[Relevant documents: First Report of the Petitions Committee, The impact of Covid-19 on maternity and parental leave, HC 526; and the Government response, HC 770.]
I remind hon. Members that there have been some changes to normal practice to support the new call list system and to ensure that social distancing is respected. Hon. Members should sanitise their microphones using the cleansing materials provided before they use them, and dispose of those materials when they leave the room. Hon. Members are also asked to respect the one-way system around the room, so please exit by the door on the left. Apologies if hon. Members are already familiar with this, but for those who are not, we need to do it. Please speak only from the horseshoe. I do not think we have too many hon. Members today, but otherwise people would need to wait. I remind hon. Members to arrive at the start of the debate. I know one hon. Member may need to pull out; please let me know if that is the case.
I beg to move,
That this House has considered the future of nurseries and early years settings.
I thank the Backbench Business Committee for granting this debate, which is a coming together of the all-party parliamentary group for childcare and early education, which I chair and which fights for the private, voluntary and independent sector—PVI—and the APPG on nursery schools, nursery and reception classes, which does good work campaigning for the maintained nursery sector. We will hear shortly from one of its vice-chairs, my right hon. Friend the Member for Chipping Barnet (Theresa Villiers). The hon. Member for Birmingham, Erdington (Jack Dromey) cannot take part today but is also very much involved in that group and was a co-sponsor of the debate.
The two parts of the sector are distinct, but they share the same grave concern about what the future holds. As a constituency MP, I am fortunate to represent both. There is a mature but, it must be said, struggling PVI sector with providers such as Kings Worthy, St Paul’s, Colden Common, and Compton and Shawford to name a few. There are many others. I thank them all for making me properly aware of the sector and its challenges in the first place, alongside my brilliant wife, who is a qualified at level 3 practitioner, so I hear it very clearly. I also have Lanterns, a maintained nursery school, in my patch; I thank its headteacher, Lynsay Falkingham, for her persistent and focused contact with me.
I will start with some positives. We all welcome the fact that the Government committed to an increase in early years education investment in last week’s spending review. That is another example of the Government recognising the crucial role that early education has in improving future attainment and economic success for the wider economy. As one of my constituency providers put it in an email to me this morning:
“I hope that in your debate, you are able to put across to the House the importance of sound Early Years Care and Education. The future of our country, our leaders, our doctors, engineers, teachers, key workers…rests in the hands of Early Years teachers and practitioners.”
I shall do my best.
I think I speak for many when I say that our childcare providers have really been the fourth emergency service during the pandemic, caring for the carers and helping the helpers. That has been so important to keep the show on the road, and it shows how important it is that we support the sector going forward. As the National Day Nurseries Association says in its excellent recent report:
“A plan for jobs needs a plan for childcare.”
To stick with the good news, it is very good that the Government are implementing our manifesto promise to provide 30 hours of funded childcare each week for parents of three and four-year-olds, which should increase the availability of affordable early education provision. Just because that is the right policy, however, it is not without unintended consequence.
I really appreciate that the Chancellor recently met me and representatives from the APPG for childcare and early education in Downing Street to discuss making childcare more accessible and affordable across the PVI sector. We did that because we cannot duck the fact that there remains a serious underfunding issue that has, unfortunately, been exacerbated by the covid-19 pandemic.
I have previously described to the House that the sector is experiencing a form of market failure—I stand by that—but that could also be a social failure if we get this wrong. In reality, the financial implications have often meant closures in the most disadvantaged areas, as providers have been forced to cross-subsidise their income—often unsuccessfully—with parental fees. The sector has struggled to make ends meet for years, and many providers feel that they have reach the end of the road as we reach the end of 2020.
By September last year—well before the pandemic hit—there had been a 153% increase in nursery closures since the 30 hours’ free childcare policy was introduced. In essence, we have delivered one part of sustainability for the future, but we now need to finish the job by increasing funding for settings to a sustainable level. Many of the providers that I speak to discuss market failure with me. It is little wonder when 25% of providers across the country could face permanent closure within the year. Recent research found that 72% of maintained nursery schools expect to end the year in deficit, raising the risk of further closures in the maintained sector, too.
The whole sector faces a real challenge, not only because of the effects of the pandemic but, more importantly, because of an unsustainable position at the heart of the sector’s funding, which we have to rectify. The issue affects every Member of the House—it is good to see such turnout on a cold and wet Thursday afternoon—because the impact across our country will be stark if we get it wrong. I would argue that we need a complete overhaul of the current system to ensure long-term sustainability in the sector and value for taxpayers’ money.
Prior to covid, the funding gap in the early years sector was estimated to be £824 million. At that point, there was already a 37% funding deficit between the hourly costs of delivering a funded childcare place for a two-year-old and the rate paid to providers, and a 20% funding deficit for places for three and four-year-olds. That is not a sustainable long-term position. Those figures are based on pre-covid occupancy rates. Settings are still struggling despite now being allowed to remain open to care for and educate our children. The funding gap has had a cumulative effect as the years have gone by. I passionately believe that addressing that gap would go some way towards reversing that market failure and the pattern of closures that we see all too often.
In short, I would like a funding mechanism to increase funding rates in line with the rising costs of delivering childcare. Statutory wage rises, increases in pension contributions and inflation rates all erode the balance that providers must maintain to remain financially viable. The £66 million increase in early years spending in this financial year, which was announced at the 2019 spending round, was obviously a welcome cash injection. Sadly, many settings saw it as a real-terms funding cut once inflation rates and the minimum wage rise in April had been taken into account, and I have heard that over and over again. Financial constraints also mean that nursery owners are largely unable to offer their staff long-term career progression and incentives for upskilling and gaining qualifications. We heard very powerfully about this at a recent meeting of our APPG.
Of course, covid has had a particularly savage impact on the sector, with increased costs and decreased revenues for many settings. There has been a decline in occupancy rates and child places, as well as increased costs to make the settings that are open safe through the personal protective equipment and additional cleaning that is obviously necessary. With just a quarter of providers saying that they expect to make a profit between now and March 2021, we have to take action to protect them for the future.
Last week’s spending review included a pledge from the Chancellor of £44 million of additional spending on early education, on top of the money confirmed in 2019. This is good news, of course: those vital funds will increase the hourly rate paid to providers for the Government’s free hours offer, and are also a step towards sustainability for the sector. However, the underlying problems with structural funding and distribution by local authorities remain acute, and will remain so unless they are properly addressed. An independent, meaningful review into the current system for childcare and early years funding will give us the chance to address the underlying, systemic problems with the early years national funding formula, to ensure some long-term sustainability.
Four years after the introduction of the early years national funding formula I mentioned, the maintained nursery sector is still waiting for stop-gap funding to be replaced with a long-term formula that addresses the historical discrepancies and funds all nursery schools viably. The announcement of £60 million in supplementary funding for maintained nursery schools in 2021-22 is hugely welcome, but there are some crucial next steps. First, funding should become a permanent part of the early years funding settlement, not a year-by-year add-on. Being in such uncertain terrain is adding huge stress to the people who run these settings. Secondly, this funding should be distributed on an equitable basis across the country, not on the basis of historical precedent, as is presently the case.
It is crucial that future funding arrangements for maintained nursery schools adequately provide for them to meet their statutory obligations as schools, which they are: for example, funding for additional costs such as the well-deserved teachers’ pay award. While that extra £60 million in funding is welcome, it is clear that here, too, a long-term sustainable financial solution must be found for the sector as a whole.
For all providers, the early years national funding formula can be—if we are being polite—something of a minefield. Requirements and entitlement distributions differ greatly across different national authorities, which creates a complex funding context for providers operating in one region, let alone several. It is complex, bureaucratic and incoherent, and we are often told that it makes a tough job even harder. The current system must work better for settings and parents, but also for taxpayers—our constituents.
Cash for funded entitlement places relies on local authorities estimating demand, and then on them making corrections to this rough draft partway through the financial and academic years. This has created an unhelpful culture of large contingency funds and underspends of taxpayers’ money that is neither providing the childcare provision it is meant to, nor supporting the settings it is meant for. Millions of pounds intended to deliver funded childcare places is often either redirected into other parts of local authority education budgets, or held in reserve to cover the inconsistencies that emerge throughout the year as they try to flatten things out.
A freedom of information request to all English local authorities found that three quarters of councils had underspent their early years allocation, which amounts to more than £65 million failing to reach providers for eligible children. It showed that contingency budgets of up to £32 million were being held to allow for funding corrections this year. This is taxpayers’ money, and we have to do better. Urgent reform to safeguard the future of nurseries and early years settings across the PVI and maintained sectors is desperately needed, for all the reasons I have set out. That will ensure better value for money for the taxpayer, maintain this vital early education—particularly for disadvantaged children, who need it most—and protect the jobs of 360,000 people who work in the sector, the vast majority of whom are women, while also enhancing their career development prospects.
For me, this is an issue of social justice. I am very pleased that Ministers are working with us to do all that they can. I know the Minister here today will take on board the concerns I have highlighted. We have shown we can work together to protect health throughout the pandemic. It is time we worked together to protect the long-term future of our education system. That needs to start with early education, so let us get it right from the very start.
I congratulate the hon. Member for Winchester (Steve Brine) on securing this debate and on the powerful and effective speech that he made. I am delighted to see you in the Chair, Ms Ali.
We have an early years crisis. Ofsted reports that there were 14,000 fewer childcare providers last March than in March 2015, because of the market failure that the hon. Member for Winchester described. We all recognise that the pandemic has made things much worse. Provider numbers fell by another 500 in just three months this year. It is a fragile sector. Striking research that the Department commissioned from NatCen and Frontier Economics, published in October, stated that 45% of open group-based providers and 55% of open childminders
“reported that they believe it will be financially sustainable to continue for another year or longer”.
In other words, more than half of group-based providers expect to close within a year.
Even maintaining current provision will be a big challenge, and policy announcements so far are nowhere near enough. Like the hon. Member for Winchester, I welcomed the additional funding for maintained nurseries in the spending review, and I was pleased that the Minister said she will soon announce a long-term settlement for maintained nurseries. I hope that we might hear something about that this afternoon. Last year’s Frontier Economics report on maintained nurseries pointed out that they do a great job in supporting children with special educational needs, as the hon. Member for Winchester reminded us, and supporting parents and families as well.
The Minister for School Standards, the right hon. Member for Bognor Regis and Littlehampton (Nick Gibb), visited Sheringham Nursery in my constituency in October last year. It works brilliantly with disadvantaged children—for example, supporting their parents to teach them when they are not at nursery. I pay tribute to the head, Dr Julian Grenier, for all his work and the work of his team, which has a really big, positive impact in the local community.
Maintained nurseries have more children than average with special educational needs and disabilities. Sheringham has 40 out of a roll of 200. It runs the Newham early years hub, supporting 100 private nurseries and childminders to improve education quality and inclusion, and increasing workforce standards and workforce numbers. It also runs the East London Research School along with a primary and a secondary school to improve the quality and impact of professional development. Those are all valuable and positive contributions.
Funding for maintained nurseries must recognise the greater contribution that they make. I am particularly keen to hear from the Minister about the longer-term funding settlement that she is planning.
It is a pleasure to serve under your chairmanship for the first time, Ms Ali. I add my congratulations to my neighbour, my hon. Friend the Member for Winchester (Steve Brine), on securing this important debate this afternoon.
Hampshire is reasonably well represented here this afternoon, but I do not want colleagues to think that that is because there is a particular problem in Hampshire with early years provision. I can assure everybody that there is not. Indeed, we have some of the highest quality early years provision in the entire country.
Over the last eight months or so, providers have been keen to emphasise to me the challenges that they have faced during the pandemic, and the challenges that they have risen to: making their premises covid-secure and ensuring that they are open for the children of key workers. In the regular Zoom calls that I have had with providers, they have been keen to emphasise the significant financial impact on the sector.
I was struck by the comments that I heard from one provider, who said that each and every month, with the number of reduced places that he could provide allowing for social distancing, he would be running his premises at a loss of £1,000 per month, which is simply unsustainable. When faced with those sorts of economics, providers take very difficult decisions and decide to no longer open their doors, which causes a reduction in the overall spaces available.
I do not intend to do a march around every childcare provider in my constituency this afternoon, but it is fair to say that they are very varied. As constituency Members of Parliament and, in many instances, as parents, we want to make sure that there is variety, whether it be the small village pre-school of the type I attended back in the 1970s or the larger more formal childcare settings, the individual childminders, those attached to schools or the maintained sector. It is absolutely right that there is variety, so that there is choice for parents and so that those facilities can be conveniently located.
I want to pay particular tribute to Lou Simmons of Abbotswood Day Nursery, who has provided me not only with the facts and figures about her business and the challenge it faces, but also a commentary on the wider sector. As she pointed out to me, the costs faced by her setting will not be identical to every setting, precisely because there is such a variety; but they are probably not atypical.
The stark reality is that with staff costs, pension costs, increases in utility costs and personal protective equipment costs all going up, the funding for childcare has not kept pace with the pressures faced. The £4.55 per funded hour per child over the age of three does not meet her operating costs of £6.80, and they have no choice but to make a charge for consumables, which parents do not necessarily understand, having listened very clearly to the Government’s mantra that it is 30 free hours per week. She will still run at a loss for every hour, every child. I know that my hon. Friend the Minister, who is working hard on this, is going to talk about the £44 million early years injection, but that is simply not enough to begin to cover the 75p per child per hour average loss made by providers such as Lou.
There is a stark reality to this. Just like the village pre-schools that have already closed, we will see the loss of childcare provision at a time when we know that women need to be able to access quality childcare to make sure that they do not lose out further in the employment market. Statistics provided by Mumsnet earlier this week, from a survey it conducted post pandemic, show that a significant proportion of mothers who use childcare—70%—were emphasising that they were struggling to balance the requirements of work and childcare at home.
These businesses, as we have heard, are run by women, employing women and providing opportunities for other women to go out to work. As my hon. Friend the Member for Winchester said, there is a social cost, which my hon. Friend Minister needs to step up and address.
The first few years of life have a crucial impact on a person’s prospects for happiness, success and opportunity in adulthood, so providing the best learning opportunities in the early years is one of the most effective long-term means to tackle serious social problems, such as antisocial behaviour, drug abuse and crime. Early-years education can truly be an engine for social mobility, and I welcome the commitment and investment in this crucial sector by successive Conservative Governments since 2010.
I particularly want to speak up today for the maintained nursery schools, of which I have three in my constituency —St Margaret’s, Hampden Way and Brookhill, which are grouped together in the Barnet Early Years Alliance. I pay tribute to the outstanding work that they do.
As we have heard today, maintained nursery schools have been kept afloat since the introduction of the national funding formula by transitional supplementary funding. In providing that money, the Government have recognised the additional requirements placed on these schools and the fact that they reflect additional costs, but the allocation of supplementary funding is based on historic discrepancies, reflecting school budgets as they happened to be in 2016. That has left Barnet schools and schools in other areas without any supplementary funding at all and they are in serious financial difficulties as a result.
I welcome the extra £60 million in the spending review. I thank the Minister and her Treasury colleagues for listening to representations from me, my hon. Friend the Member for Finchley and Golders Green (Mike Freer), many in this room and, of course, the two all-party parliamentary groups, but we must reform the way the money is allocated to deliver a fairer distribution based on need, rather than historical accident.
Schools in Barnet and other boroughs in the same position such as Harrow and Camden simply cannot hold out much longer. The situation is becoming desperate. The whole sector, of course, has been waiting for over three years for the long-term settlement promised by the Government. For us in Barnet, that is three years without even the supplementary funding that others have received.
I urge the Minister today to make a commitment, right here and right now, to reform the allocation of supplementary funding and bring forward proposals for consultation to do that as soon as possible. I urge her also to secure the long-term funding settlement that the Department for Education promised back in 2017 but has still not been able to deliver. That is a funding settlement that reflects the level of resource needed to run a maintained nursery school—so, more than the hand-to-mouth levels of supplementary funding that the sector has had to survive on for the past few years.
There are dedicated professionals in maintained nursery schools throughout the country who are ready and waiting for that new system leader role, centres of excellence and specialists in SEND provision. They are enthusiastic about the challenge, so let us seize the opportunity to save those schools and empower them to continue their inspirational work, providing a brighter and better future for the children in their care.
It is a pleasure to serve under your chairship, Ms Ali, and I thank the hon. Member for Winchester (Steve Brine) for bringing this important debate to Westminster Hall. I would love to spend my time talking about the long-term future of nursery provision, because we have all agreed that a child’s start in life is vital, but covid-19 means that we have to deal with the immediate crisis facing nursery schools if we are to have any nursery provision in the future.
Nurseries and nursery workers have been absolute champions throughout the crisis, having stayed open throughout the pandemic to care for the children of key workers—and what thanks have they got for it? It is difficult, at times, to hear members of the Government get to their feet, thank nurseries and say how important the workers are, but not reimburse them for their covid costs—personal protective equipment and adjustments to buildings and schools. All that has come out of their existing, dwindling budgets.
On the issue of budgets, I want to raise the local situation in Luton, where Flying Start children’s centres sadly face closure. Over the summer, our council was backed into a corner by the Government and forced to find savings of £22 million after passenger numbers at Luton airport, one of our biggest revenue raisers, collapsed because of the pandemic. Along with my hon. Friend the Member for Luton South (Rachel Hopkins), I have pleaded with the Government to listen, spelling out what even more cuts would mean to the people of Luton—even more difficult decisions forced on the council by the Government from Westminster, including cuts to children’s services.
I am here to plead with the Minister: meet us and work with us, and give Luton Borough Council the resources it needs to save Flying Start, which are vital for children, parents, families and our town. Nearly 2,000 local people signed a petition to save Flying Start over the summer and 500 parents have joined the Facebook group that is organising to save the centres. If the Government do not act, there will be a devastating impact on families and young people in the community who rely on the services—the pregnancy club, antenatal education, feeding classes, breastfeeding café, baby massage, baby talk, stay and play, messy play, and sing and sign. All those courses will be gone.
Flying Start provides a support network for parents—particularly mothers—many of whom do not have access to other local support or guidance. We have seen throughout the pandemic how important it is that new parents should be supported after the birth of a baby. I know that from personal experience. In particular, some new mums suffer from isolation, depression, anxiety or domestic violence. We need to make sure that they have access to support in the children’s centres.
After 10 years of austerity and cuts to such vital services, we know what we are losing when those services go. We have seen it play out already. Inequalities grow further. Child poverty in Luton will rise. The support that people depend on will be pulled away. People in Luton have grown used to that indifference, and that is incredibly sad. The Government promised the country, and people in Luton, that they would do whatever it takes to get us through the pandemic; but, with cuts like these handed down from Westminster, we are making Luton pay the price for their broken promise. In finding alternative sources of money, as we did with th/e airport to fill the gaps left over the last years, people in Luton and our council did everything asked of us. All we ask is that the Government keep their promise.
Whether it is cuts such as those in Luton, the loss of more than 3,000 health visitors nationally or billions cut from public health budgets and children’s services, the Government really have a blind spot when it comes to early years. I hope they listen to examples such as what is happening to constituents in Luton, give us the resources we need to save those services and act to support parents and families.
I thank my hon. Friend the Member for Winchester (Steve Brine) for securing this debate, and I thank the Minister for all she has done to campaign for better opportunities for early childhood education and intervention, and for understanding how great an impact that has on the overall levelling-up agenda.
Children in low-income households tend to experience poor home learning environments; a substantial gap in academic attainment between the poorest and richest children is clear by the time they begin school. The 2010 review by Frank Field, a former Member of this House, on poverty and life chances found that 55% of children in the bottom 20% of attainment in school at the age of seven will remain at the bottom until the age of 16. However, if a parent shows a sustained interest in a child’s early education, their chances of living in poverty as an adult decrease by 25 percentage points.
Early intervention is key to reducing poverty and creating the levelling-up agenda in the long term. Estimates of savings to the public purse as a result of better early years intervention during the first 1,000 days of a child’s life predict that the Government could save approximately £15 billion annually.
A recent report published by King’s College London found that young people who had secure attachments in early childhood had lower levels of antisocial behaviour than those with insecure attachment. The study found that young people securely attached to their mother cost the public purse an average of £6,743, and those who were insecurely attached cost more than £10,000. It is an interesting study.
Family and parental challenges have presented themselves through covid. A Centre for Social Justice report found that parents, especially fathers, face a wide range of challenges with regard to family units, especially during pregnancy and the early years. Six in 10 fathers told the CSJ that they had no conversations at all with midwives about their role. For health visitors, it was approaching half—44% of all fathers told the CSJ that they received little or no advice from them about their role as a father. More than four in 10—41%—of fathers who have a nearby children’s centre have never been invited to or attended any children’s centre activity, despite a legal requirement for children’s centres to engage with fathers as a hard-to-reach group.
Children’s centres and family hubs are vital in tackling the issue of attainment through early intervention. Family hubs are local one-stop shops offering families with children and young people aged zero to 19 early help to overcome difficulties and build stronger relationships. Children’s centres do the same thing in many of our communities, including my constituency of Beaconsfield. Such provision is typically co-located with superb early years help and support. The Ivers Family Centre is in my constituency, and many local residents, including one of our councillors, Wendy Mallen, campaigned tirelessly to save it. It is vital for helping children close the attainment gap and make sure they have every opportunity to succeed in life.
The purpose of family hubs is to co-locate and co-ordinate all family services available in a community and provide a visible and welcoming access point for any parent—mother and father—to appropriate support services or information about family-related matters. The CSJ set out in its 2014 report why family hubs and children’s centres are so important. They strengthen families regardless of their structure, with a focus on children’s development and parental relationships. They prevent family breakdown through relationship support at key points and support families in difficulty with conflict resolution and support for separated families. That could save the state millions of pounds in the long term, because if there is early intervention not only in the child’s life, but in the lives of the parents to give them support, it could make all the difference.
As we come out of covid, I hope the Minister will consider this type of funding, so that we can help those who have suffered the most during lockdown and we can help get everyone in the country back on track.
It is very good to see you in the Chair, Mr Hollobone. I congratulate my hon. Friend the Member for Winchester (Steve Brine) on securing this important debate.
I acknowledge the important work of nurseries and early years settings in my constituency; they have been core social infrastructure in the area. They are at the heart of child development, but also support parents in their work and ease family budgets. I particularly mention a maintained nursery school in Alton, in my constituency, called Bushy Leaze, which does high value work with children with special needs, supporting parents, doing outreach in the community and partnering local schools.
I also acknowledge the commitment of the Government to early years education and childcare, with no fewer than five extensions to early years and childcare entitlements since 2010: the 15 hours’, then 30 hours’ tax-free childcare; the 85% reimbursement under universal credit; and, crucially for this debate, the offer of 15 hours for two-year-olds.
Finances in this sector are difficult—they were hard even before the pandemic, and they have become worse. Like others, I welcome the £44 million. I know that the Department does regular analysis of cost structures in this sector, but that clearly still remains difficult to manage in some cases. I hope the Minister will keep that under review, make sure that the process is transparent, and, as time goes on, peg that to cost increases, particularly when it comes to the national living wage.
In the longer term, there is more that we can do to ease cost pressures on the sector, particularly with trying to spread out the demand on the offers for three and four-year-olds, when there are more children in the summer term than in the autumn term, but there have to be staff for the whole year.
Maintained nurseries are more costly, partly because they do more. Like others, I welcome the continuation of the supplemental funding, but the sector really needs long-term visibility and security in its funding. I welcome the fact that the Minister has said that there will be more to say on that soon. I hope it is possible to tie that in with a wider look at the sector and how all parts of it fit together.
I do not have the time to give most of my speech, in the circumstances. Others have said how important early years education is. It is fundamental for social mobility and for dealing with some of the most entrenched disadvantages in our society.
We have seen an increased prevalence of children presenting with high needs. That is because of a combination of greater diagnosis and awareness, and perhaps some greater underlying prevalence as well. Whatever the reason, we know that the earlier we can help and support those children and their families, the better for them and, later on, the more it will ease the pressure on the school system.
In that wider look at how the sector works and how it all fits together, ideally there would be a geographically distributed network of maintained nursery schools with a defined set of core services, one of which would be to support the private, voluntary and independent sector nurseries in the area. There is also more opportunity to use primary school settings. A couple of years ago, we put in place a capital fund to allow more of that, but there is far more potential. It is important that those nurseries include some year-round provision as well.
We need a people plan, because this is all about the wonderful people who work in our nurseries. I welcome the fact that in the T-levels programme, early years and childcare is one of the first T-Levels to come on stream.
There are one or two other very important people in a child’s life: mum and dad. The home situation may be becoming more complex in the current time, partly because of the developments in electronics and so on, but we know that about a fifth of the difference in the development of cognitive ability is to do with parental engagement. It is very difficult for public policy to start getting involved in that arena, but nursery schools and others working in early years can play an important part in supporting parents with the support they are looking for.
I hope the Government will continue with and grow the Hungry Little Minds campaign, which uses ambient opportunities for people on the bus or train, eating their breakfast cereal or about to go to bed, to help to promote early literacy. The BBC has an important role to play, too.
If the erstwhile right hon. Member for Birkenhead, Lord Field, was still in this House, he would remind us of the time he was talking to some 15-year-olds at a secondary school in Birkenhead. They said there were two things they really wanted to learn more about at school—how to make lifelong friendships and how to be good parents. Everybody has a huge part to play. We need to work out how the social infrastructure that we have been talking about can best support all this important work.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Winchester (Steve Brine) on securing the debate.
When we and the Government talk about childcare provision, it is usually in the context of enabling parents to go to work, and secondarily as a development tool in getting children ready for school. We say less about the critical impact of the early years education system on reducing inequality. That point was powerfully made by Dr Laura Jana when she presented to the all-party parliamentary group on women and work a week or so ago. She found that the primary determinants of a person’s life outcomes as an adult were linked to whether they completed school, formed a loving relationship, held down secure employment and avoided the criminal justice system.
All the childcare providers in my constituency would agree with that, and would say that, to deliver that, they need high-quality, qualified staff. It has struck me in my nearly one year as an MP how difficult they have found it to deliver that. I have done some quite granular work, which time will not allow me to elaborate on. In essence, even when taking into account the money that they are allocated through the free hours programme and the top-up that they receive from West Berkshire Council, those providers struggle to meet an appropriate wage rate for qualified staff, taking into account national minimum wage obligations, a desire to provide good resources, and inflationary pressures. The point was illustrated by one nursery’s saying that a qualified member of staff retired and it could only afford to replace them with a zero hours contract.
The other huge driver on the finances of nurseries, and the reason why they entered the covid crisis in such a serious deficit position, is the lack of certainty—not knowing, term by term, what funds would be available. I regret to say that I speak on behalf of nurseries such as Ladybirds in Newbury, a PVI nursery that is literally on the brink. If it closes the doors—I sincerely hope that it will not—it will follow another three that have de-registered in the past six months. It tells me that it has been hit hard by the covid crisis, particularly by parents withdrawing children unexpectedly, and that projected profits for the year have turned into a loss of somewhere around £12,000. Hungerford Nursery School and Victoria Park Nursery School, two maintained nurseries, report a decline in income of £35,000 and £57,000 respectively. Taken together with the extra cost of making their premises covid-secure, the implications for their future are serious.
What are the solutions? Every MP always requests more money. I am so grateful to the Minister for the work that she has done with the Treasury in getting more money in the spending review. However, I looked into the funding system—the tax-free entitlement, the 15 free hours, the 30 free hours, the tax credits and universal credits—and it is fair to say that different thresholds and entitlements have added up to a fragmented and piecemeal system. Some form of streamlining would be the best way of getting the money to staff.
I will make one other point, which I make in my capacity as chair of the all-party parliamentary group on women and work. We are on the brink of a bloodbath in terms of female employment. We know what is happening in hospitality and retail, and we know that those jobs are predominantly occupied by women. If childcare providers go out of business, there will be such an incentive for women to remain at home, looking after the kids, not finding new work. The Chancellor’s guiding principle has been to avoid long-term structural unemployment, but without a childcare solution we risk that.
It is a pleasure to serve under your chairship, Mr Hollobone. I start by thanking the hard-working early years staff in Luton and across the country for the dedicated support that they have provided to children and their families throughout the pandemic.
In Luton, across my constituency and that of my hon. Friend the Member for Luton North (Sarah Owen), there are six maintained nursery schools, which work together to provide comprehensive nursery education and care to our local community. Gill Blowers Nursery School, Grasmere Nursery School and Pastures Way Nursery in Luton North, as well as Chapel Street Nursery School, Rothesay Nursery School and Hart Hill Nursery School in Luton South, have stepped up to the challenges posed over the last year, despite the overarching financial uncertainty in the early years sector.
When I visited Hart Hill maintained nursery school and met the fantastic headteacher, Mrs Thompson, and her staff team, I saw at first hand the brilliant work that they do, and heard about how they have remained open throughout the pandemic to continue providing education and care to children from some of the most deprived areas of Luton. They have also supplied key resources and food to families.
Maintained nursery schools offer a bespoke package of education and care by using skilled staff and research-focused routines, environments and ethos, and by working in conjunction with external health and SEND professionals. A bespoke approach enables them to focus on children’s needs and wellbeing by understanding their responses and behaviour and then adapting provision to provide a safe, responsive space. The maintained nurseries in Luton have resourced provision for children who have significant special educational needs and severe medical or health needs. Last year, they successfully completed 53 education, health and care plans for children who have gone on to transition into specialised primary schools. The maintained nursery schools have ensured that between them they have resources to support 96 children with severe or complex needs, many of whom have been transferred from private early years settings. Their dedication and commitment to Luton ensures that our most vulnerable children have the care that they need and deserve.
Despite all the essential support that maintained nurseries provide our communities, the Government chose not to introduce a long-term funding plan in the recent spending review, about which we have already heard a lot. I am aware that there was the one-year settlement in the summer, but short-term funding plugs will not safeguard the future of maintained nurseries. Yearly funding does not provide sufficient certainty for maintained nurseries to plan ahead by employing staff and allocating resources, or for parents, who worry that the services on which they rely may not exist in a year’s time.
The Department for Education’s own statistics show that the percentage of maintained nursery schools in deficit has risen from 3.5% in 2009-10 to 17.7% in 2018-19. Unlike schools, many maintained nurseries have not received funding to cover additional covid costs, and are ineligible for the covid catch-up fund. Luton Borough Council consulted with DFE representatives on whether increased costs would be reimbursed, and the DFE indicated that they would be. However, all applications for costs reimbursement by maintained nurseries in Luton have been rejected, as they have been deemed ineligible. Will the Minister meet me and my hon. Friend the Member for Luton North to further discuss how Luton’s maintained nurseries can get crucial additional funding to cover those costs?
If maintained nurseries close, the cost of looking after vulnerable children will fall on other services, which have suffered the economic impact of austerity and the pandemic. I urge the Government to introduce a long-term funding settlement as soon as possible.
Thank you, Mr Hollobone. It is always a pleasure to make a contribution in Westminster Hall, but especially on such an important issue. I congratulate the hon. Member for Winchester (Steve Brine) on setting the scene, as he so often does in these debates. I was involved in many of the debates in which he was Minister. Today, he is asking the questions and making constituency-based requests, and I am very happy to support him and others. I put on the record my thanks to the Library for the briefing on this topic. We do not often say so, but the Library briefing for this debate was quite good. Its opening statement says:
“The Institute for Fiscal Studies (IFS) has estimated, for example, that ‘a quarter of private nurseries might have been operating at a significant deficit’ during the national lockdown, compared to 11% before the pandemic. With regards to the impact of lower attendance, the IFS has estimated that ‘for every 5 percentage point drop in fee income between 5% and 25% compared with pre-crisis levels, an additional 3–4 percentage points of providers are likely to face a significant deficit.’”
Over the years, my constituency has seen large growth in nursery provision, based on the high employment opportunities and the need for nursery provision—it was a growth market. Since the coronavirus outbreak in March, however, there has been a real sea change, and nursery care and childcare providers have contacted me regularly. I understand the severe difficulties for a sector that is essential for the proper functioning of the working economy. I was reminded of the essential nature of childcare during lockdown when inundated with requests for help to allow people to go to work. I repeat the valid point raised by the right hon. Member for East Hampshire (Damian Hinds) about the problem of taking away grandparents’ ability to mind children, as has been the norm for generations, by forcing them to work into their late 60s. There is a lack of childcare that was once a given. The opportunity for aunts, uncles, siblings or grandparents to help out is not happening. Life is changing.
Nursery providers need investment to deal with the high level of provision that is expected of them. If they are to provide wraparound childcare, they need transportation to and from school, workers who are equipped to deal with the needs presented, and to be able to pay them a living wage. Sometimes people in nursing provision and childcare do not get the living wage, but they should and must. That is not possible with the funding that they receive.
Covid-19 has simply exacerbated and accelerated the issue that needs to be resolved for the future of nurseries. Nurseries, which are absolutely essential, will be a casualty not of coronavirus but of not being recognised as a vital component in the cogs of education. An Early Years Alliance statement points to the fact that only a quarter of providers surveyed said that they expected to make a profit between now and March 2021. Some 51% said that they would need emergency funding to stay open for the next six months. Two-thirds or 65% said that the Government had not done enough to support providers during the covid-19 pandemic. The survey found that one in six early years providers could close by Christmas 2020 without additional funding. On behalf of others, we must make the plea to the Government to step up. If nurseries were to close due to financial restrictions and problems, there would be an impact on people’s ability to work.
I will finish with some of the good things. The Duchess of Cambridge highlighted the essential nature of early years intervention and the impact of the first five years of life. She referred to five big insights, which included a visit to a farm in my constituency, which is why I wanted to mention it; we are pleased to have royalty in Strangford any time. That leaves no doubt as to the value of good nursery provision. It is time for the Government to stand with the Duchess of Cambridge, to fund the sector properly and to make the changes to keep businesses open.
Early years intervention by trained professionals makes a difference to individual children and, as Duchess Catherine has said, makes a difference across generations in our community. Let us show today that we in this House are prepared to support the nursery sector for our future generations.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Winchester (Steve Brine) on securing this important debate. Nursery and early years providers are vital, not just to allow parents to work, but to support the development of the children in their care. We saw how vital they were in allowing our key workers—nurses, doctors, supermarket staff, police officers and many others—to keep doing their vital jobs during the lockdown. More than ever before, they were literally a necessity, as the Government advised against informal childcare arrangements with at-risk grandparents. Without them, many people would not have been able to carry on going to work as the nation needed them to.
For many providers it was an incredibly stressful time financially, because although we needed them to stay open to help key workers they lost huge chunks of their income, and their costs increased due to things such as using more agency staff and extra cleaning measures. It is welcome that the Government continued to pay for Government-funded hours, but that still left shortfalls for many. Nurseries in my area, such as Little Angels, which I visited a few months ago, really struggled. I am pleased to say that it has survived, but others locally and across the country have not.
On the importance of early years settings, it is helpful to remind hon. Members of the 2019 Education Committee report, which found that early years education for children below the age of four had a positive impact on the life chances of disadvantaged children. Maintained nursery schools in particular are extremely successful in ensuring excellent outcomes for disadvantaged children.
I was lucky to recently visit the grant-maintained Westminster Nursery School—appropriately named—in the heart of Crewe. As a maintained nursery, its catchment area includes very significant deprivation and the children who come to it often require significant levels of additional support. The headteacher, Elizabeth Hulse, her staff team and the chair, Donna Reed, have worked incredibly hard to keep the doors open and manage and minimise the risks of covid. I put on record my thanks to them. When I visited them in October, however, they still did not know what their funding would be. That uncertainty does not make it easy for any business or organisation to plan.
Thankfully, Ministers have now confirmed that supplementary funding, worth up to £23 million, for maintained nursery schools will be continued for the summer term of 2021 to enable local authorities to support them. That will provide maintained nursery schools, such as Westminster Nursery School, with some reassurance about funding for the 2021 academic year. However, although it is very welcome, it does not take us past the 2021 academic year and does not address all the financial shortfalls that nurseries experience, and there is still no long-term funding solution. Those nurseries need to be given security and stability for the years ahead.
Currently, the local authority, Cheshire East, provides additional funding to the nursery to which I have been referring, but there are no guarantees about that and there is not an agreed approach for deciding what funding should be made available. We need to develop an agreed framework, so that the funding for maintained nursery schools can be standardised and so that the funding formula is up to scratch for the whole sector. The criteria used to allocate the funding should reflect the actual levels of need locally and the challenges that different nurseries face, so that they can deliver the best possible outcomes for their children.
I want to see maintained nurseries such as Westminster Nursery School, private providers such as Little Angels, school-based providers and the entire sector prosper and, hopefully, do more. Their success is our success. For the most disadvantaged in our society, they are just about managing to be a vital stepping-stone, when I want to see them become a fully fledged escalator of opportunity. I ask my hon. Friend the Minister to listen very carefully to the representations made today, and to help build that brighter future for a very important sector for so many young people in this country.
It is a pleasure to serve under your chairmanship, Mr Hollobone, and I reiterate the congratulations to my hon. Friend the Member for Winchester (Steve Brine) on bringing this important topic to Westminster Hall this afternoon.
I declare an interest, as a father of two young children who were at nursery throughout the previous lockdown. I would like to pay a personal tribute, and one on behalf of many other mums and dads in my constituency, to the early years teams at Hillingdon and Harrow Councils, and particularly to Hillingdon, which not only kept my children’s nursery open but ensured that other mums and dads, whose children’s nurseries closed their doors during the lockdown, were able to access childcare as key workers during that period.
The research clearly demonstrates that the money that we spend on a child during childhood gains the most value when it is spent in the early years, but that is not where most of that funding is distributed. When we look at the way in which we fund different parts of a child’s journey through life, we see that most of the money goes into secondary education and relatively less is spent early on.
I would like to focus my brief contribution today on three aspects of this challenge that it is important to get right if we are to bring about sustained change. The first aspect is about looking at the market as it is. Many hon. Members have made the powerful point that without effective early years provision, our economy is held back. The Government should be proud of the work that has been done with tax-free childcare—an enormously successful policy, appreciated by many working parents—but also the funded hours. However, as we go into a debate that is very much focused on funding gaps in the early years, we also need sometimes to challenge the behaviour of some providers.
It has caused great concern in the sector in my constituency that some nursery providers made much of the fact that they were closing their doors, taking furlough money for the staff who were placed on furlough during that period, taking the full entitlement of payment from the local authority for the funded hours, telling parents that unless they paid the full fees, there would be no place for their child when the nursery eventually reopened, and quite proudly telling other nursery providers that that meant that when those providers went out of business, they would be able to take over their premises and behave in a predatory commercial way afterwards. Therefore, although much good work has been done in the sector, I think that we also need to be prepared sometimes to challenge the behaviour of some providers, whose actions have not reflected the wider move of trying to get behind communities, parents and key workers at this difficult time.
My second point, which builds on what my hon. Friend the Member for Winchester said, is about the complexity of the sector. For the early years we have children’s centres, which are not childcare venues but which are a provider of key services for that time of life. We have nurseries; we have nursery schools. We have, of course, childminders, who are a significant part of many children’s journey through the early years. All of them, in my view, need to be seen as part of that bigger picture of the support around a child and their family. We know that, when we look at attachment, when we look at intergenerational relationships, when we look at a child’s start in life, all those things need to be taken into account. Although it is right that we are hearing the voices of providers of settings such as nurseries, it is also important to recognise that childminders are a crucial part of the picture, and they too need the skills, the ability and the capacity to support children and be part of the market response.
The final point, and the most important one, is the need for our country to have a longer term plan for the early years. A lot of the political debate has been focused on funding. Those with long memories will recall the neighbourhood nurseries initiative, which was started in 2004 and axed in 2007, to much national angst. There has been a pattern of frequent changes in the Government’s response.
We can see the numbers of children coming through the system. We know when there is a baby boom that we need to plan ahead, and we know that when the demographics go the other way we may need to reduce capacity in the system. A number of hon. Members have mentioned the need for effective workforce planning. I invite Ministers, building on work that I know is already done, to set out what that long-term plan is beginning to look like, so the children of this country, particularly in the early years, have some certainty over the medium to long term.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Winchester (Steve Brine) on securing what has been a really interesting debate with some expert colleagues. It is a pleasure to follow my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds).
First, I begin by paying tribute to some excellent nursery schools in my constituency. Wycombe does not correspond with the Buckinghamshire stereotype, and Micklefield Pre-School and Bowerdean and Mapledean Nursery School serve areas with some real difficulties. They make an enormous contribution to our community, and have done especially during this difficult year. Micklefield Pre-School supports children from disadvantaged backgrounds, and many of its families are key worker families. Bowerdean and Mapledean Nursery School works closely with families to help children academically and socially in a happy and supportive environment. Both schools are very proud to be crucial parts of our community and we are very proud of them.
Some 247 of my constituents in Wycombe signed the relevant petition to give UK nurseries emergency funding. My staff have spoken with local managers and it is a very real concern; I know the Minister will be aware of that.
As I listened to the previous speakers, I was reminded that the first thing I did when I got into politics was not in connection to Brexit—I know hon. Members will be surprised to hear that—but was in fact that I got involved with the Centre for Social Justice, which had at the time done a joint paper with the Smith Institute on early years. Although I got involved to do a voluntary consulting engagement on how their policies might be implemented, I remember being very struck by that paper, which showed the crucial importance to children’s development and lifelong prospects of love and care in their early years.
As a Conservative, I would like lower taxes, but I have realised in the course of my time here that if we want lower taxes in the future, we had better invest in early years today. I think many hon. Friends and perhaps Opposition Members—we do not know—may have realised that, too. We need to invest for the very long term if we are to properly serve our society.
Finally, I want to pick up on a point made by my hon. Friend the Member for Newbury (Laura Farris) about how hard this crisis has hit women. She made the point much more articulately than I can. She is absolutely right and has my full support. I am not going to lecture the Minister, but I am very clear that, when we have a very difficult Parliament on spending, the Minister is going to need all our support in saying that early years education has to be a priority for funding, much as many of us would like to balance the books.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for Winchester (Steve Brine), the right hon. Member for Chipping Barnet (Theresa Villiers) and my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) for securing this important debate and for being officers of the all-party parliamentary group for childcare and early education. I was proud to be the first chair of the APPG when it started three years ago, and I have just about forgiven the hon. Member for Winchester for upstaging me at every opportunity as the new chair, because the APPG has gone from strength to strength. It has played a vital role in the pandemic and I thank its members for all the work they have done.
There have been some really important contributions in the debate today from all sides. It has been a very sophisticated debate, which is not always the case in politics. Not only did I learn a lot, but I was reminded how important the early years sector is for our country, for our economy, and for women—a point that was made by the hon. Member for Wycombe (Mr Baker) and others. I will highlight some of the contributions that will stay with me.
My right hon. Friend the Member for East Ham (Stephen Timms) spoke powerfully about how fragile the sector is. I think everyone recognises that it has been very fragile since long before this pandemic hit. I have first-hand knowledge of that, both from having small children of my own and because of all of the work I have done in my constituency with early years providers. He also spoke passionately about how the group-based providers are at threat of closure. That has certainly been my experience as well, and we need to take some dramatic action if we want to stop that threat of closure. I pay tribute to Sheringham Nursery School, which is in my right hon. Friend’s patch, and the work it does to help families who have children with special educational needs. I know Sheringham well, and my family friends have benefited greatly from it, so I join him in paying tribute to it. I understand how anxious its staff are feeling about what is happening during the pandemic.
My hon. Friend the Member for Luton North (Sarah Owen), who told me that she had to leave before the end of the debate, spoke passionately about her constituency, and about the role of early years providers in this pandemic and their exclusion from covid funding. That is one of the things I will be picking up on in this debate, because I feel very strongly that those providers have been left behind during the pandemic. She spoke about the baby groups, which were a lifeline for both of us. We both have first-hand experience of them. Their significance is often overlooked, but they are important for those who have a small child and have not been in that situation before. I see some Members nodding; such groups were probably important for them as well.
My hon. Friend the Member for Luton South (Rachel Hopkins) talked about maintained nurseries and Hart Hill Nursery School in her constituency. She highlighted not just the educational benefits of those nurseries, but the health benefits—I have seen that at first hand—and the safe environment they provide for all our young children. The hon. Member for Wycombe spoke about lower taxes if we invest in education. That is probably not the first thing I would go to, but investment in early education is something I passionately believe in, and I believe that Members who have spoken today have made some very powerful cases for how important that investment is.
My hon. Friend also talked about the necessity of long-term planning for maintained nurseries and the long-term funding settlement, both of which I agree with. I know that the Minister’s door is open to me when it comes to discussing policies, which I really appreciate. I hope she also meets with my hon. Friends the Members for Luton North and for Luton South. I think we can agree that they have made a powerful case for their area today, and I hope the Minister will find some time to engage with them and listen to them about what is going on in their area.
One of the things I wanted to talk about is the lack of support for early years providers and all the things they have missed out on due to not being schools. Back in March, as everyone knows, childcare providers were asked to stay open for vulnerable children and the children of key workers. They were assured that they would be able to access the furlough scheme in full, even when they received local authority funding. But just three days before the scheme opened, that position was reversed, forcing providers to tear up their plans and suffer huge losses. Ever since then, early years providers have been overlooked for support, and I wanted to highlight just some of the struggles they have had to put up with during this pandemic.
For a start, early years providers have never been able to claim any of the funding for the additional costs of making their settings covid-secure that schools have been able to claim, which strikes me as ridiculous considering that when we go into a nursery, we see small children running around everywhere. I am not quite sure why they did not qualify for that.
On that point about nursery schools not receiving additional funding for covid security, for the very reason that little ones do not know how to socially distance, Park Hill Nursery School has had to divide up its classrooms. It has created a new classroom in its library area to maintain smaller groups in order to deal with that, which puts added pressure on staffing.
I absolutely agree with my hon. Friend, and I have seen exactly what she is describing at first hand in my son’s nursery.
I am also worried that nurseries with rateable values of over £15,000 were not allowed to access the larger covid grants for retail hospitality or leisure businesses. I hope the Minister will look into that. The Chancellor agreed to give nurseries business rates relief only after intense lobbying from all sides, but, sadly, that support is due to come to an end in April next year, and maintained nursery schools, which have been mentioned repeatedly in this debate, are not able to access it. Many part-time or recently started childminders have been excluded from help through the self-employment income support scheme, and the early years providers did not qualify for the £1 billion covid catch-up funding. Last week, they were excluded from the covid workforce fund to help with the cost of staff absences, despite huge staff pressures.
In essence, throughout this crisis, early years providers have been asked to take on the responsibilities of schools but the liabilities of businesses, and with nowhere near the same level of financial support that has been given to other businesses. Of course I welcome the £44 million increase in new childcare funding in the spending review, but I do not feel it is enough to plug the gap, which stood at £662 million last year. It will only come in April, by which time many providers will certainly have closed. A chain of three nurseries in Essex I spoke to recently spent £6.10 per hour providing a Government-funded childcare place, yet only got £4.32 per hour from the Government to do so, so the 6p per hour increase to funding in the spending review is a drop in the ocean.
I want to work constructively with the Government because the early years sector is important. I also give credit where it is due. One positive step was the Government’s commitment to funding providers at pre-covid occupancy levels, both when they were forced to closed to most children from March to June, and in the autumn term when it was clear that childcare demand would be suppressed by fear of covid, furlough, job losses and working from home. That prediction was correct: occupancy in early years settings is currently just above 60% of normal term-time levels. However, although there is no reason to think demand will not continue to be low for some time, the Government are planning to go back to funding providers based on current occupancy from January. I realise it may sound like a technical point, but that will be devastating for over a quarter of providers, according to a recent survey by the Early Years Alliance.
One could argue that that made sense when the Chancellor was planning to withdraw the furlough scheme and get everyone back to work from October, but it does not make sense to extend the furlough and impose lockdown and severe restrictions while pretending that everything is back to normal for childcare, just because the Government do not want to foot the bill. I ask the Minster to take heed of this. It is hard to estimate the overall impact on the sector, but to take the example of the small nursery chain in Essex I mentioned, the owner estimates that the chain would have lost £12,000 of income this autumn term if funding was based on the current, reduced occupancy, and expects the shortfall to be much bigger in the spring term when funding is set to be calculated as the Government intend.
Mass closure of childcare settings would be devastating for over 300,00 people working in early years, the majority of them women, which is a point already made by hon. Members. Childcare workers are paid badly anyway—I am sure people are aware of that—with one in eight receiving less than £5 an hour. We should be working to tackle low pay and improve career progression in the sector. We have duty to make sure we do not bring about the demise of these jobs by slashing funding.
To remind everyone, this debate is about the future of nurseries and early years settings. The reality is that without better support, and a new approach, thousands of them may not have a future at all. Most hon. Members have made that point today. Survey after survey shows that the early years sector is on the brink of collapse. One in six providers expect to close by Christmas, rising to one in four in the most deprived areas. Recent research from the Department for Education shows around half of all nurseries, pre-schools and childminders were unlikely to be sustainable for more than a year. These are shocking statistics, and I hope the Minister will take account of this. There has been a net loss of 14,000 childcare providers in the last five years as a result of the chronic underfunding of early years entitlements. We could lose at least that many again within this year if fears are not allayed, and action is not taken immediately. I ask the Minister to consider how devastating this would be for working families who rely on childcare, and the young children whose life chances are shaped by the power of early education—that point has been made over and over again—not to mention the impact on our economy and recovery if working parents are forced to stay at home. The brilliant early years workforce will suffer large-scale redundancies.
It is a technical point, rather than a political one, but does the hon. Lady agree that one of the ways that we could address this challenge is by taking the funding cycle through which early years receives its resources out of the same funding cycle where it sits with schools, as there is always a powerful incentive for schools forums to ensure that resources are underspent, in order that they may be redistributed to other causes in the local area? Instead, we should have a much more flexible, local and sustainable means of directing the same money, so that these issues can be addressed.
I agree with the hon. Member that we should have a flexible funding settlement, but I also think that we need to change our approach and attitude to early years settings, because we often see them as looking after children but not quite providing education. It is as much a cultural and attitudinal change as it is a funding change, so I somewhat agree with the hon. Member. We now have an opportunity to look at the childcare sector in this country as a whole, because the pandemic has shone such a bright light on the very big failures in the childcare system due to the lack of funding and the rules around early years settings, and also because they do not qualify for funding in the same way that schools do. I agree with him—that is what I am trying to say, in a very long-winded way.
I will end with a plea to the Government: please do not ignore the cries for help from a sector as important as early years. I urge the Minister, who I said has an open-door policy when it comes to discussions and constructive criticism, to rethink the plan to slash early entitlement funding from January—that is very soon—to give the early years sector the targeted support that it so badly needs, and to commit to working across the House to give our fantastic nurseries, pre-schools and childminders a sustainable future. I really feel that early years providers are an essential part of the social and economic fabric of our country. Therefore, to coin a phrase, let us build back better from the pandemic, rather than let this vital infrastructure come tumbling down when we need it most.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Winchester (Steve Brine) on securing this really important debate, and I thank all colleagues for taking part; it shows how much we care about the early years.
I love the early years. When my children were little, I gave my time as a volunteer to help run our local pre-school. The days were always busy. I admit that they were sometimes quite tiring, but they were always deeply fulfilling and packed with joy. I have huge admiration for people who work in the early years sector and dedicate their time, skills and love to helping to provide high-quality early years education and childcare. They do an excellent job in helping our youngest children to learn and grow, and families across the country rely on them. I thank them all.
We should be so proud of our early years providers. Some 96% of early education settings are now rated good or outstanding by Ofsted—an increase from 74% back in 2012. A child’s early years are absolutely crucial for their development, and we are doing more than any previous Government have done to ensure that as many families as possible can access high-quality, affordable childcare. That has made a difference for children. The latest early years foundation stage profile results show that the proportion of all children reaching a good level of development is really improving. Back in 2013, only 52% of five-year-olds, or about one in two, had a good level of development. The figure is now 72%—nearly three out of four children. Since 2013, the attainment gap at age five has also narrowed, so disadvantaged children are catching up with those from better-off backgrounds.
That is partly due to the increased and unprecedented investment that the Government have put into early years childcare. This year, we are planning an unprecedented investment of £3.6 billion in free childcare places. That includes the universal 15 hours of childcare for all three and four-year-olds, regardless of whether their parents are working. Take-up is high: 91% of three-year-olds and 94% of four-year-olds back in January of this year. That investment also includes the 15 hours of free childcare for the most disadvantaged two-year-olds. That gives them a great start in life and helps to close the attainment gap. More than 1 million disadvantaged two-year-olds have benefited from it since the programme began in 2013.
More recently, an extra 15 hours for working parents with three and four-year-olds was introduced in 2017 by the Conservative Government. An estimated 345,700 children took up those 30 hours places in 2020. Funding for those places provided an average of 56% of income for group or school-based early years settings last year.
During the pandemic, the Government have acted to support nurseries and provide security to them and childcare. At the peak of the pandemic, early years settings did an amazing job by remaining open for the children of critical workers and for vulnerable children. Many hon. Members mentioned how that made a difference to their own personal lives, as well as to their constituents. I thank those early years settings.
We prioritised childcare settings for reopening on 1 June, and we have supported early years providers by continuing to pay local authorities for the free childcare places at pre-covid levels since March, even if providers had to close due to the pandemic. Providers were eligible for the coronavirus job retention scheme for the proportion of the business that comes from private income. Childminders could also use the self-employment income support scheme, and many settings have benefited from business rate holidays and business loans. We froze Ofsted fees for 2020-21, and early years staff have been prioritised for coronavirus tests throughout this period when they have booked them through the online portal. In addition, since 17 September, if a staff member or a child has tested positive for coronavirus, the settings have been able to access the dedicated advice service provided by the DFE.
We know that at the beginning of the summer term, attendance levels were much lower than they were before covid, and providers were of course concerned about sustainability going into the autumn term. On 20 July, we announced that we would continue to fund childcare at the pre-coronavirus level through to the end of the term. That has given nurseries and childminders an extra term of secure income, regardless of whether or not children are attending. Currently, at least 80% of early years settings are open, and attendance has been consistently increasing during the autumn term. We estimate that, last week, 826,000 children attended an early years setting.[Official Report, 8 December 2020, Vol. 685, c. 8MC.]
The arrangements for the spring term funding are really important, and I am very sorry that we have not been able to set out this position sooner. I know that we must finalise it quickly because, after all, it is just for next term. I assure the House that I am pressing everyone very hard to do so. Understandably, my colleagues at Her Majesty’s Treasury have been very focused on the spending review, but I am pleased that during it they also gave great focus to early years, and the position was announced by my right hon. Friend the Chancellor.
As I said earlier, early years settings will continue to benefit from a planned £3.6 billion of funding for this financial year, but for the next financial year colleagues should understand that there will be a demographic change, and as a result of falling birth rates there will be fewer children in the early years age group. Therefore, the total early years entitlement spend in 2021-22 may be less than in 2020-21. However, for 2021-22 the Chancellor has announced a further £44 million, which means that local authorities will be able to increase hourly rates paid to childcare providers for the Government’s free childcare offers. That will pay for a rate increase that is higher than the cost that nurseries may face from the uplift to the national living wage in April. I wanted to put that important fact on the record. Further details and information on how the money will be distributed will be made available as soon as possible.
We understand that increased levels of attendance in early years settings does not necessarily mean that parental demand for childcare has yet returned to the levels seen before the pandemic. Providers have told us that they have seen a reduction in the number of additional hours that parents pay for. This month we will support providers and local authorities to help improve sustainability in their own local markets. Two national webinars will be delivered to the sector by our partner, Hempsall’s, which will promote strategies for improving provider sustainability, sharing good market practice across early years providers and building confidence in local authorities to have business support conversations with providers in their local markets. We are also considering making reactive expert support available to local authorities to address any immediate sufficiency issues.
Many right hon. and hon. Members have spoken about maintained nursery schools. I know that my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) is keen to understand the plans for future funding for maintained nursery schools. There are 389 such schools across the country—I have two in my constituency. They do an excellent job, but they have extra costs, such as carrying a headteacher and more qualified teachers in the governing body. That is why the Government have provided £60 million in supplementary funding this year, and the Chancellor announced in the spending review that that money is secured for the coming financial year. The Government’s commitment to the long-term funding of maintained nursery schools is unchanged. We continue to consider what is required to ensure a clear long-term picture of funding for all maintained nursery schools. We will say more about that soon
I note the request from the hon. Member for Luton South (Rachel Hopkins) for a meeting about children’s services. She need only write to me to get a meeting. I have written to the hon. Member for Luton North (Sarah Owen) about maintained nursery schools; I am sure that she was pleased about the extra money. DFE is supporting Luton with a specialist adviser at this time, and I will happily facilitate a meeting to update them.
We are in frequent contact with local authorities and early years sector organisations, through regular meetings and working groups. I would like to say a big thank you to the organisations that represent the views of the sector, including NDNA, PACEY and the Early Years Alliance. They work continually with us, hand in hand, on these matters.
My hon. Friend the Member for Wycombe (Mr Baker) spoke wisely about the need for strong support and strong supportive voices for the early years sector. He is spot on. I thank him for agreeing that he will be with me all the way.
Supporting families and children is at the heart of all that the Government do, especially at this challenging time. Ensuring access to childcare to educate children and enable parents and carers to work is crucial to providing support for children. I am deeply honoured to be responsible for this extremely important part of the Government’s agenda, and I will always champion early years.
In summary, we have heard some committed speeches about the maintained sector and the PVI sector. The fragile sector comment was very well made by the right hon. Member for East Ham (Stephen Timms). My neighbour, my right hon. Friend the Member for Romsey and Southampton North (Caroline Nokes), talked about the high-quality provision in her constituency and across Hampshire. Across the whole country, the Minister reminded us of the Ofsted figures, and that is all true.
My right hon. Friend the Member for Chipping Barnet (Theresa Villiers) called for the long-term settlement, echoing what I had said in my opening remarks. I was struck by what my other neighbour, my right hon. Friend the Member for East Hampshire (Damian Hinds) and former Secretary of State, said about social infrastructure and the need for a people plan. That is absolutely spot on. I was struck by the comment made by my hon. Friend the Member for Newbury (Laura Farris), who said that we are on the brink of a bloodbath in terms of female employment. My hon. Friend the Member for Wycombe (Mr Baker) was absolutely right to say that early years is about the building blocks of a successful society and economy.
We have heard speeches that cover every aspect of the sector, from the 389 maintained nurseries to the 20,000 or so in the PVI sector, and then there are childminders and our children’s centres. My message is that we need to see the sector as a whole. All providers across the sector look after SEND children. All understand that a plan for jobs needs a plan for childcare. The consistent theme has been that we have to close the gap between what it costs to provide the childcare and what providers receive to provide it. Unless we close that gap, we will continue to have this discussion.
Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).