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Childcare Settings: Financial Viability

Volume 641: debated on Monday 14 May 2018

14. What assessment he has made of the effect of the Government's policy on funded childcare on the financial viability of childcare settings. (905258)

15. What assessment he has made of the effect of the Government's policy on funded childcare on the financial viability of childcare settings. (905259)

By 2019-20, we will be spending an extra £1 billion annually on higher funding rates to deliver 30 hours of free childcare. The rates are based on our review of childcare costs, which was described as both thorough and wide-ranging by the National Audit Office. We have commissioned new research to understand providers’ current costs.

According to Ofsted, the number of childminders dropped once again in the last three months of 2017. We now have over 15,000 fewer childminders than there were in 2012. Does the Minister believe that funding levels have played a part in this dramatic drop-off? If not, how does he explain it?

We are spending record amounts on childcare—£6 billion in total. If we look at parents who got their 30 hours of childcare for three and four-year-olds, we see that 377,000 codes have been issued for the summer term. The system is working.

Evidence to the Treasury Committee shows that the Government’s scheme is making childcare cheaper only for those already using it and failing to bring parents into work. How have Ministers created a system that pushes child carers into poverty and out of business, and prices out the poorest families in most need, like those in north Liverpool?

Mr Speaker, you will not be surprised that I disagree with those words. A lone parent has to earn just over £6,500 and a couple just over £13,000 to be eligible for the 30-hours three and four-year-old offer. The Secretary of State spoke about the two-year-old 15 hour disadvantage offer and that same 15 hours for three and four-year-olds as well. The evidence is clear that the money is being targeted at those who are in most need.

The latest evidence that the 30-hours policy is underfunded came in the shape of a survey of providers conducted by the National Association of Head Teachers. It showed that a quarter of providers believe that 30-hours children have displaced three and four-year-olds who are entitled to only 15 hours of free childcare—the children most likely to be disadvantaged. Will the Minister tell us whether this was in the plan for this policy? If not, does he not agree with the chorus of voices telling him it is time to relieve the financial pressures on providers so that the poorest children do not miss out?

This year, we will be enhancing our annual survey of childcare and early years providers with more detailed research on provider finances and childcare costs. This will provide us with robust, up-to-date evidence on childcare costs. I remind the hon. Lady that funding to local authorities for three and four-year-olds, delivered through the early years national funding formula, has increased from £4.56 to £4.94. As of April 2017, our funding rate to deliver the entitlement for two-year-olds increased by 7% in every local authority.

We move on to Topical questions. I give notice to the House that I would like to move on to tributes to Baroness Jowell at 3.30 pm, so it is important that colleagues are either characteristically or uncharacteristically, as the case may be, brief.