VAT for nurseries, Mr Zahawi said that changes could not be made under the current legal framework because it was subject to EU legislation.

Childcare costs research

Mr Zahawi said, ‘Funding is inevitably and understandably high on our agenda. We are clear that getting the funding right is critical to the successful delivery of the free entitlement.

'This year we will be enhancing our annual survey of childcare and early years providers with more detailed research. I’m interested in getting deep into the evidence on provider finance and childcare fees for two-  to four-year-olds. We’ve also commissioned independent research involving site visits to a representative sample of providers to provide us with robust up-to-date evidence on the cost of delivering childcare and operating costs, including business rates, and we will consider next steps when we have the costs.’

SEND funding concerns

Rushanara Ali, the MP for Bethnal Green and Bow, was one of several MPs who raised concerns about funding for disadvantaged children and those with special educational needs and disabilities.

‘The number of free places for disadvantaged two-year-olds and children with special educational needs and disabilities is falling because those children are more expensive to care for due to the higher staff-to-child ratios,' she said.

'The Government have not taken that on board; if they did, they would recognise the important contribution that nurseries working with SEND children make in our constituencies. Two-year-olds are currently not eligible for support from the disability access fund, the early years pupil premium or the SEN inclusion fund, all of which could be used to improve their access to early years provision.’

Ms Ali also asked for reassurance from the minister regarding funding for maintained day nurseries, such as Overland, Mary Sambrook and John Smith in her constituency. Other MPs also raised concerns about maintained nurseries [and nursery schools] during the debate.

In response, Mr Zahawi said, ‘My message to local authorities is: do not take premature decisions on maintained nurseries.’

Rachael Maskell, the MP for York Central, asked Mr Zahawi if he would ‘set out the discussions he has had with the Treasury ahead of the Budget to ensure that we have the right amount of funding for nurseries? Can we expect an announcement on 29 October?’

In response, the minister replied, ‘we are looking at funding very closely—a real deep dive. We have included our own additional survey questions for providers and have taken a representative sample of providers so that we can begin to understand it.’

Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA) said, ‘Some pertinent points were made about key issues such as funding, costs, closures and other challenges facing the sector, but disappointingly the children and families minister Nadhim Zahawi didn’t answer some of the questions put directly to him.

‘He refused to be drawn about whether he was lobbying the Chancellor ahead of the autumn budget for more money to put into funded childcare.

‘Although the petition to scrap business rates for nurseries received more than 10,000 signatures requiring a response from Government, the minister refused to comment on it. Instead he called on local authorities to give discounts to nurseries and for MPs to encourage them. Local authorities are already cash-strapped and the Government must ensures this happens at a national level.

‘Several MPs spoke of their anxieties about nursery closures with many quoting NDNA’s latest research that closures had increased by 66 per cent since 30 hours was rolled out a year ago. Each closure results in heartbreak for children, families and staff, but he brushed our research aside.

‘The depth of concern across England was highlighted clearly in today’s debate. The Government must now listen to the sector and politicians if they are serious in their ambitions to improve children’s outcomes and support families with childcare costs.’