30 hours childcare risks widening the gap in the early years

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Better-off families are set to benefit from 30 hour childcare at the expense of poorer families, warns a new analysis by think tank CentreForum.

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Families on the lowest incomes will gain less from Government childcare subsidies than better-off ones

The 30-hour childcare policy could widen the gap between poorer children and their peers, with families on low-incomes set to receive 20 per cent less in childcare susbsidies than high earners, according to the Widening the gap? report.

CentreForum argues that higher-income families will be the main beneficiaries of the policy because they are more likely to qualify for it, and moreover there is also a risk that increased competition for childcare places will lead to the poorest children being unable to access their 15 hour entitlement.

This risk also extends to younger children eligible for the free entitlement for disadvantaged two-year-olds.

Added to the competition for places, the report points out that some early implementer local authorities are funding the extra 15 hours at a higher rate than the initial 15, which if this is replicated during the national roll-out could mean that some providers prioritise children who qualify for the full 30 hours, at the expense of children eligible for only 15.

The report looks at the policy’s potential impact on the gap in educational outcomes between children from higher and lower socio-economic backgrounds by comparing the system in March this year to September 2017, when the 30 hours entitlement for working families will be brought in.

It points out that the majority of families do not currently access their maximum entitlements, particularly the childcare element of working tax credit, which it says is partly due to the need for parents to pay 30 per cent of their childcare costs, which many parents struggle to afford, as well as lack of awareness about the available support.

Assuming that there is no great change in take-up, the report’s financial modelling finds that although all working families expect the wealthiest will receive an increase in subsidies, the increase is expected be lower for families on the lowest incomes who do not qualify for the 30 hours and tax-free childcare.

'A cliff edge will be created between families above andbelow this threshold and those on lower incomes can be expected to receive substantially less in government subsidy,' the report says.

For example, a two parent family witha three or four-year-old who are on the national living wage earning £19,000 a year, and not eligible for the 30 hours, will receive on average of around £600 more a year, around £2,700 a year.

Compare this to a two parent family earning £100,000, qualifying for the 30 hours, who are expected to receive an increase in £1,400 a year, more than £3,400 in subsidies.

The report concludes that the Government’s focus on driving employment could have the unintended consequence of widening the attainment gap between children when they start school, and ‘cut across initiatives such as the Pupil Premium’, which aim to narrow the gap.

It also points out that while the Government’s intention with the 30 hours is designed to increase employment, existing evidence suggests that the policy is unlikely to have a major impact on maternal employment rates.

The report’s author Rebecca Johnes, education researcher at CentreForum, said, ‘The disadvantage gap in attainment appears very early in a child’s life and already stands at over four months at age five.

‘We know what an important role early years education can play in addressing the disadvantage gap, making it vital that the 30-hour entitlement is implemented carefully and, most importantly, fairly. There is a real danger that the policy, as it stands, will benefit those on higher incomes, rather than children that most need high quality early education.’

David Laws, CentreForum executive chairman, said, ‘The findings are worrying. The system shouldn’t be designed in a way that means a two parent family earning £19,000 could receive 20 per cent less than a similar family with annual earnings of £100,000.

‘The Government needs to look at the childcare support for low earners to make sure the system is uncomplicated, fair and progressive. Disadvantaged children should not be squeezed out of the best childcare settings.’

In response to the CentreForum report a Department for Education spokesperson said, 'The vast majority of three- and four-year olds are already taking up our 15 hour offer, along with 70 per cent of two-year olds from the most disadvantaged families. We expect take-up numbers to rise as we double our offer to 30 hours from September next year and are giving providers substantial capital investment to help create more childcare places.

'We are also continuing to drive up the quality of early years education, with the numbers of qualified staff increasing, high-quality people coming into the profession through Teach First in the Early Years and having a record number of providers rated Good or Outstanding. This help prepare our children for school.'

The DfE added that the more five-year-olds than ever before were reaching a good level of development against the Early Learning Goals, and that the gap between disadvantaged children and others is narrowing.
 

Sector response

‘We urge Government to heed CentreForum’s warning that extending the entitlement to 30 hours per week for working families is likely to exacerbate the current strain on quality. We know that high quality childcare makes the most difference, particularly for children from low income families. There is an opportunity to use the Government’s forthcoming consultation on the early years funding formula to ensure that providers are incentivised to deliver the new entitlement.

‘The main driver of quality is the early years workforce. The Government has already made a public commitment to work in partnership with the sector to publish a workforce strategy in 2016, this needs to be addressed urgently, but to date we have seen little progress.’

Liz Bayram, Professional Association for Childcare and Early Years

‘The report also rightly highlights that children from more deprived backgrounds - who are arguably most in need of greater access to high-quality early education and care - are likely to benefit the least from current childcare policy.

'This, in our view, is a direct consequence of the Government's decision to focus on getting parents back to work over and above ensuring that all children get the best possible start in life, an approach that completely contradicts its commitment to "closing the gap" and "increasing the life chances of the most disadvantaged" in the early years. 

'If the 30-hour offer is to have any chance of having a positive impact on families, it needs to be adequately funded, available to those who need it, and built around a focus on quality. Anything less will, in our view, be a policy failure.’

Neil Leitch, chief executive of the Pre-school Learning Alliance

‘The Government’s additional childcare investment is set to have a really positive impact on working families battling with high childcare bills. However, as this report shows, the extension of free early education alone is not a silver bullet for hard pressed families. Even with increased subsidies, low income families will struggle to meet their childcare costs and children not eligible for the 30 hours will miss out on its educational benefits.’

Julia Margo, chief executive at the Family and Childcare Trust

‘CentreForum’s analysis of the evidence suggests that if this policy were to fail, this could prove a major set-back for the Government’s efforts to close the educational gap between children from higher and lower socio-economic backgrounds.’

Dr Eva Lloyd, professor of Early Childhood at the University of East London

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