Guest post: “Our investigation found that ministers knowingly underfunded childcare - and parents have been paying the price.”

[JuliaMumsnet]

Last week, news broke that the government had been knowingly underfunding childcare provision. Childcare is naturally an issue that we at Mumsnet have long been active on, running surveys on childcare costs as a barrier to working, the 30 hours childcare scheme, and family friendly childcare. So what does this latest piece of news reveal and what does it mean for parents? Shannon Pite, Communications and External Affairs Director at Early Years Alliance which led the investigation into this revelation, explains:

"I was speaking to a friend about our respective finances last week, and the conversation turned to the cost of childcare.

“I should start a nursery,” she said, laughing. “I would make so much money!”

Though her comment was obviously tongue-in-cheek, it highlighted a not-uncommon misconception about the early years sector. When the cost of childcare accounts for the majority of your monthly wage, why wouldn’t you think that those working in the sector were making huge profits?

As the mother of a two-year-old, I know the impact of high childcare costs all too well.

But having worked at the Early Years Alliance, the largest early years membership organisation in England, for nearly a decade, I also know the other side of the story.

First and foremost, what we so often talk about in terms of childcare is much more than that. The service offered by nurseries, pre-schools and childminders is not just care, but Ofsted-registered high-quality early years education.

And yet despite the fact that research shows that the first five years of a child’s life are absolutely critical for their learning and development, years of government underfunding has meant that we have seen the sector lose nearly 13,000 early years providers over the past six years, with over 2,000 in the last year alone. Those working in the sector, despite being education professionals, receive some of the lowest wages across any industries, according to the Low Pay Commission.

So where is the money going?

The problem lies in the government’s so-called ‘free childcare’ schemes for two-, three- and four-year-olds. We in the sector have argued for years that the funding that the government provides for the delivery of these places is not enough, and that this is forcing early year providers to keep staff wages low and charge parents extra – either for things like meals and snacks, or, for younger children, higher fees – to make up this shortfall.

Of course, the government has always denied this – which is why back in 2018, we at the Alliance filed a Freedom of Information request to the Department for Education asking them to show us exactly how they calculated early years funding rates.

It took us more than two years to get this information – and looking at what it reveals, it’s easy to see why the government didn’t want to release it.

What we now have are private government briefing documents from the 2015 Spending Review which reveal that:

• The government believed that fully funding the early years sector was “unaffordable”, predicting an annual cost of £2 billion, and an hourly funding rate for three- and four-year-old funded places of £7.49. In the end, they gave us just £300 million per year and a funding rate of £4.89 – a shortfall of £2.60 per hour.

• The government knew that the level of funding they were providing, alongside the introduction of the 30-hour offer, would push up prices for the parents of younger children, as well as leading to additional costs for consumables like food and nappies.

• Ministers expected early years providers to work to the absolute maximum child-to-adult ratios allowed by law to make the inadequate funding levels work.

The government claims that these figures are old and that they have subsequently increased funding rates. And they have – by 8p an hour in 2020 and 6p an hour in 2021. But if they think an extra 14p makes up for a £2.60 shortfall, I have some serious concerns about their maths skills.

While none of this will come as a huge surprise by anyone who is familiar with the early years sector, it should still make us all angry. The government gave providers the impossible task of delivering quality care and education on woefully inadequate funding, and then sat back and let the sector take the blame when parents – understandably – raised concerns about high prices.

We are determined that the findings of our two-year investigation are a catalyst for change – but the sector needs the support of parents to make that happen.

That’s why we are asking all parents to contact their MPs (template email here)- whether that’s on twitter or via email - and call on them to write to the Chancellor to demand a fair funding settlement for the early years sector at the upcoming Spending Review. Only this will ensure that the sector is able to continue delivering the affordable, quality care and education that children and families need.

Because all of us, providers and parents, deserve so much better than what the government has gotten away with giving us so far.

For more on the Early Years Alliance’s investigation, and to find out what you can do to support our call for fair funding for the sector, and more affordable care and early education for parents, visit: www.eyalliance.org.uk/fullyfundearlyyears

Shannon will be coming back onto the thread at 11am on Thursday 1st July for one hour to answer all your questions - so get posting below.

This is awful. The turmoil in the sector has been terrible. Hopefully a PM with a baby and part of a dual income couple who can't afford a nanny will get it.
Come on Rishy, pay up.

Is there somewhere where the figures are clearly set out? I don't doubt them, but there seems to be lots of mixed messages. I've read several times that staffing costs account for about 70-80% costs in the childcare sector. If that's the case, then how is £7.50 an hour the breakeven point? Even with a ratio of 1:2 that would be a profit. Genuine question from someone who'd love to understand better!

It is similar with the money promised for secondary schools to catch up. There is just no way that the government will stump up £2 billion when they have only budgeted for £300 million.

Until Covid, no-one saw the importance of childcare for working parents. Suddenly employers are now realising that they will lose good employees if childcare cannot be obtained so perhaps pressure from some of the bigger employers would be useful (assuming they are not short sighted enough not to care).

This should be on the other feminist board as well as obvioulsy it is an issue of concern to all women.

Why wouldn't you want as many as possible to see it?

To not post it there implies you aren't really interested in getting as many as possible aware of this issue.

This is not a niche discussion.

Knowingly underfund

But what’s the issue with that? Given there is a limit to what the government can spend money on - there must be many areas where they “knowingly underfund” simply because there’s a limit to what is available

This is an interesting post.

There is a thread running about how difficult it is to attract staff to work in a nursery as they need level 3 qualifications but pay is minimum wage and hours are long and theres no progression.

Other than increasing the hourly rate the government pays are their other things that could help the sector such as business rates or VAT changes.

A lot of schools had a nursery class in my area but they have all shut as financially unworkable. This means its all private providers now.

Is this related to the campaign that mumsnet bas with the government?

www.mumsnet.com/Talk/mumsnet_campaigns/4279288-How-has-Covid-19-impacted-childcare-and-your-maternity-and-parental-leave-Share-your-experiences-with-MPs

As a economist, what puzzles me is why they didn't just offer the £4 subsidy they were prepared to afford towards the £7 per hour cost. That would still have created cheaper childcare without the cost pressures forcing nurseries to shut and essentially lying to parents and voters about the 30 hours being "free". Thanks for the template for MPs - useful

@Phineyj

As a economist, what puzzles me is why they didn't just offer the £4 subsidy they were prepared to afford towards the £7 per hour cost. That would still have created cheaper childcare without the cost pressures forcing nurseries to shut and essentially lying to parents and voters about the 30 hours being "free". Thanks for the template for MPs - useful

Because people like the lie that it's free, and they mostly don't blame the government when it turns out to be a lie. There are always loads of MN threads where people find out that they have to pay something even though their child has the funded hours and they're nearly always furious at the nursery, which they think is trying to swindle them, not the government, whose fault it actually is.

@CastleCrasher £7.50/hour is below minimum wage, but also, employers' NI contributions, possibly pension costs, and other staffing on-costs would have to be added on to that.

@CastleCrasher

Is there somewhere where the figures are clearly set out? I don't doubt them, but there seems to be lots of mixed messages. I've read several times that staffing costs account for about 70-80% costs in the childcare sector. If that's the case, then how is £7.50 an hour the breakeven point? Even with a ratio of 1:2 that would be a profit. Genuine question from someone who'd love to understand better!

Not quite sure what you mean

• £7.50 is below minimum wage - then you have to add the costs of employers NI, holidays, pensions, sick leave, training etc
• then the fact that the childcare staff are not the only staff - management, admin, cleaners, catering (or outsourcing costs)

-then the actual premises costs - rent/mortgage, maintenance, insurance, gardening, crockery, play equipment and toys etc etc

• then the consumables - food, paints, playdoh, crayons, paper, sandpit sand, wipes, soap, towels, glue, beads etc etc

Would the tax income from parents returning to work not help offset the cost of the government paying for childcare? And the improvements in income of parents over time who were able to advance their careers?

As we know the government hate investing in people to create a functioning economy for the future, why do you expect the government to listen to us and actually do something about this problem?

@Scaredycatmoo

Knowingly underfund

But what’s the issue with that? Given there is a limit to what the government can spend money on - there must be many areas where they “knowingly underfund” simply because there’s a limit to what is available

What is the limit?

For a rich country like ours, there’s plenty to spend. This government has raised huge amounts of debt to prop up the losses made by gambling bankers (yes, that was the reason for the banking credit crunch), but can’t fund decent services for the general population.

It’s priorities. They priorities the bankers.

*prioritise

Furthermore, this borrowing is against future tax income, not current. So if the government invests in the future population I.e. children, to give as many the best start in life, then they will earn well, and put that back into the economy, to earn those tax revenues to pay back any future debt.

When the government bleats on about debt - ask yourself - who is that debt owed to.

[quote Scaredycatmoo]Is this related to the campaign that mumsnet bas with the government?

www.mumsnet.com/Talk/mumsnet_campaigns/4279288-How-has-Covid-19-impacted-childcare-and-your-maternity-and-parental-leave-Share-your-experiences-with-MPs[/quote]
I signed a petition asking for an increase in early years funding and got a link to the MN petition send to me.

The Department of Education replied to the petition and basically said we are going to do SFA as the funding for early years is sufficient....

Petition and response link: petition.parliament.uk/petitions/586700?reveal_response=yes

Any government will only take a short-term view. Once elected, any government's only concern is to win the next election.

They do this by taking the short-term view - max length of the Parliament plus 6 months in case there's another gulf war, covid-type disaster.

Remember Alastair Darling's memo? There's no money left, we've spent it all.

As, sadly, MP's - in general, become more and more committed to only feathering their own nest, this will happen. They want their cake and eat it x 1000.
Examples
They get kicked out at the next election, so they want redundancy money - Resettlement grant - implying they're a Sch E employee.
They get a grant for setting up an office 'employing' their wife, cleaner and next door's dog.
They want to claim the maximum mileage each and every moment that they stick their nose out of their front door. But that's Sch D for the self-employed.

Gordon Brown and his 'prudence' one of the 4 fundamental accounting concepts. Announce in the budget that you're doubling the personal allowance (and hide the fact that you've delayed the implementation by 1,000 years)
Remove the advance corporation tax dividend credit and destroy the best occupational pensions system in Europe at a stroke.

Yes, look to France, 75% final salary pensions. How do they do it? In 2015, when I got my payroll/HR manager qualification the employer's rate of 'NI' was 50%, in 2016 55%, it has been almost 100%, but due to the generosity of 'new' president they have graciously put it down to 70%.
A min wage job of 10€/for a 35hr week costs the client 400€-500€/day. The business owner and I'm talking mainly building trades, works about 100hrs a week the 'workers' stop on the dot of 12 noon for the weekend. Not their problem. Was watching a cabinet maker on the house opposite - they've taken the moulded panels out of the door and replaced them with glass. He was dead against it, but, they were paying it. He no longer takes on any apprentices, he just cannot afford to, based on the greed of the government. He works to give himself the national minimum wage and after that he does what he wants - a job for a plumber etc etc using their own barter system.
I can remember when the gentleman's agreement was that the Speaker should not be opposed. My MP was the speaker, he 'lived' in the next road to me, can't remember if the 'gentlemen' in the chamber broke that with him - the Rt Hon Selwyn Lloyd, think it was because his successor was Viscount Tonypandy.

Until the 60s being an MP was not a career. It was very very highly paid professional people giving something back. Think barristers Rt Hon Gerald Nabarro with his fleet of Rollers NAB1, NAB2 etc etc
For every flash Harry like him there were deeply honourable men who would only accept a payrise in the year of the election and not for the rest of the Parliament. Not so easy in the 70s with inflation at 27%, but that was how Rt Hon Enoch Powell saw things, giving up a career as a high-flying academic to 'serve' his country in peace-time as he'd done in war.
1 Road in the other direction from Selwyn - he gave his house to Abbeyfield a charity, when left another by a constituent. Can't see that happening today. Anyway my road of terraces and semis, to the right Selwyn and to the left another road in which lived a family that I knew well, well the younger sister Andrea anyway. Her big sister was an actress. This was in Cheshire btw where the late Harold Wilson went to grammar school not Bradford, no, but Wirral Grammar School. The actress in the next road to me, decided to then enter politics, her strident platform being that she was from Liverpool.

Funny thing, you carried on to the end of her road and came to a lovely road of little terraces. In one lived a lady with her daughter. They lived quietly, the daughter lived very quietly left in peace her husband havingly treated her appallingly publicly unfaithful being photographed nude with his new 'muse'. He was a singer/songwriter with a partner before the 'muse'. Don't think Cynthia ever remarried, her xh did and was shot and killed. Her son was in his pram at the baths in his pram, wasn't that impressed even though the temporary minder was. She told dm she had THE baby in the pram.

People are people, good bad and indifferent. MP's are the biggest bunch of self-serving hypocrites in the country. Ever tried claiming £5000 on expenses without a receipt? They can and do, but they're employees, right? Only when it suits them.

Martin Bell was the best MP we'd had. He got an actual majority of the electorate when he was voted. Yes, over 50 % of the registered voters in the Tatton constituency voted for him. The previous incumbent came under a bit of a cloud in a cash for questions scandal. Funny, the paper shop on the bottom Street had a copy of Private Eye in the window that week. Nothing else, except that this particular issue was surrounded by a circle of little brown envelopes.

Sadly, often justice has very little to do with right or wrong, it's a pissing contest. And of the 600-odd Rt Hon MPs very few deserve the moniker Cyril Smith anyone?

I'm old and I need my bed bath.

In summary, no government has any money except that which it takes 'by force' from the taxpayers. And no matter how they sell themselves as being more altruistic than the early Christian Church, the socialist side of the spectrum will always, always, run out of spending other people's money.

XH was told by a fellow student at Liverpool poly in the 60s that he knew what the working class wanted. He'd read books about it. Xh was born into extreme poverty due to slavish adherence to Marxism by his parents ie no hot water except for a gas heater above the sink, bed bugs toilet in the yard, a zinc bath on a nail etc etc. His df turned down the offer of a commission in the army to become an education officer due to his encyclopaedic knowledge of mediaeval history, such was his knowledge of history on political grounds.
I hate bigotry - I've had it spat at me at work that I was a 'protestant' and been told they were surprised I'd been taken on. Nearly bit my tongue in half on that one. I forebore, heaven knows how when temping for a council, from going in with both guns blazing against a young woman, by the name of Bernadette, that subjected me to a daily tirade of protestant based abuse. However, next time I will apologise as not being able to continue the discussion and ask her if she would be so kind as to ask her parish priest a question.

When there were 2 popes, which one was infallible? Cos as a stupid pig-shit thick Anglican I couldn't possibly understand. I will restrain from asking how much recusant money is owed as they have grounds to come looking for me on that one and I'm nearly bankrupt!

This is hardly news though. It's been long needed that the government address this.

@CastleCrasher staff wages are not the only staffing cost. There's also recruitment and training (not just early years but 1st aid etc) professional accreditation (a legal requirement), sick pay, mat pay, temp wages for covering staff absence to maintain legal ratios...

And staffing is not the only overhead either of course, there's rent/mortgage for the venue, utilities, safety adaptations and equipment, general baby/toddler equipment (high chairs etc), certification for building safety (gas safety, fire safety etc), security and fire safety systems installation and maintenance and getting new when regs change (which they often do), toys and books and craft equipment...

The list goes on and on

I have been both a nanny and a childminder and unfortunately there are still some parents that don't value early years workers or provision and the govt certainly don't!

As a childminder it was constant!

Certifications generally only last a year and it wasn't uncommon for new regs to mean you were eg doing 2 lots of first aid accreditation a year - which the nanny/childminder/nursery have to pay for - these aren't despite some parents thinking so, paid for by the govt/free.

Early years education and childcare is massively undervalued in this country and the provision woefully inadequate.

I've seen it from the other side too, I raised dd as a single mum and the limitations of childcare and the costs made it incredibly hard to find a job that worked around the childcare I had available. It very much limited the type and level of job I could apply for. Even office jobs often now expect you to work late or on Saturdays, bank holidays etc

Not everyone has family/friends that are willing or able to help out.

My only query is this is England figures/info.

Does anyone know what the situation is here in Scotland ? My dd is now 20 so I'm out of touch somewhat, but still take an interest, partly due to own experience as a child care worker and partly as dd may be having to deal with all this at some point, and I have friends who have young dc who are still navigating all this.

"simply because there’s a limit to what is available"

There is of course - BUT it's somewhat galling that this govt constantly refuses funding to essential infrastructure then pisses it away on crap like oh... brexit! Hs2, royal yachts, bungs to cronies... I could go on!

Chris graylings cock ups ALONE have iirc cost the country almost 3 BILLION! And that's the stuff we know about!

The money IS there - the political will is not

@newtb I agree the widespread corruption has to be addressed too, and the conflicts of interest in many areas due to what industries/companies they have shares in and how that affects how they vote - my particular bug bear is artificially high housing costs due largely to MPs of all colours being allowed to be landlords and property developers or have shares in...and then they vote against anything likely to bring housing costs down! Or indeed anything that gives tenants more rights!

Shouldn't be possible to be a "career politician" either - limited terms! Accountability has gone right out the window!

Personally I would have EVERYONE who wanted to be an Mp

1 have worked in a normal job for at least 5 years (not a cushy number at daddy's pr firm crap)

2 have them live in social housing for 6 months on minimum income level/benefits

3 MP's paid the national minimum wage or at the very least the national average - as determined by an independent agency like ohhh the rowntree foundation? That might motivate them to actually DO what's needed to raise the national average

4 no second homes, have them live in a designated building just for MP's (so security etc can be cheaper too) when in London (unless they live in commutable distance) they can have bedrooms with en suites and the building can have on the ground floor dining facilities, conference and meeting rooms etc. GIVING MP's second homes is ludicrous!

5 expenses - minimum essential travel costs, that's it! Every other employee has to pay for their work clothes, food etc out of their wages! Why on earth shouldn't mps?

If we implemented the above alone I bet we'd have plenty of money for early years education then! And loads of other things too

he knew what the working class wanted. He'd read books about it.

Omg! I've met those types too!

I'm so sorry you experienced bigoted abuse - I have too from the other side of that coin being a Catholic raised scot of Irish descent (which is hard to deny given my colouring! Red head, freshly milk bottle complexion) awful way for people to behave.

@Scaredycatmoo

Knowingly underfund

But what’s the issue with that? Given there is a limit to what the government can spend money on - there must be many areas where they “knowingly underfund” simply because there’s a limit to what is available

The problem is that they didn’t say to parents “we will pay £4.89 towards the cost of £7.49 and you pay the rest” (which would have been fair enough and honest). Instead they said to parents “It will be free, we’re paying for it all” and just left the nurseries to try to plug the gap.

* DfE forbids nurseries to offer the 30 free hours and then ask parents to simply top up the council’s hourly rate. *

It covered 100% for term time only
But zero for holidays

This is why the amount provided didn’t sufficiently cover nursery costs.

It’s wasn’t a conspiracy on the gov sidd

Honestly, I would rather they means test even the 15 hours to a max salary cap per person of 50k or something, instead of giving it to people like DH and I who seriously do not need it.

It works out as being about £2,500 a year for DH and I, for 2 kids for two years each. that's a 10,000 state subsidy handed to a high earning couple, while they won't fund the hours properly for a lower earner. At least they did cap the tax free childcare.

I was a childminder until April this year, and have now left the sector as I could no longer afford to stay open. I was paid £3.85 from the government for the funded hours and charged £4.50 normally. Parents would not pay for consumables and wanted it all for free, some even expected me to supply all nappies, food etc for free. The local authority took 5% of the money the government gave them and then rather than pay all providers fairly the pay was based upon, levels of qualifications within the settings, living in a deprived area, having send and children in additional languages. so all providers offer the same care and education but get paid less if you don’t live in a deprived area etc.