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Funded Childcare

Volume 744: debated on Monday 22 January 2024

(Urgent Question): To ask the Secretary of State for Education if she will make a statement on her Department’s plans to roll out 15 hours of funded childcare to 2-year-olds in working families from April 2024.

The Government are rolling out the single largest expansion in childcare in English history. By September 2025, we will provide working parents with 30 hours of free childcare a week from when their child is nine months old, all the way until they start school. By 2027-28, this Government expect to spend in excess of £8 billion every year on free hours in early education—double the amount we are currently spending.

We are introducing that in phases. From April, eligible working parents will be able to access the first 15 hours of free childcare each week for their two-year-olds. In September, they will be able to access the first 15 hours each week for nine-month-olds. A year later in September 2025, they will be able to access the full 30 hours for all eligible children aged nine months upwards.

We want parents to be able to access the new offer as soon as they can. Delivering that ambition includes increasing childcare funding rates, with an additional £204 million in this financial year and an additional £400 million in the coming financial year. We are providing grants to help new childminders enter the sector and, to make it easier for the sector, making changes to the early years foundation stage that it has asked us to make.

We hear every day from families how significant this policy will be for their finances. Once the roll-out is completed, eligible families will save up to £6,500 per year. It will help parents to return to work or increase their hours, and tens of thousands of parents have already successfully applied for their codes, ready to take up their places in April. Parents should visit to see the full range of support they are entitled to.

Regarding tax-free childcare, we will be issuing letters with temporary codes to any parents whose tax-free childcare reconfirmation date falls on or after 15 February and before 1 April. That will ensure that any eligible parent who needs a code to confirm their funded childcare place with their provider will have one, and that no parent should worry that they will lose out.

I welcome this opportunity to correct some misleading stories about the childcare roll-out, and to hear from the hon. Member for Houghton and Sunderland South (Bridget Phillipson) about whether she supports our childcare policies, and, if not, what her childcare policies would be. I am sure Members on the Labour Benches would like to know as much as we would.

In which case, it would have been good to have come forward with a statement, rather than me granting an urgent question. So, please bear that in mind before you make a comment.

Thank you, Mr Speaker, and thank you for granting the urgent question.

Crumbling school buildings, botched school budgets and now the hat trick: a childcare pledge in tatters because of Conservative bungling. It is not Ministers, but families across the country paying the price for Tory incompetence. How did we get here?

A litany of failures: a pledge without a plan and a Department without a grip, led by Ministers without a clue; families without the certainty of a childcare place they were promised by the Chancellor last March; and meanwhile the Department is facing a further £120 million shortfall because of yet another miscalculation. How are they going to make up that shortfall?

Families are facing a rolling wave of Conservative chaos which wrecks all before it: for providers it is an utter fiasco, where their income after April is still a state secret. When will providers be told about their funding rates? How many families does the Minister estimate will now not be able to access new hours because of this shambles? The Prime Minister’s official spokesman this morning said:

“We are confident that the provision and capability is there, we are confident in the strength of the marketplace.”

But the market is telling them that their plan is simply not deliverable. The chief executive of the Early Years Alliance said that signing up to the new system was “financial suicide” for providers. Mr Speaker, this is not a market, it is an almighty mess and Ministers know it. Government sources are briefing the papers that there will be

“parents that just don’t get their places.”

Let me explain to Ministers in words of one syllable. That is no good. That will not work. They must do more. They need to fix it. If providers cannot price places now, how on earth can they be expected to offer more in September? Can Ministers guarantee to parents now that the roll-out will be delivered on time, yes or no?

It need not be this way. Sir David Bell is leading Labour’s early years review to ensure that childcare is about life chances for children, as well as work choices for parents. Up and down this country families are fed up with this Government, their broken promises and their incompetence. It is time for a general election to end this Tory shambles once and for all.

I will try to pick out the questions from the bluster.

On the £120 million, this is a specific issue that affects September 2024 onwards, where we allocated to local authorities 22 weeks of funding because that is the period from September to March. Some then said that they pay 26 weeks to their providers, so we have that money in order that they can provide 26 weeks of funding where that is what they do.

On the funding rates, we announced the funding rates for three and four-year-olds in April last year, and for two-year-olds in November.[Official Report, 30 January 2024, Vol. 744, c. 9MC.] Given that local authorities have to pass on 95% of the money that we give them, providers have a pretty good idea of what they will receive. However, while the vast majority of authorities will confirm their rates in the coming weeks, a small number leave it until 31 March. We are encouraging them not to do that, and to confirm their rates as early as possible in the same way as the others.

The hon. Lady asked how many families would not be able to access the childcare offer as a result of those two issues. The answer is none. As she knows, we have increased funding rates significantly. Neil Leitch, to whom she referred, is in our stakeholder group, and we value his input. However, I think it will be clear to people watching these exchanges that while we get on with the biggest delivery of childcare ever, the Labour party has no plan, no policy, and no idea how to help families with childcare costs.

The expansion of childcare is extremely welcome, and I have every confidence that the Minister and the excellent team at the Department for Education will deliver this current expansion on time and that the funding will reach all the families who need it. To be fair, however, the Minister is dealing with a system that has become remarkably complicated over the last 15 or 20 years. Would he be interested in discussing with the Chancellor the notion of rolling up all the various funding streams that we provide for childcare, and indeed for family support, and instead of taking money from people in taxes, losing some of the administration and returning it to them in the form of mandated childcare, thus giving every family with children a generous tax break to allow them to make choices for themselves?

My right hon. Friend has written some articles, which I have read, proposing that very idea. We think that our present system is the best way of achieving what we want to achieve, but I am of course happy to continue my discussions with him.

Good-quality childcare is a crucial economic infrastructure issue for parents now and the education of children in the future, which is why we need it, but the system is too complex, and we cannot access it in my constituency. Providers are collapsing. When will the Government think about drawing up a workforce plan to try to stabilise the system before adding more and more complexity for parents?

I am not sure what the hon. Lady means when she says that people in Bristol cannot access the system, but if she sends me the details, I shall be happy at look at them, because, I have said, tens of thousands of parents have already accessed it. I should also point out that while there has been a fall in the number of providers, there has been an increase in the numbers of both staff and places, so we are confident that we will deliver the roll-out as planned.

I welcome the Minister’s statement, and working parents across my constituency welcome this expansion and the biggest ever investment in childcare in England. Today, however, I received a letter from Victoria Morris, a very experienced childminder who has worked in Leigh-on-Sea for more than 20 years, pointing out that someone who owns a nursery can claim the funding for children to whom they are related, including their own children, but that does not apply to childminders. She simply asks whether the Minister would consider lifting that ban so that childminders are on the same footing as other childcare providers.

The current legislation states that people cannot access Government money for looking after their own children, although it can happen in a larger setting. We have no plans to change that at present, but I should be happy to have a discussion with my hon. Friend.

We know of the challenge that many parents face in trying to find an appropriate nursery for their children, but it is even harder when a child has special educational needs. According to messages I have received, some nurseries are refusing to take such children on. Can the Minister say without equivocation that that is unlawful?

The hon. Gentleman has made an important point, and he is entirely right. We have heard from great organisations such as Dingley’s Promise that providers have not given places to children with special educational needs, and the team and I are looking into that to ensure that it is not the case.

Parents asked for support with childcare and the Treasury and the Government have delivered it, but the system does need to be simplified. I have been following the analysis of the codes, and receiving the codes, by Pregnant Then Screwed, which announced today that a fix had been found and thanked the Department. It would be helpful to hear a little more about that. Will my hon. Friend meet, for instance, the New Deal for Parents group, which is looking for long-term simplifications? Will he also tell us how he is working through the different local authority areas to show that there will be places available now and also in September, because so many parents are looking forward to that?

My hon. Friend has been campaigning on this issue since she arrived in this place. The tax-free childcare code issue was a specific issue caused by parents needing to reconfirm their eligibility every three months to prove that they were still eligible. If they did that quite late last year, they were concerned that they might not be able to get the place they needed in time for the 31 March deadline. As my hon. Friend says, Pregnant Then Screwed has fixed that issue. I would be happy to meet the groups that she mentioned. On the sufficiency of places, we are in monthly contact with local authorities to ensure that they have sufficient places, and only a very small number are reporting any concerns at this point.

A report from the Early Education and Childcare Coalition last November found that only 17% of nursery managers said they could offer the extended entitlement, because of the crisis in recruitment in the sector, and 35% said they would limit the number of places they offered unless the Government helped with recruitment. More than half of all nursery workers have said they are planning on leaving the sector in the next 12 months. What will the Minister do to address the crisis in recruitment and retention in the sector so that nurseries can provide the extended entitlement that parents want?

We have seen a 4% increase in the number of staff in 2023, compared with 2022. None the less, part of the reason why this is a phased implementation and expansion of childcare is to ensure that we have the number of staff we need, and in a couple of weeks we will be launching a big recruitment campaign to get more people into the sector.

I reserve the right to do that, but we hope that if we ring them up first and ask them to publish—with the threat of doing that if they do not—they will do so.

The current system of childcare support is not working: IT problems are causing parents to be locked out of the system; codes are not working; there are no timescales to sort problems; there is no response to complaints; and people are waiting weeks for moneys to be paid to providers. If the current system is not working, how does the Minister expect to reassure parents that the new system, which will rely on the same codes and systems, is going to work?

I simply do not accept what the hon. Lady says—[Interruption.] If she wants to send me details, I will be happy to take them up with any local authority that is not doing what it is asked to do. On the two particular issues with the roll-out, we have moved quickly and provided solutions for them.

This is the biggest ever expansion of childcare and it will be transformational for many working parents, so it is bound to be really complicated to implement. The Minister has just said that only a tiny number of local authorities are reporting that they think they will not have sufficient places, so does that mean that the vast majority of local authorities say that they will have sufficient places? What is he doing to encourage more people to come into the profession and act as childminders?

My right hon. Friend is absolutely right: the vast majority of local authorities are already reporting that they will have the number of places that they need. We are working with the small number that have challenges and we are confident that they will be in the right place by that point. On her question about childminders, one of the things we are doing is introducing a brand-new childminder grant scheme to encourage more childminders into the great early years careers that are available.

I heard the Minister talk about the staffing. For a new parent or carer, handing over their young child to the staff in the sector is one of the most scary things. Those staff do fantastic work but are often paid low wages. The Women’s Budget Group has estimated that there will need to be at least 40,000 additional new early years staff to cope with the increase in entitlement in terms of recruitment and retention in the sector. Will the Minister outline when we can expect the long-term workforce plan for the early years sector, so that we can actually have the staff? It is no good having this increase in entitlement if there are no staff to look after the children.

The hon. Lady is right that we need more staff. I think she refers to the estimate in time for September 2025, rather than for the first part of the roll-out in April, which is part of the reason for the current recruitment campaign. We are pleased to have already seen a 4% increase in the number of staff.

I welcome the fact that the Government are rolling out the biggest ever investment in childcare in England. Will my hon. Friend outline how much the average working family will benefit from the extended childcare entitlements?

My hon. Friend is right that it is the biggest expansion of childcare provision in history. By the time the roll-out is complete in September 2025, it will save the average family up to £6,500 a year in childcare costs.

Many of us tried to warn the Government that this would be like Help to Buy, pushing up demand without tackling supply. Numbers matter in this sector, and it is 313 days since the policy was announced and just 70 days before it is due to be implemented. There have been 30 separate questions in this place about the staffing shortfall, and none of them has been answered. There are two children chasing every registered place, and only two local authorities have actually agreed the rates. It is little wonder that parents are frustrated. Will the Minister set out, here and now, the staffing shortfall in terms of delivering the two-year-old offer in April? Will he tell us what it is, and will he tell us when he expects to close it?

The hon. Lady cites the figures for September 2025, not for April. I am confident that, in April, she will see that we have the staff available for the roll-out.

I declare an interest as the father of two wonderful children, Charlotte and Persephone, who go to nursery in this very place and will benefit from the new proposals.

The UK has a declining birth rate—on average, 1.92 children per woman—and we clearly need more children. Time and again, when surveyed, women who want more children say that they are not having more children because they cannot afford it. I thoroughly welcome the money that has been announced, but what more is being done to support parents who say they want more children but cannot afford to have them? That could perhaps include looking at the tax rate.

I hope Charlotte and Persephone enjoy their nursery provision here, which I am sure is among the 96% of early years providers that are good or outstanding. My hon. Friend is right that childcare is one of the biggest financial challenges facing families today, which is why we are pleased to save them so much money. I am happy to continue the conversation about what else he thinks should be done to support families.

The shortfall in childcare providers is a serious issue for constituents in Putney. Eastwood Nursery School, the last remaining state-maintained nursery in my constituency, is under immediate threat of closure. It provides training for childcare providers across the constituency, as well as excellent early years education. Does the Minister support state-maintained nurseries? Will he meet me to talk about the future of Eastwood Nursery School?

We certainly support state-maintained nurseries, which play a vital role in the sector. I would be delighted to meet the hon. Lady to discuss that particular case.

I praise the Minister for being on top of his brief and for ironing out some of the misunderstandings flying around today. Is it not the case that, as others have said, the challenges of rolling out this offer sit within the broader context of the ongoing workforce challenge? Today I spoke to a provider that has 42 settings and is not able to fully staff a single one of them. I know the Minister is doing a lot of work on this, but will he say a little more about how he plans to meet that workforce challenge with his recruitment drive?

I thank my hon. Friend, who has also done a lot to champion the sector and to raise awareness of the challenge it faces. He is right that we need to get more people into the workforce, particularly for the September 2025 roll-out. That is what the recruitment campaign and the changes we made to the early years foundation stage are all about. We listened to providers on the flexibilities that might make their lives easier and delivered almost everything they asked for, in the hope that it will help them with recruitment and retention.

I recently visited the Ryton Willows Montessori nursery in my constituency, where its manager explained her concerns about the impact of the change on her, and about how she was going to make the sums add up financially and provide an excellent service. We have heard that the final figures are not available; when will they be available? Will the Minister undertake to review the figures to see that they meet the needs of the sector?

We set our rates by conducting a survey of 10,000 providers, in order to understand the costs they face and set the rates accordingly.[Official Report, 30 January 2024, Vol. 744, c. 9MC.] Last November, we delayed publishing the rates a bit, in order that we could provide more money to take account of the Government’s near 10% increase in the national living wage. We believe we are getting them right in relation to what people are paying, but if the hon. Lady has particular evidence she would like to send me, I will happily look at it.

Last Friday, I visited the Butterfly Lodge nursery in Blackpool to hear the concerns of early years providers, many of whom are at breaking point. They welcomed the uplift in funding from April, but they were keen to emphasise that it does not even cover the significant increase in their costs, such as for utilities and the national living wage. What steps are the Government taking to stabilise the sector and prevent early years providers from leaving it altogether?

I set out in my statement the additional money that we had given to the sector in the last financial year and this one to help it to meet those cost pressures—that was anchored to the survey of 10,000 providers that I talked about.[Official Report, 30 January 2024, Vol. 744, c. 10MC.] Again, if the hon. Gentleman wants to send me information, data or specific case studies, I will gladly have a look.

I am glad the Minister said that, because I have a specific case from my constituency that I wish to raise. It relates to the parents of a two-year-old and a nine-month-old baby. They are teachers in local secondary schools and the mother is planning on returning to work after maternity leave. They have been really struggling with this issue of the portal, when they would get the code through and so on. I hope that what was announced will help them, but will the Minister confirm that if it turns out that it does not, I will be able to write to him and get an immediate response?

Yes, and I hope that the hon. Lady will do so. We have taken an extra-cautious approach on this. A particular group of parents were affected and rather than just write to them, we have written to a much broader group of parents: everybody whose reconfirmation window goes from middle of February to the end of March. So no parent should lose out as a result of this issue and she should get in touch with me immediately if those parents are encountering any problems.

The businesses involved in providing childcare need to be able to plan ahead. The Minister may say, “Everything will be fine in April. There may be some problems down the road, but we are confident we can iron them out,” but that really is not going to be get people to invest in leases from premises and all sorts of things that those who run childcare businesses are going to need to commit to, so will he give us a bit more detail? He says he is confident that this is going to meet the need, but 700,000 children are going to join the scheme, according to the Government’s own figures. Where are those childcare providers going to get the information they need in order to be confident that they can invest to go forward?

We are in monthly contact with local authorities and at least monthly contact with providers about this. Some local authorities do take a long time to publish their rates. We are looking at that, because we have provided the information and the funding that we need to, and we do not think it is right for providers in the sector to be waiting right up until 31 March to get that information. So we are looking at what we can do on that. Having said that, some local authorities have already confirmed their rates and the vast majority will do so in the coming weeks.

The initiative is supposed to provide 700,000 additional childcare places, yet 5% of providers withdrew from the market last year, including in the Sandymoor part of my constituency. How do Ministers square that circle, given the funding pressures going forward?

We are doing all we can to help providers meet the funding pressures. It is important for Members of the House to understand that there is a difference between the fall in the number of providers, which can be seen in nationally published data, and the increase in the number of staff and places. I am confident that parents will be able to access these hours as entitled.

Every time the Government have made an announcement to improve childcare, I have welcomed it. I was pleased to serve on the Bill Committee for the Childcare Act 2016, but I questioned then exactly how the Government were going to deliver the capacity needed within the budget available. The Minister said that all would be well, but he was wrong and it took years to build up capacity, and the current offer is still not being universally delivered. Given the poor preparation for this latest initiative, how on earth can parents expect the Government to deliver this time?

I am glad that the hon. Gentleman has welcomed our announcements on childcare, although Members on the Opposition Front Bench have not done so. We are in close contact with local authorities and providers in order to deliver the initiative, and parents will be able to get those first 15 hours for their two-year-olds in April.

Does the Minister believe that part of the consideration on affordable childcare will take into account the need for nurseries to be able to operate alongside the cost of living crisis? Can additional funding be found to meet that need, not for the sake of the delivery of a promise but for the children who desperately need the care to enable their development and for the parents who simply cannot afford to do it alone?

The hon. Gentleman raises an important point about the increased cost pressures that everybody has to face. That is why we gave an additional £204 million in the last financial year and a further £400 million in the current financial year to help meet those pressures, based on the fact that we surveyed 10,000 providers in order to understand exactly what they are paying for all the things he outlines.[Official Report, 30 January 2024, Vol. 744, c. 10MC.]