Guest post: “The jury is still out on whether the Government is sufficiently funding providers for 30-hours free childcare”
The Chair of the Treasury Committee, Nicky Morgan MP, presents the Committee’s report on childcare, and their recommendations
Posted on: Mon 26-Mar-18 10:24:52
(61 comments )
In the summer of 2017, the Government launched two new childcare schemes: ’30-hours free childcare’ and ‘Tax-Free Childcare’. Around the same time, I became Chair of the Treasury Committee in the House of Commons. We launched an inquiry into the Government’s childcare policy and its influence on the economy earlier this year, and yesterday, we published our report.
High quality and flexible childcare is important for getting parents into work and supporting working families. Throughout our inquiry, we examined how childcare can deliver benefits to the economy and support labour productivity and participation. We also looked at the effectiveness of Government initiatives at making childcare accessible and affordable.
A key objective of the Government’s childcare policy is to improve productivity by allowing parents to return to work at a level more consistent with their skills. However, the impact on the UK’s overall productivity performance is uncertain and more research would be welcome.
One possible way to improve productivity is to remove age restrictions on childcare support for parents entering training or education. As it stands, childcare support is provided by the Government to parents under the age of 20 and for full-time university undergraduates. But outside of these groups, support is very limited.
The rapidly changing nature of work makes it ever more important that Government encourages lifelong learning and promotes the acquisition of new skills. As it stands, however, most parents considering entering training or education would be deterred by an absence of proper support for childcare costs. Many parents may need to retrain or upskill to return to work after having children. It’s short sighted for the Government to exclude such parents from receiving proper childcare support.
Many parents may need to retrain or upskill to return to work after having children. It's short sighted for the Government to exclude such parents from receiving proper childcare support.
As part of its efforts to improve the UK’s productivity performance through the launch of the National Retraining Scheme, the Government should remove age restrictions on childcare support for parents entering training or education. This would enable more parents to build their skills in order to enter high quality work.
Recently in the House of Commons, the Government agreed to a six-month extension of the workplace childcare voucher scheme. The scheme was due to be discontinued on 6 April 2018 and would no longer be open to new applicants. This 11th hour stay of execution is no way to manage childcare policy. It is likely that many parents who were better-off under childcare vouchers will have already made arrangements with childcare providers and their employers to start using the Tax-Free Childcare scheme.
The Government’s U-turn underlines the Committee’s concerns about the difficulties that parents face in making the right choice about which schemes to use. It should keep the voucher scheme open until it understands the extent to which parents will be made better or worse off as a result of discontinuing the scheme, and simplify its range of childcare support to address the complex interaction between schemes.
The jury is still out on whether the Government is sufficiently funding providers for 30-hours free childcare. The Committee received evidence from numerous organisations highlighting the measures that are being taken by providers to make up for shortfalls in funding. This includes restricting the times at which parents can claim the 30-hours free childcare, which reduces flexibility, cutting back on higher qualified staff and increasing child-to-staff ratios, which reduces provision quality, and charging for services that were previously free, such as food and activities, resulting in providers in higher income areas being able to better mitigate funding shortfalls than those in more deprived areas.
If the Government wants to avoid these consequences, it should pay a higher hourly rate to childcare providers that more accurately reflects their current costs.
The Committee also notes that many parents choose to care for their young children at home, rather than returning to work, and that the economic value of this activity is not measured in the national accounts. This is a legitimate choice that the Government should take care to respect in setting its objectives for childcare policy. In particular, the over-riding policy objective should be to support parents who decide to return to work, rather than to increase labour force participation among those who choose to stay at home to care for their children.
The Government will respond to the conclusions and recommendations in the Committee’s report within eight weeks. In the meantime, let us know what you think.
Nicky Morgan will be responding to questions and comments on this post later this week.
By Nicky Morgan MP
My daughter’s nursery has just increased fees by 13% - £100 a month. I can’t help but think this is related to the underfunding of 30 hours childcare and the costs being passed on to the parents whose children don’t qualify for those hours. So a review of that hourly rate and more stringent rules for providers on what costs they can and cannot pass on to parents would be welcome.
Also pleased to see the discussion about childcare vouchers. We will be better off staying in the scheme once both our children are in school than transferring to tax free childcare. I would be very disappointed to get to a stage where employers withdraw the voucher scheme when it will ultimately leave some families worse off.
I'm amazed they can come to this conclusion, when sharp practice was already rife on 15 hours early Education. Because there was a shortfall then too. Indeed pretty much all through from the 'No top up' and other changes (2009)
The jury is still out!!
no parent or childcare provider would say that. It's quite clear that this policy is nowhere near being properly funded.
The underfunding is very unfair for all involved, families AND providers. Many nurseries have had to close down because of how little they receive from their local authorities to cover the 'free' 30 hours of childcare. Nurseries have to charge for food, and/or increase the costs for extra hours and fees for younger children otherwise they go bankrupt. As a childminder, if I had only ONE child taking up the 30 hours of 'free' childcare, I would see my income reduced by 17%. That's a significant pay cut considering that we don't make a lot of money to start off with. I'm all for helping parents and children, but I am not a volunteer.
The jury is still out on whether the Government is sufficiently funding providers for 30-hours free childcare...... said no childcare provider ever. .
If the Government wants to be seen for paying for childcare, then the Government has to be prepared to pay the commercial rate for a place. It cannot expect small businesses up and down the country to fund its poorly researched election promises.
It doesn't need anymore than the most basic of maths to see that paying less than the hourly rate x 30hours x however many "free places" a Nursery offers, means that the Nursery has to make that money back elsewhere or it will go out of business.
Nor of course does the Government make any allowances for dc with SEN/D where the Nurseries need to provide enhanced, and in many cases 1:1 support to be able to include a child with complex needs. A one off DAF payment of just over £600 is only going to provide support fr about 2 and a 1/2 weeks, not 46 or so working parents need.
"A key objective of the Government’s childcare policy is to improve productivity by allowing parents to return to work at a level more consistent with their skills."
Seriously? Have they actually spoken to any new parents? If they want to keep parents in work then they need to target help in the first 3 years of a child's life, when childcare is most expensive and when most women are forced to give up work if they are going to have to. By the time they qualify for 3 years funding its too late. And in many sectors 3+ years out of work is a huge problem. I had to leave work after having DS2 when my parents couldn't help out with childcare any more. Working as school support staff didn't cover the cost of two in childcare and my contract was 15 hours, not the magic 16 hours to qualify for help with childcare under WTC. So, 4 years later Im still not working. Littlest DS is going to school in September but realistically I would struggle to get a min wage job in a supermarket now, despite some bits of voluntary work.
The government policies on childcare were written to win votes from rich families, not to help parents stay in work or maintain their careers. Im not bitter about it, being forced out of work actually worked best for my family in the end as my youngest child had some health problems. I just think people need to be realistic.
In addition, in my area nurseries can charge whatever they like. We put youngest son in a nursery from term before 15hours funding to socialise etc. The term he qualified for funding they started charging top up fees. They called them top up fees, on top of food costs etc which were compulsory. They are not allowed to do that. I have a letter from the government and my MP saying they are not allowed to do that. I told the local council department responsible that the nursery were breaking their grant conditions in lots of ways, however nothing ever got done about it. Nobody is interested in checking how the nurseries are coping or if they are making unreasonable extra charges to parents. We moved him to a charity run preschool who at least are honest about their charges.
How on earth can anyone write that the jury is out on this with a straight face?
Providers up and down the country have had to close. That is as a direct result. Our setting has just increased fees by nearly 10% this year. That is also - by their own very reasonable admission - as a direct result.
How incredibly offensive that Nicky Morgan expects us to buy that sentence.
If they want to pursue votes by bribing parents back into work, then just make it a fixed lump sum voucher the parents can offset against any childcare fees, don't pretend a Nursery can afford to provide quality childcare and educational provision for the money the Gvmnt are prepared to pay per hour.
I don't think the government is doing enough to support parents with childcare.
I live in Scotland and the 30 free hours have not been introduced here, I have 19 month old twin sons, a 5 month old baby and would give anything to go back to work and actually bring in a decent wage but am restricted from doing so because childcare costs so much money, I would be earning nothing, I would actually owe a childcare provider money AFTER being paid a month's wages. So in my opinion, I don't think enough is being done in Scotland to help with childcare. Also, abolishing childcare vouchers is another reason that it is impossible for me as a parent to go back to work. It's actually depressing.
As a childminder, if I were to offer all of my space to those parents claiming the 'free' 30 hours I would be down by £45 per week due to the shortfall in funding. Why should childcare providers like me be forced to carry the financial burden and effectively pay for the underdunding?
Also, may i add to my comment above.
The underfunding of childcare providers is appalling. Why on earth would anyone want to work within an environment where there is 1 adult to 5 children and having to take a huge pay cut due to the underfunding is completely beyond me. I can't get my head around where it is seen right at all, does this not "fix" one problem and create a whole new other issue?
The funding should be a set fair amount for each parent who works 30 hours a week. It should in no way, shape or form be age restricted and it should be available for parents who are furthering their education so that they in turn, can work a good job and put money into the economy.
The problem is not the fact that parents decide to stay at home with their children to care for them, it is actually due to the fact that they cannot afford to go to work. They cannot afford to put several children into nursery and quite simply because most nurseries will not accept any more than the bare minimum of 30 free hour applicant placements because they would end up having to close down.
The government has let parents down greatly, especially those of us who are actually willing to work but cannot because we have more than one child, because we are not supported enough.
If a scheme is brought in where childcare is granted to working parents, at least pay the right amount of money towards the childcare providers or at least try a lump sum, per child. Otherwise, like the free 15 hours childcare, it will just spark judgement to those who are using this scheme.
I also struggle with who the judgement is made for people who are high earners. A couple earning £199,999 would still have access to the 'free' 30 hours, which to me is ludicrous. Why on earth should taxpayers fund their childcare? I have seen quite a few threads on this website about people who ask about how to plump their retirement fund enough in order to get the 'free' hours; who have 20K+ bonuses and ask if this is going to affect their payments. This scheme is helping the wealthier and putting children from disadvantaged backgrounds even further behind. More than half of British people who live in poverty are in employment - they are the people that this scheme should be supporting, not those who earn £199,999 a year.
The whole thing was just thrown out there a few weeks before the general election as a vote winner for the tories. And it worked for them. Who wasn't going to vote for so much more 'free' childcare?
It wasn't thought through properly and has many, many flaws; most which have been mentioned here by others.
I'd agree with that TwoFishFingers
Agree with PPs. The jury is not still out! The policy is woefully underfunded and just a vote-winning gimmick.
Far from encouraging people to work, it’s enabled some to take more time off!
That 16 hours a week just has to be an average. I’m aware of well-paid contractors taking childfree breaks between contracts, enabled by that nice Government and its free childcare policy.
If parents don’t make up enough hours, we’re expected to pay it all back, leaving us even further out of pocket: a childminder locally has just been stung with this one. The council told her to contact the parents for reimbursement. So far, she’s having trouble even trying to find them.
Nicky Morgan, if you scan up to the guest post about 6 months ago, Justine Greening posted about this very subject. She promised to get Robert Goodwill to come back and respond to the many comments - despite Mumsnet repeatedly chasing, he never did.
Perhaps a read of that thread and the addressing of some of the very valid points raised might be helpful?
I don't think it was a "vote winner" if I remember rightly labour offered similar if not better.
We have just received the 30 hours for my youngest. It is such a relief after seeing 90% of my salary go on childcare for the past few years over 2 DCs. In that time though we have had some really hard times and in some ways it feels like too little too late as the hardest part was when I had 2 DCs in nursery and literally cried as I paid the nursery bill! I had to take a massive pay cut as I could not physically get to and from my previous job during nursery hours. This resulted in the vast majority of my salary going on childcare, and I earn above an average salary. I do not know how people on lower incomes cope going back to work with fees of £50+ a day. Well I do they have to use family. This wasn't an option for me. I strongly believe some funding should be available from age 1+ even if just ten hours to allow women to continue career in some form. By age 3 as many have said it's too late. And whilst I know the "time for twos" is an intervention measure in many cases it is a serious smack in the face to those working knowing children of unemployed are getting it free whilst you work your butt off and don't see your kids (yes I know time for twos also has other purposes and people in receipt of it work before you all jump on me - but take my point here).
Nurseries deserve to be fairly funded and childcare needs to be accessible to all.
It was a vote winner. No other party at that time offered anything near to this.
The 30 free hours available at our nursery (approx 8-11am then 2-5pm) are entirely incompatible with working in a normal job. If I were to use only them, I would need a job that allowed a 4 hour lunch break to collect my daughter, look after her for the unfunded hours, then return her to nursery and get back to my job for whatever is left of the 3 afternoon hours before I have to leave to collect her again. There are NO jobs like that. If this funding is meant to get women back into the workforce, they would be better off funding 2-3 full days so I could work on those days.
My local preschool has just asked parents for voluntary contributions to make up the shortfall from 30 hrs funding, local funding cuts, increased wages etc. They are the least rapacious organisation I can think of and generally work on a shoe string. The local nursery has put up fees for the same reasons. The 30hrs free childcare is a false economy if it is not properly funded (which it blatantly isn’t!). The costs are just passed on to parents by other means. All headline, no real change.
The whole concept of "free" childcare is a complete con! It is NOT free! Someone has to pay for it - and right now the government funding isn't enough. It's absolutely outrageous for anyone to expect childcare businesses to pick up the shortfall.
If the State wishes to provide free childcare then the State should pay for it!
The nurseries should be able to invoice the local authorities for the free childcare hours taken up by their clients. Or alternatively, the local authorities could invite childcare businesses to tender for the provision of free childcare places and then a contract would be awarded to the "winners", who would not be permitted to charge any fees, but who would receive their funding, at the level which they agreed would be sufficient to cover the provision, from the LA.
Local authorities would need extra funding from central government for that 80smum. Their funding has been cut to the bone already.
Of course the jury is not 'still out'. The 30 hours scheme is a load of bollocks, certainly in this part of the country (South East) where most providers who are offering it are clawing back money elsewhere by raising fees or adding extra charges.