Poorer children could miss out on free childcare places, NAO warns

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Failure to get the funding right for the 30-hour childcare policy could lead to cuts to places for disadvantaged two-year-olds, the Government’s independent spending watchdog claims today.


The success of offering parents more free childcare depends on getting the funding right, the NAO says

The report, Entitlement to free early education and childcare, highlights the extent to which many providers are concerned about the level of funding for the 30 hours, putting the success of the 30 hours’ policy at risk.

If the funding is not right, it says, early years settings may choose to cut back on offering places for disadvantaged two-year-olds, whose care costs them more, to enable them to offer extra hours for threes and fours.

While providers are keen to offer the 30 hours some providers may choose not to offer the scheme at all, it says.

This would jeopardise the Department for Education’s aims to improve educational outcomes for children who would benefit most from free childcare, the NAO warns.

It points out that funding for the free hours has stayed the same since 2013-14, meaning that providers have faced real-time cuts. While the DfE has confirmed new average funding rates that are designed to encourage efficiency, the report says that it does not know how efficient providers are at the moment, given the freeze in funding.

The report also raises concerns about the value for money of free childcare places for two-, three- and four-year-olds.

It also says that the Government is unable to track the effectiveness of the £2.7 billion invested in the funding of the free entitlement.

The quality of settings has risen, and the number of children reaching a good level of development at the end of the EYFS is now 66 per cent, according to EYFS Profile data, up from 52 per cent in 2013.

But there is no way of linking data to the quality of the individual early years setting that children have attended, and moreover, the DfE intends to scrap the EYFS profile from next year.

The report also highlights that only 58 per cent of eligible parents of two-year-olds have taken up the free childcare offer, against the DfE's aspiration of take-up levels of more than 70 per cent. Some communities are less likely to be aware of the free offer, while other parents think two is too young for nursery.

Amyas Morse, head of the National Audit Office, said, ‘Many parents and children are benefitting from the entitlement to free childcare, but the Department does not yet know what long term outcomes it is getting for its investment of nearly £3 billion a year.

‘In rolling out the new entitlement the Department should use and evaluate its pilots to make sure that certain groups do not inadvertently lose out. It is particularly important that the number of disadvantaged two-year-olds accessing free childcare continues to rise, in line with the Department’s own aspirations.’

Meg Hillier MP, chair of the Committee of Public Accounts, said, ‘The Department of Education needs to do more to make sure three- and four-year-olds in deprived areas are not missing out on free childcare.

‘The extent of variation in the quality of childcare across the country is unacceptable. Almost one in five childcare providers in disadvantaged areas are not up to standard, compared to less than one in ten in more affluent areas.’

'Adequate funding'

Sector organisations said the report backed up their own concerns.

Purnima Tanuku, National Day Nurseries’ chief executive, said, ‘This report reaffirms our conclusion that providers are keen to offer the new free 30-hour childcare entitlement but may not be able to if the funding is not viable for them to cover their costs adequately.

‘It’s notable that the NAO points to funding levels stagnating since 2013, translating to a 4.5 per cent cut in real terms. It also reports that new average funding rates announced by the Government are designed to encourage efficiency within providers, although with their rates frozen for several years, it does beg the question of how they can be more efficient than they are currently.’

Neil Leitch, chief executive of the Pre-school Learning Alliance, welcome the report’s emphasis on the need to ensure that the 30-hour offer is funded adequately.

‘As the report highlights, many early years providers have endured real-term cuts in funding over recent years, meaning that the sector has had to rely on additional payments from parents and the goodwill of practitioners to stay afloat, a solution that is simply not feasible in the long term.’

‘We urge the Government to engage with the sector to gain an accurate understanding of the true cost of delivering free entitlement places, and how these costs are likely to change in years to come.’

Imran Hussain, director of policy at Child Poverty Action Group, said, ‘The Government’s promise to invest more in extra childcare places is really good news but children in deprived areas are getting a rough deal. 

‘They have fewer nursery places and they are less likely to be good quality. Alarmingly, the NAO report warns that situation may get worse if cash-strapped nurseries end up increasing places for three- and four-year-olds by cutting back on more costly help for the most deprived two-year-olds.

‘We have to get childcare right if we are to tackle child poverty.  Done well, it enables parents to work, boosts family incomes and narrows the achievement gap between deprived children and their more affluent peers. Unless we have a bolder strategy and adequate funding for childcare, mothers will continue to be locked out of the jobs market by high childcare costs and provision that they feel they can’t always trust.’

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