MPs' stark warning to Government over nurseries' sustainability

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The situation for private and voluntary nurseries in England is so dire that early years education and childcare are at risk of becoming services that only wealthy families can access, MPs and peers have warned.


Ruth George MP, Tulip Siddiq MP and chair of the APPG on childcare and education, and children's minister Nadhim Zahawi at the report launch on 1 July

  • ‘20 per cent shortfall in funding per child’
  • Children’s minister says APPG report will inform next spending review

The situation for private and voluntary nurseries in England is so dire that early years education and childcare are at risk of becoming services that only wealthy families can access, MPs and peers have warned.

The All-Party Parliamentary Group on Childcare and Early Education report, Steps to sustainability, says the Government’s 30-hour childcare policy for three- and four-year-olds has exacerbated the financial situation for nurseries and that evidence suggests there is around a 20 per cent shortfall in funding per child.

The APPG launched a formal inquiry last year into the financial sustainability of private and voluntary providers and has heard evidence from nurseries, sector organisations, the Local Government Association and others, which informed the findings.

Chair Tulip Siddiq MP said, ‘There is a significant body of evidence to demonstrate that childcare providers are battling to achieve and maintain financial sustainability, and that Government policies are a major cause of this challenge. With the spending review just around the corner, and a new Prime Minister soon to enter Downing Street, this report is being published at a critical time. We urge the Government to take on board our recommendations and provide the urgent funding and support needed to successfully, and sustainably deliver its childcare policies.’

Speaking at the report launch, the children’s minister Nadhim Zahawi sought to reassure the sector, saying, ‘I’m in complete agreement with the APPG on the importance of early education. I greatly value your work. The commitment of early years providers is demonstrated in the magnificent response that they’ve made in delivering the 30 hours.’

On the recommendations around the funding gap, he said, ‘I can assure you that this APPG report will inform the discussions for the next spending review.’

The minister said he found the recommendation for a cross-departmental annual review of early years costs and funding ‘really interesting’. On business rates, he said there had been ‘some headway with giving the power to local authorities to give discounts’ but there needed to be talks with the Treasury about ‘how to make that work better’. To date, just one local authority offers nurseries this.

During questions to the minister one nursery spoke about how the pressures of underfunding were affecting provision for children with special educational needs. ‘I’ve got real concern as to how well it’s recognised, not only the need for the gap to be closed, but the fact that practitioners are having to work with children with additional needs,’ she said.

‘There is insufficient capacity to support those children both in our settings and going into schools. I have an autistic child at the moment who is due to go into school. The local council have advised not to get an EHC [Education, Health and Care] plan because they don’t think he’ll get it, because there are children with more needs. Yet this child is going to have to go in with very limited support. He is not going to be able to go in for a full day. The schools are unable to offer the level of support he needs.

‘It’s wrong that parents are being advised not to apply for something they are entitled to, to support a child. This must be supported financially.’

Another raised the issue of the language around the 30 hours, saying, ‘Parents can expect to pay for food, nappies, consumables. Parents are reading everywhere “free 30-hour childcare”. You’re asking us to say this bit’s education. You cannot distinguish between childcare and education. We have frustrated, angry parents on the doorstep saying, “I was told it was free” and it’s very hard to respond to that.’

Another commented, ‘If nurseries continue to close in some areas, how’s the Government going to provide the places? There’s no point providing 30 hours free if there’s no nurseries to take them. Given the Government haven’t got the greatest reputation with the Sure Start centres, surely it’s better to fund us now properly and prevent further damage.’

Another nursery spoke about the impact of funding cuts on two-year-old places.

The report has been welcomed by the sector.

Neil Leitch, chief executive of the Early Years Alliance, said, ‘The report and its recommendations are the result of a year of hard and serious work by the APPG to understand the early years funding crisis.

‘It deserves a considered response. It’s beyond time ministers got a grip of this situation and recognise that only Government can intervene to safeguard the long-term sustainability of the sector by increasing fees and committing to an annual review.’

Purnima Tanuku, chief executive of the National Day Nurseries Association, said, ‘The report has to be a wake-up call to ministers, and hopefully the new Prime Minister, that the early years need urgent attention.’

The report states that early years settings are struggling with:

  • Rises in business rates. Some providers face a doubling of their rates, with one experiencing a rise from £13,000 to £30,500 following revaluation in 2017. The report calls for business rates to be scrapped for PVI settings in England, as has already happened in Scotland and Wales.
  • Rises in pension contributions, increases in the National Minimum Wage and the introduction of the National Living Wage have all led to bigger outgoings for providers, but Government funding for providers has not risen in line with these changes.
  • Difficulties with the recruitment and retention of staff, with providers experiencing an increase in the movement of staff away from childcare and into other roles, such as retail, due to low pay.

Steps to sustainability: nine recommendations

1. The Treasury and the DfE must address the funding gap that has developed as a result of government policies, and has been exacerbated by the 30 hours funded childcare policy for three and four year old children.
2.The Government must commit to cross-department annual review of early years costs and funding rates, with a view to increasing funding levels as necessary to ensure they cover provider costs.
3.The Treasury must deliver full business rates relief to providers.

4.Providers must be supported to ease recruitment and retention challenges.
5.Reporting requirements must be made more consistent and less of a burden.

6.Prioritise closing the funding gap in deprived areas.
7.Universal credit should allow payments direct from the Department for Work and Pensions to providers.

8.The government should establish an independent early years commission.
9.Parliamentarians should lead a campaign to champion the work of childcare practitioners.

  • The full report can be found here  
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