Warning signs over 30-hour impact on poorer twos

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The introduction of 30-hour childcare has led to ‘a possible trade-off’ between provision for disadvantaged two-year-olds and that for three- and four-year-olds, research suggests.

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30-hour childcare could be 'crowding' out places for disadvantaged two-year-olds

The findings come from an analysis by the Education Policy Institute, which looked at the impact of recent government childcare policies, including the 30 hours entitlement, on take-up rates and provision. 

When analysing the impact of the 30 hours on take-up for disadvantaged two-year-olds and children using the 30 hours, the researchers found a small correlation.

This means that take-up for disadvantaged two-year-olds fell, or increased less, in local authorities with a higher number of children using the 30 hours.

However, the effect is seen in some local authorities, but not all, the report says.

For example, Bath and North East Somerset had 1,316 children on the 30 hours entitlement and saw a 38-percentage point increase in the take up of two-year-old places between 2017 and 2018.

However, during the same period, Bedford had 1,221 children in 30-hour places but saw a 5-percentage point decrease in take-up of two-year-old places.

‘The trade-off may have been magnified by inadequate funding levels,’ the report says. ‘In the face of financial constraints, some providers may not be able to provide for both two-year-olds and three-and four-year-olds on the 30 hours entitlement, and therefore have to prioritise provision for one group over the other.’

The report cites CEEDA research that showed that the delivery cost for two-year-old places in 2018 was underfunded by -31 per cent, while three- and four-year-old places had a funding deficit of -17 per cent.

It suggests that, ‘The cost differences may lead to three- and four-year-olds on the 30 hours entitlement crowding out two-year-old provision, but our findings show that this is not currently happening.’

However, it says that this should be monitored as Department for Education research on the 30 hours had found a small decline in the average number of funded places for two-year-olds after the introduction of the 30 hours, ‘signalling tht it is possible for the crowding out effect to become more prevalent in the future’.

Other findings: 

  • There is no clear relationship between the take-up of the 30 hours entitlement and the change in the supply of places. The data shows that, despite local authorities having similar levels of take-up, there were still wide variations in the change in the number of funded places. This indicates that the 30 hours policy does not clearly stimulate new capacity in the short term, but the full effect may yet to be seen.
  • There was no evidence that changes to funding rates have had an impact on the take-up of the 15 hours or the 30 hours entitlements in the short run. It is possible that increases in funding may have been absorbed by existing funding pressures. Additionally, it may be possible that other variables may have a stronger influence on early years take-up, such as parental work patterns, the relative cost of childcare and the perceived benefits of childcare.

Neil Leitch, chief executive of the Pre-school Learning Alliance’s, said the research was 'deeply concerning'.

'Unfortunately this is an inevitable consequence of a situation where, according to sector experts Ceeda, more than two in every five (44 per cent) childcare providers have seen their funding fall in in real-terms in the last five years. This has meant that funded places for two-year-olds – which are more expensive to run – have become too costly for providers already struggling to stay open and reliant on parents who are able to afford "voluntary" charges to make up the funding shortfall.

'Let’s not forget that ministers were warned that freezing funding levels and introducing 30 hours would mean disadvantaged families struggle to access childcare. It’s now abundantly clear that this concern was well-placed. If government really is serious about social mobility it should stop actively pursuing policies which leave disadvantaged children behind and start ensuring that early education is properly funded.'

Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA), said, 'This latest report from the Education Policy Institute (EPI) is further evidence of the unintended impacts of the 30 hours policy.
 
'Time and again we have highlighted the difficulties providers are facing due to rising costs against a backdrop of stagnant Government funding.
 
'Our latest findings show that 87 per cent of providers cannot cover their costs for the 30 hours offer while 54 per cent do not meet their costs on the hourly-funded rate for two-year-olds. This will only get worse next year with unfunded increases to minimum wage on top of inflation. Clearly, chronic underfunding is limiting the positive effect this policy could have on the sector as a whole.'

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