Exclusive: The Minister's View - We want you to grow

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The 2011 census found there were 3.5 million children under five in England and Wales, which is 406,000 more than the last census in 2001.

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At the same time as this demographic boom, the Government wants to roll out free early education.

Taken together, these represent a huge opportunity for the early education sector, and we want to do all we can to help you and your businesses take advantage of this opportunity.

From September next year, some 130,000 two-year-olds will be eligible for 15 hours of free early education each week; with a quarter of a million two-year-olds benefiting the year after that.

We know that children from poorer backgrounds are much less likely to have access to early education at the moment. Seventy-three per cent of two-year-olds from the richest families experience early education, compared with only 31 per cent of two-year-olds from low-income families. We need to do more to help those disadvantaged young children. This is at the heart of the coalition's commitment to extend the free entitlement.

Funding for lending scheme

With this expansion come opportunities for nurseries, childminders, pre-schools and other childcare settings. You are all part of a crucial, and growing industry in this country, devoted to children's development.

The new investment we are making gives us a unique opportunity to do more. Now is the time to be thinking about investing for the future when 40 per cent of two-year-olds will join those threeand four-year-olds who already benefit from free early education.

I know that in the current economic climate it is not always easy for you to access the credit you need to grow. This Government is doing all it can to allow small businesses that dominate our sector to develop and prosper.

So that is why I am particularly pleased that last month (July) we launched the Funding for Lending scheme, building on the success of the National Loan Guarantee Scheme. We are nudging banks and building societies to lend money to businesses like yours. This allows banks and building societies to borrow from the Bank of England at reduced rates. Banks and building societies are encouraged to lend; and the more money they lend, the cheaper the loan from the Bank of England.

I would urge nursery providers to take a careful look at the opportunities this scheme offers to expand their provision. This service is now open for business, so ask your bank or building society if they are taking part. They should be.

Make your views known

In the meantime, we are receiving responses to our consultation on the eligibility criteria for those two-year-olds who should receive free early education from 2014. This consultation will close in mid-October, and I'd welcome your thoughts and constructive suggestions before then. It is essential that we get this right. To access the consultation go to http://www.education.gov.uk/aboutdfe/departmentalinformation/ consultations/a00211261/ extending-free-early-education-two-year-olds.

FLS: HOW IT WORKS

Launched by the Bank of England and HM Treasury in July, the Funding for Lending Scheme works by allowing banks and building societies to borrow from the Bank of England for up to four years. As security against that lending, banks will provide assets, such as business or mortgage loans, to the Bank of England. Banks will be able to borrow during the 18 months from 1 August 2012 until 31 January 2014.

Banks will have strong incentives to boost lending, by lowering interest rates and increasing the availability of business loans and mortgages. The more that they lend, the more they can borrow from the Bank of England.

Banks that are increasing their lending will pay the lowest fee on their borrowing.

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