Guest post: “The jury is still out on whether the Government is sufficiently funding providers for 30-hours free childcare”

[MumsnetGuestPosts]

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.

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.

Semiconciousrobot is entirely agree with you about means testing. I think having certain universal benefits that everyone receives encourages people to be willing tax payers.

@wwwwwwwwwwwwww exactly.

Hi Nicky,

Welcome back to munsnet. It was great to see how you really took on board what was said about summer borne on here a few years back, so hopefully you will find these comments useful as well.

There is a huge problem with the 30 hours and children with SEN.

In my own extended family we have a dc aged 2 with very severe sn attending nursery at a special school. The special school is very oversubscribed as they often are and the dc is on an assessment place and doesn’t even get the 15 hours available at 2. My relative was looking forward very much to her dc going 30 hours at 3, as she works 4 days a week.

Imagine her horror when the LEA told her at the last minute that the 30 hours cannot be claimed in the special school nursery as there is no entitlement to 30 hours ‘education’, it is only a ‘childcare’ entitlement. Her dc still only gets 15 hours at the SS which has all the facilities needed like 1-2-1 qualified staff, sensory room etc.

She then asked could he have the remaining free 15 hours at a local private nursery. The nursery said it would be uneconomic to do so because they couldn’t keep him safe without 1-2-1 which would make it too expensive for them.

My relative then applied for funding to enable her child to do the remaining 15 hours at the private nursery and was knocked back by the Lea.

It was only after she contacted a charity and wrote a letter before action threatening legal proceedings and saying they were breaching the equality act that the lea finally relented and funded the 1-2-1 at the private nursery.

However the lea has told my relative that this is a one off and they will not routinely find other children in the same position.

Please can the scheme rules expressly state what happens to dc with Sen. I’m afraid leaving it to leas is a license for them to refuse to help the families who need the 30 hours most.

Lack of affordable childcare is such a false ecconomy. I gave up higher rate tax paid employment when my XH who didn't work and wanted to be a SAHP couldn't cope with DS1.

I setup my own business, whilst caring for DS1 and had DS2 a year later. XH left just as the business won various awards and secured some funding. DS1 (3) DS2 (1).

DS1 was due to start school (early in Wales) but I couldn't get any wrap around childcare for him (undiagnosed SN) and as it turned out school couldn't cope with him full time either. DS2 started in nursery but the fees were crippling. We were in poverty in work or out of it. I was unable to commit the time to the business it needed.

The benefits system trapped us for years earning a few thousand in minimum wage type stuff or the losses would exceed the gains. The risk factor of trying to break free was too high.

I'm now remarried and DS1 is 14. Now in special full time education (saying that he's not done a full week since first week Feb) and I'm finally breaking the benefits trap. Came of carers allowance last year and should break off tax credits at the next review. Again self employed. Still no childcare options available to me.

If childcare had been more accessible 14 years ago then quite possibly the UK would be quite significantly net up rather than down.

I wonder if the/ a version of the access to work scheme could be extended to carers.

I wonder if we as a society could look at the cost to society in lost revenue for people not working. It goes beyond costing society a year or four of childcare costs. Many never fully get back on the career ladder.

Personally I don't resent the person earning £199,999 getting 30 hrs free childcare. At that income, their annual tax bill is higher than several average earners wages. They are not the issue. Undervaluing parents as contributors to society and unfunded childcare - for all is.

My situation fwiw:
Changes in my industry over the years have forced me into self-employment. My work is unpredictable and I can have clients cancel at the very last minute which results in my paying for childcare whilst earning nothing (and I am very lucky to have found a childcare provider who can work somewhat flexibly). The situation has become unsustainable. I have a good degree in a science subject and would like to return to education to retrain as a teacher or engineer. However the cost of the course plus childcare may be prohibitive, the graduate loan won’t cover course fees let alone living expenses and childcare. I feel I have a lot to offer and very much want to work but it’s not easy.

And agree with pp: I think the jury has returned a unanimous verdict that the 30 hours scheme is underfunded.

Also lostherenow, agree that 3 is too late. For all the reasons you state.

Hello Nicky,

I've always had a query about funded childcare that you might be able to answer please.

My issue is that places start, at the earliest, from age 2.

By that point, every mum's maternity leave has long ago finished and if they couldn't afford un-funded childcare, they've already had to leave the work force.

I would argue that 2/3 years is as good as nothing if this is the case, and that the hours need to be available from 6/9 months; helping mums return to their job after maternity leave and thus not have to ever leave the workplace.

Surely this would be of more benefit to the country than mums nipping in and out of work, or not returning for 2/3 years after their mat leave ends.

I'd love to know if the govt could provide free/subsidised hours when they're needed, and not years later.

Thanks.

I'd also like to understand why the legislation requiring schools to have adequate provision before and after school hours to enable parents to work was never enacted? Again, this is something where the additional funding required would be more than offset by the additional tax revenue generated.

"I'd also like to understand why the legislation requiring schools to have adequate provision before and after school hours to enable parents to work was never enacted?"

I don't think it ever reached the point of prepared legislation. This was a classic example of New Labour spin - promising more extensive wrap-round, but then only requiring schools to signpost was existed locally, and to periodically scope demand (in a flawed system - they only had to ask people in the school, who would already be sorted and may be less willing to use a school-based club, even though they might have leaped at it / lobbied for it at around the time they started).

Incidentally, don't forget that the ELG was New Labour too, including the 2011 iteration (which was decided 2009, meant to roll out April 2010, but extended by a year because it was apparent at that stage that it did not work on the funding available and councils were 'being given more time to prepare'. I did wonder if it was done like that so Labour could change it if they got it, but blame new administration if they changed it. Instead, successor governments have taken it on and expanded it - plus changed the purpose from ELG to 'childcare'. But didn't sort the key flaw which is finding gap.

It was better before the reforms of 2009/11, because before the 'top up' fees were disallowed, the funding gap was obvious, and settings did not have to run some of their places at a loss. There are now some quite creative T&Cs which have the same effect (restricting sessional availability, so parents have to pay for some hours at a high rate to cover gap, additional payments for lunch/materials). This prices people out just as effectively as top ups, but it's possible to pretend it isn't happening

This was a classic example of New Labour spin - promising more extensive wrap-round, but then only requiring schools to signpost was existed locally, and to periodically scope demand (in a flawed system - they only had to ask people in the school, who would already be sorted and may be less willing to use a school-based club, even though they might have leaped at it / lobbied for it at around the time they started).

What rationale is there for putting existing provision out of business so schools can reinvent the wheel?

Oh parents leapt at it, of course they did! This was the mistake made at the beginning - and the reason they changed it.
The new, heavily subsidised clubs were putting childminders and other existing childcare providers out of business.

In any case, school-age childcare costs much less than under 5s provision.
Early Years providers are struggling, many are going out of business. Schools are cut to the bone. And people want to divert scarce funding into further subsidising their out of school childcare!

I’m not entirely clear what you mean by the ELG since nurseries and childminders would read that as Early Learning Goals.
I’m guessing you mean the Nursery Education Grant for 4 year olds - free nursery education for every 4 year old, and it really was free - many providers found it higher than their rate to compensate for the additional work and to encourage us to join the scheme.
It was later expanded to include 3 year olds and the hours increased.

Labour did propose to increase it to 10 sessions a week, but had to shelve those plans due to the financial situation at the time. They put it into every manifesto since and the LibDems and Conservatives got into a bidding war over it at the 2015 election.

Funding for it has never been reduced: it has simply not kept in line with other increases and costs. Many councils did not increase funding when the hours were increased.

There were also bursaries and grants available to Early Years providers to enable us to provide the education and care these young children need and deserve. These were cut when the Coalition came to power and have been cut further since. That’s why costs have increased for providers.

Now we are expected to subsidise the shortfall in funding for 30 hours a week. We have the ridiculous situation where I, a childminder, am expected to pay towards the childcare costs of accountants, law partners, company directors, IT professionals - people who can afford expensive cars, renovations, foreign holidays, private schools.
I do not begrudge them these things. They work hard and are entitled to spend their money as they wish. I do resent the Government forcing me to subsidise them!

In any case, school-age childcare costs much less than under 5s provision.
Early Years providers are struggling, many are going out of business. Schools are cut to the bone. And people want to divert scarce funding into further subsidising their out of school childcare!*

The main problem is that there is no legal requirement for schools to make wrap around care facilities available so in many areas they simply doesn't exist, funded or otherwise, and it is incredibly hard to find private providers to do it. In my view it should be a legal requirement for schools to make the facilities available for before and after school care, even if parents need to pay for it (as you point out care for school age children would be much cheaper per hour than for children 0-3 for whom there is currently minimal subsidy, and fewer hours are required anyway). But in any case it isn't an either/ or choice between which age groups to fund because the additional tax revenues generated would more than offset the cost, as can be seen in countries that have already implemented these kinds of arrangements. It's a no brainer.

A massive gap which also needs to be addressed is holiday childcare for children aged 3-4. My child is eligible for the funded hours but none of the local play schemes here take 3 year olds (you have to be 4) and I don’t have enough holiday to cover all the holiday.

In fact even for 4 year olds there is an issue as many of the local providers only allow half days for 4 year olds and to do full days you have to be 5.