In its response to the Treasury Committee’s report on childcare, which was published in March and strongly recommended an increase in 30 hours funding rates to reflect current costs, the Department for Education (DfE) states it is ‘confident that the Early Years National Funding Formula is allocating funding fairly and transparently.’
The report by the Treasury Committee, which is chaired by former education secretary Nicky Morgan MP, argued that funding for the 30 hours is based on out-of-date wage data from 2013 and rent and other overhead costs from a survey carried out in 2012.
it also said that the committee has not seen any evidence to justify that increases in the National Living Wage have been factored into the hourly rates provided by Government to local authorities and childcare providers.
In its response to the report, published today, the DfE claims that the hourly rate paid to local authorities compares ‘very favourably’ with published independent research into the hourly cost of childcare.
However, it does say it will continue to monitor delivery costs and is ‘committed to continuing to support childcare providers to manage their costs and improve productivity’.
On the Treasury Committee’s call for the Government to explain how it is ensuring lower-income parents don’t lose out if they can only access the 15 hours and not the 30 hours, the DfE refers back to its evaluation of early implementation and early roll-out, which it says found ‘no negative impact on existing free entitlements’.
It goes on to say that a report assessing the implementation and impact of the 30 hours in the first year of national roll-out, will be published in September. It also said that it has commissioned new research to provide ‘robust and detailed’ cost data of under-fives from a ‘representative’ sample of early years providers.
The Treasury Committee also recommended making children eligible for the 30 hours as soon as they turn three, rather than the term after their third birthday.
However, the DfE says this approach would likely ‘unsettle a market that is already adapting to large-scale transformation’, and ‘it would not be fair to local authorities or childcare providers to introduce such as significant change at this stage’.
In response to the Treasury Committee’s call for the requirement for parents receiving the childcare element of universal credit to pay for their childcare costs up front before seeking reimbursement, to be rectified as a matter of urgency, the DfE outlines the various types of support available to universal credit claimants. Although it does recognise that it may prove difficult for those receiving universal credit to pay for childcare in advance.
Likewise, in response to the Treasury Committee’s recommendation to remove age restrictions on childcare support for parents entering training or education, as well as expand the courses that qualify for childcare support, the DfE explains that there is a ‘wide range’ of support available to parents in formal education, including the 15 hours for two-, three- and four-year-olds.
Commenting on the DfE’s response, the chair of the Treasury Committee, Nicky Morgan MP said, ‘It’s evident from the Government’s response that it’s relying on niche schemes to support parents entering training or education.
‘The schemes cited by the Government – Care to Learn, Discretionary Learner Support, and the Childcare Grant – only provide just over £180 million in support, and exclude many of the parents who are out of work and require training in order to return to work.
‘The Government is spending £6 billion per year on childcare, so only 3 per cent of this goes towards providing support for parents in training.
‘In the Committee’s report, we recommended that the Government should consider removing age restrictions on childcare support for parents entering training or education, which could help improve the UK’s productivity.
‘The Committee urges the Government to reconsider our recommendations.’
The Pre-school Learning Alliance branded the DfE’s response to the Treasury Committee’s report as ‘woeful’.
Chief executive Neil Leitch said, ‘It beggars belief that in the face of such overwhelming evidence that the childcare sector in England is inadequately funded, the Government continues to dig its heels in and insist that everything is fine.
‘Recent independent research revealed that there is currently a half billion shortfall in sector funding. Clearly this is not a problem that is going to go away on its own, and the fact that the DfE is "continuing to monitor delivery costs" will offer little comfort to the many childcare providers across the country who face potential closure if things don't change.
‘All the Government has done here is regurgitate old excuses in an attempt to defend the indefensible. The Treasury Committee's report explicitly criticised the practice of comparing local council funding rates to frontline provider delivery costs, describing it as "misleading", and yet ministers have done exactly the same thing once again in this response.’
He added, ’Early years providers do an incredibly important job for little recognition and even worse pay. When serious concerns are being raised across the board about the way that the sector is being funded, they deserve more than the woeful response that the government has seen fit to issue to this report.’
Steven McIntosh, director of UK policy, advocacy and campaigns at Save the Children, said, ‘The Government’s response to the Treasury Select Committee is a missed opportunity to help families and to improve universal credit before it’s fully rolled out.
‘The committee rightly pointed out that requiring parents to pay for their childcare costs upfront is a fundamental design flaw of universal credit. Families on universal credit will struggle to afford these huge advance fees.
‘As more and more families start to receive universal credit, the Government has an opportunity now to make sure the childcare element helps parents into work and boosts their children’s chances in life. We need urgent action to ensure it does.’
Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA) said, 'Judging from the reaction to our England annual survey report published today, it is clear that the concerns we have raised in our survey are also shared by wider stakeholders, including the Federation of Small Businesses (FSB).
'The Government cannot simply ignore the mounting evidence and strength of feeling across the childcare sector and fail to address the chronic underfunding threatening the future of high-quality childcare in this country.
'It is shocking that the minister can dismiss the Treasury Select Committee (TSC) recommendations in this way, following their in-depth inquiry; the latest evidence from NDNA’s England survey and numerous other pieces of work.
'Looking at the incredible and widespread media coverage NDNA’s survey received today, it’s interesting that the DfE decided to publish the response on the same day without any prior indication. The Government cannot afford to be either stubborn or complacent and ignore the all-party TSC evidence as well as the sector’s widespread discontent and serious concerns on this policy.'
- Read the DfE's response here