[Relevant Documents: Ninth Report of the Treasury Committee, Session 2017-19, Childcare, HC 757; and the Government Response, HC 1196]
I beg to move,
That this House has considered e-petition 255237 relating to the provision of free childcare.
It is a real pleasure to serve under your chairmanship, Mr Davies, and to lead the first Petitions Committee debate of this new Parliament. Campaigning on issues that are important to us is a vital democratic right, and for hundreds of years petitions have had the power to connect people with Parliament, to raise awareness of important issues and to help bring about real change for people and communities around the country. More than 23 million people have started or signed petitions on the parliamentary site since it launched in 2015, and it has been inspiring to see so many people getting involved and actively engaged with Parliament and democracy. I am proud to have been elected Chair of the Petitions Committee, and I look forward to taking it forward into the new decade, starting with today’s debate, which has attracted interest from every part of our country.
The e-petition, which is titled, “Provide 15 hours free childcare to working parents for children over 9 months”, was signed by more than 146,000 people, including more than 600 in my own city of Newcastle upon Tyne. It reads:
“After 9 months of maternity leave, most working mums do not receive any maternity pay and need to go back to work. I think all working parents should be entitled to 15 hours free childcare from the time a child is 9 months. It makes more sense to provide this funding from 9 months instead of 2 years.
Many working families struggle week to week due to the cost of childcare. You are required to go back to work after a year of maternity pay however many go back after 9 months due to funds. Once you go back the majority of your wage goes to childcare and in some cases you are better off not working. This should not be the case.”
The creator of the e-petition, Harley Cuthbert, was going to be in the Gallery today to watch the debate and may well join us. I thank Harley for starting the petition. She told me that she decided to start the petition because of her own situation.
For anyone to be left feeling that they cannot afford to start a family due to the cost of childcare is truly heartbreaking. We all want to live in a society where families are able to balance work and family life and are not forced to delay having a family or become dependent on welfare benefits to meet the costs of raising a family. Harley described her situation as being in a middle group of people who earn too much to receive state support, but not enough to be able to afford the cost of childcare. The system should encourage parents to work and contribute to the economy, while also raising a family. The provision of affordable childcare is a key part of that.
Childcare is an issue that interests the British public, and no fewer than 67 petitions in the last Parliament were related to it. They included calls for extra support for parents of multiples, for free childcare to begin earlier, such as at six months or a year, for extra support for parents with disabilities, for special schemes for the families of UK armed forces personnel and for business rates relief for nursery providers.
Ahead of the debate, our Committee reached out to the public online, through Facebook and Mumsnet, to continue the conversation about how childcare issues are impacting on families. The issue affects people in every part of our country and across the income scale, from two-parent families with two good, full-time salaries, to part-time, single-parent families on minimum wage. All said that they struggle to pay for childcare so that they could return to work. I want to share just a few of the contributions to highlight how the issue is affecting working families.
One of the strongest messages from people was that they have to pay to go to work. Jo said:
“With two preschool aged kids I was earning at a loss having to pay for childcare…working and not making money is really bad for a mum’s mental health, the guilt for choosing to maintain a career and not being with your kids is one thing but to do it for no current financial gain is a real mind crusher.”
Katie, who is due to return to work in June, said:
“When me and my partner were looking at me going back full time and putting my child in nursery full time it didn’t make financial sense for me to go back to work. It’s unfair for parents to have to choose between going back to work to break even or in some cases actually paying to work (as nursery fees are above the cost of their wage) or staying at home and having no job and no income.”
A large number of respondents said that they were better off financially not working or working fewer hours than paying for full-time childcare.
Some families are paying the same amount for childcare as they do for their rent or mortgage. Claire said:
“3 days a week nursery is costing us £1000 forcing me to have to go back full time and rely on family for the other 2 days!”
“The nurseries in my local area have essentially created a fixed price for childcare. Full time nursery 5 days a week is £1500 a month. That is more than my mortgage!”
We know the cost of childcare is a huge expense for families, and the childcare survey, published by Coram last month, reported that the average cost of 25 hours of childcare a week for a child under two in England is £131.61 a week, or £6,800 a year. That is a significant amount of money for families to budget for. Moreover, we know that the cost of childcare is rising above the rate of inflation. Twenty-five hours of childcare for children under two now costs 5% more than it did a year ago, and 4% more for a child aged two. Those ever-rising costs put huge pressure on family budgets and erode the incentives for parents to go out to work when they see most of their wages disappearing to cover the cost of childcare. The financial pressures have a knock-on effect on other aspects of family life.
We have heard from parents whose careers have been permanently disadvantaged. Others must rely on family members to help, particularly elderly grandparents. Some people, such as Harley, have delayed having children or having additional children because of childcare costs. Shannon said:
“I had my baby in May and I’ve had to give up working and rely solely on my fiancé’s wage. My weekly wage before was £250 and my childcare bill would be £200 so I’m out of pocket by the time I’ve filled my car to drive to work and drop my little girl off.”
“Women like me who then have to stay at home to look after children risk falling behind male colleagues at work, increasing the gender pay gap. Men who don’t have caring responsibilities are able to work those extra years and so earn more overall.”
Sandra, a grandmother, said:
“My daughter returned to work recently. Her older daughter was cared for by me until just over a year ago when she was given a nursery place. I now care for her baby almost 9 months old. I’m nearing 66 with no pension. My daughter can’t afford to pay me as she is on minimum wage. I love my grandson but 4 years ago it was easier with his sister and I now struggle with caring for him. I’m exhausted by the time she gets home, a nursery place would be brilliant.”
Another point, particularly given that we have just had International Women’s Day, is the impact on gender equality and career progression for women. A report by the TUC in 2016 found that fathers who work full time get paid a fifth more than men with similar jobs who do not have children. A wage bonus of 21% contrasts with the experience of working mothers, who the report found typically suffer a 15% pay penalty. The TUC has called for more decently paid jobs to be available on a reduced-hours or flexible-work basis to reduce the penalty paid by mothers and to enable more fathers to fit working around their fathering and parenting responsibilities.
Better childcare opportunities could also enable women who have children to continue working more hours a week, reducing the impact on their career. If we are to tackle increasing rates of child poverty and a lack of social mobility, it is critical that we address the issue. In 2017-18, 4.1 million children were living in poverty—30% of all children—which is a shocking statistic. It is expected to reach 5.2 million by 2022. The two biggest costs putting pressure on family budgets are childcare and housing. When childcare costs are accounted for, an extra 130,000 children are pushed into poverty.
We also know that the attainment gap between disadvantaged and more advantaged children is already evident by the time a child reaches school at age five, with the gap between them equivalent to 4.3 months of learning. The gap more than doubles to 9.5 months at the end of primary school, and then more than doubles again to 19.3 months at the end of secondary school. Increasing the availability of good quality affordable childcare enables more parents to get into or return to work or access education or training, while also improving the educational outcomes for their children.
My hon. Friend is making a powerful case. Does she agree with me that the current system is under huge pressure? In my city of Cambridge are two nurseries: one maintained and one private. One is slashing services and the other is telling parents that services will stop within weeks. Does she agree with me that the current system is not financed properly by the Government?
I absolutely agree with my hon. Friend. I will come on to make that very point in more detail.
The issue is not only a problem for individual families; it is critical to our whole economy and productivity levels. Early years education has proven to be a positive benefit to our children, too. The Department for Education’s study of early education and development—SEED—longitudinal study, published in 2018, found that increased hours per week spent in formal early education, such as day nursery, between the ages of two and four resulted in non-verbal development and better socio-emotional outcomes. The Education Committee’s inquiry into tackling disadvantage in early years found that early years education for children below the age of four has a positive impact on the life chances of disadvantaged children. However, it also found that disadvantaged children currently spend significantly less time in pre-school than children from more affluent backgrounds.
Britain has long had a publicly funded education system because successive Governments have recognised that such a fundamental service should be provided by the state and be available to all. Just as we accept the principle that family income should never be a factor in whether children receive a good school education, the same must be said of early education, which is equally as crucial. We often look to Scandinavia for ideas on effective family policy; countries there have long recognised the value of early education and have invested in it extensively.
Finland provides free universal daycare from eight months until the start of formal education at age seven. In Sweden, parents have a universal entitlement to a guaranteed childcare space, and the fees for using it are capped. The system is so accessible that 85% of children under five years attend pre-school. Parents are entitled to 16 months’ parental leave, with the first year paid at 80% of their salary. They also receive a monthly child allowance that can be used to significantly reduce the cost of pre-school. In Denmark, the cost of childcare to parents is capped at 30% of the actual cost for nurseries. Norwegian parents are entitled to a flat-rate child benefit allowance. The result is that Scandinavian countries consistently rank among the best internationally on all the indicators of children’s wellbeing. Rates of child poverty are also among the lowest in the world.
The provision of free part-time childcare places for all three and four-year-olds in England was introduced in the early 2000s. Tony Blair’s Labour Government recognised that the modern welfare state needed to adapt and do more to support parents to raise young families and balance home life with work. The introduction of free childcare, alongside tax credits, was part of a package to give parents—particularly mothers—more choice over returning to work and having more children. I am pleased that the principle of investing in early years support has received cross-party backing. There have been some positive developments from Governments in recent years. Working parents of three to four-year-olds now receive 30 hours of free childcare, and those of disadvantaged two-year-olds can receive 15 hours on a means-tested basis.
However, although the headline picture is of a Government that continued Labour’s investment in early years, beneath the surface services have been squeezed and vital early intervention support has been cut. Across the board, spending on Sure Start and early years services in England has decreased by 39% since 2014-15, and almost £1 billion was slashed from Sure Start spending between 2010 and 2018. Free childcare, as my hon. Friend the Member for Cambridge (Daniel Zeichner) has pointed out, has been underfunded; additional funding has not been allocated to cover the cost of minimum wage rises for nursery staff. Take-up of the two-year-old offer among children who receive free school meals varies significantly across the country, with analysis showing that in major metropolitan areas they are among the key disadvantaged groups. Access to places and differences in the types of placement on offer varies a lot, too, and can limit take-up in some areas. That is why, in 2018, the Treasury Committee conducted an inquiry, which I was pleased to be part of, into childcare policy and its influence on our economy.
I was really pleased to see the Committee—for the first time chaired by a woman—investigate the economic impact of childcare as a key aspect of our national infrastructure, in recognition of the fact that our economy is driven not only by trains, roads and IT, but by parents’ ability to go to work knowing that their children are happy and well cared for in high-quality settings. We therefore looked at the overall package of Government initiatives in this area and their effectiveness. Our cross-party review found that the Treasury had made little effort to calculate the economic impact of the Government’s childcare interventions. However, the evidence available suggested that the biggest impact of the Government’s childcare schemes may be to make childcare more affordable to those who receive support, rather than bringing parents back into the workplace.
The Committee also found that parents may need to retrain in order to return to work, but the free childcare scheme did not support that. We recommended the removal of age restrictions on childcare support for parents undertaking training or education, which would have the greatest impact on productivity. We also identified design flaws in the current schemes. The requirement in the childcare element of universal credit for parents to pay childcare costs up front before seeking reimbursement is really unhelpful to the lowest-paid parents. Moreover, the fact that the entitlement to 30 hours of free childcare only begins the term after a child turns three means that if a parent is offered a job in January, their entitlement will not begin until the summer term; that can make a critical difference to some parents’ livelihoods and decision making. If the current system of support is the starting point, the flaws need to be addressed for free childcare schemes to support people into work effectively.
Another area that has proven to be a challenge is the way in which providers are funded to deliver the schemes, and any uplift in free childcare must be accompanied by the additional funding required to make it viable. Coram’s childcare survey found that around a third of local authorities thought that the 30-hour extended entitlement had caused prices to rise for those aged three to four outside the funded entitlements. Half thought that there had been a negative impact on the financial sustainability of childcare providers. Purnima Tanuku OBE, chief executive of the National Day Nurseries Association, has said:
“High quality early education positively impacts on a child’s development and therefore their lifelong education and opportunities—it cannot be done on the cheap...By short-changing childcare providers, the Government is selling families short on their promises. Parents are seeing fees for additional hours and for under threes go up as a result.”
The Treasury Committee report estimated that the average cost per hour of providing childcare is £4.68, but the average rate that the Government passed on to providers for 2017-18 was £4.34. Some providers are left with insufficient funding to cover their costs and therefore have to cut back on the service provided, including by restricting times, reducing child-to-staff ratios and charging for services such as food and activities. In this situation, providers in higher-income areas can mitigate those funding shortfalls much more easily than can providers in deprived areas, who have much more to gain from these schemes. That undermines the potential for early education to reach disadvantaged children, who are in the greatest danger of falling behind.
The Education Committee’s inquiry into tackling disadvantage in the early years made similar observations. It found that rather than closing the gap, the Government’s 30-hour childcare policy was entrenching inequality by leading to financial pressures on nurseries, providing more advantaged children with more quality childcare and putting stress on the available places for disadvantaged two-year-olds. The Government must pay providers a rate that reflects the full costs; otherwise, the full benefits for those who are eligible will not be realised, particularly in our most disadvantaged communities, and the overall cost of childcare will be pushed up further.
Of course, investing in childcare costs money. Any policy proposals, however effective they would be, are shaped by the available financial resources. The cost of funded childcare places for three and four-year-olds stood at £3.3 billion in 2018-19, which is equivalent to £3,650 per eligible child. Overall, the Government now spend about £6 billion on all funded childcare, despite the limitations and restrictions in the current model. If free childcare were to be expanded to all children from nine months old, as the petition requests, there would clearly be significant cost implications. Labour’s manifesto proposals to reform childcare provision and make high-quality early years education available to all, regardless of income, would amount to a £4.5 billion investment. We know the value of investing in early education to tackle entrenched disadvantage and gender inequality, and there would be longer-term cost savings and a productivity boost from targeting this investment at the early years. Although this would involve a significant cost, politics is the language of priorities, and measures that tackle poverty, support families and boost the economy should be at the top of the list.
There is clear cross-party support for improving childcare, as evidenced by commitments in the manifestos of the three main parties at the last election. Labour pledged the extension of paid maternity leave to 12 months; the introduction of 30 hours of free pre-school childcare for all two, three and four-year-olds; and the extension of provision for one-year-olds. The Conservatives pledged a £1 billion fund to help to create more high-quality affordable childcare, including before and after school and during school holidays; and the Liberal Democrat manifesto included a commitment to offer 35 hours of free high-quality childcare to every child aged two to four, and to children aged between nine and 24 months whose parents are in work.
It remains to be seen whether the current Government have the political will to deliver the support that is needed. Childcare is an issue that affects families right across our country, and there is a widespread belief that the Government could be doing much more to support people to work while also raising a family. I thank everyone who signed the petition that led to today’s debate, and I thank all members of the public who have been in touch to share their views. I hope that by the conclusion of the debate, we will have represented their views and experiences effectively, and that the Government will reflect on this discussion and have a serious think about what support they can provide, particularly given this week’s Budget, which is very timely.
I will finish by asking two questions that I hope the Minister will pledge to consider. First, will she commit to a review of the economic and social impact of various levels of free childcare, so that its effectiveness can be independently verified? Secondly, will she commit to exploring the expansion of free childcare as requested by the petitioners, including the benefits of such a scheme and how it might practically be delivered with sufficient childcare places and funding to make it viable? Today, the Government have the opportunity to give a clear expression of their commitment to supporting families, supporting social mobility and supporting women and families in the workplace by pledging to investigate this issue. On behalf of the petitioners, I urge the Minister to do so.
Thank you, Mr Davies. I crave your indulgence: this is the first time that I have contributed to one of these debates, so please forgive me if I do not follow the protocol exactly. I am sure you will be quick to draw to my attention any failings on my part, as the Minister was when she kindly pointed out that I had sat on the wrong side of the Chamber when I came in.
This is a timely opportunity to discuss these issues. As one of the many parents directly affected by them—I have two nursery-age children—when I heard the list of issues that the Government need to consider, it resonated with me. Having had those discussions about how best to allocate the cost of childcare, what impact the costs would have on two working people, and whose salary and career prospects would be most impacted, those issues feel very personal, and I know they are on the mind of my constituents in Ruislip, Northwood and Pinner. I will reflect back some of the solutions and points that arose in my time in local government, as I was responsible for this issue both in my local authority of Hillingdon and, to look at the bigger picture, at the Local Government Association, which represents local authorities.
I will start with the cost and its impacts. When the free childcare policy was first implemented, one of the debates that local authorities had with the Department was about the fact that, as is clear from providers’ feedback, the funding that comes through this mechanism is unlikely to be sufficient to ensure that childcare is always free to the user. I have spoken to a number of the Ministers who have been responsible for this area over the years, and they have been very candid about this. The fact that the commitment was in a Bill meant that they needed to speak of that childcare as free, but providers recognised that there was scope to charge for elements of childcare, such as nappies, food and trips—elements quite explicitly laid out in the legislation—which those of us paying the monthly bills would assume were part of the overall cost. That made it a slightly different conversation.
It is fantastic that the Government have invested in providing what is, in practice, a massive subsidy for childcare—about a 90% subsidy in most places. However, there will always be an ongoing debate when, although we talk about something being free, families have to pay an additional contribution to secure the hours—although for most parents, the funding covers the cost of the care that, in the Department’s analysis, it is intended to cover. My children’s nursery and many others, recognising the fact that the free element is term-time only, have spread that time out, so that in practice it becomes a subsidy over the course of the year. That is extremely welcome, given the overall cost of childcare, but clearly it leads to this dilemma whereby people expect it to be free but it is not, although it is heavily subsidised.
It is important to consider this in context. I was the local authority’s lead member on this during the previous Labour Government, when the tax-free voucher schemes were being rolled out and accessed through many employers, particularly large ones such as local authorities. The Government have maintained some of that momentum by seeking to make the benefits of those voucher schemes available to a much larger cohort of people through the tax-free childcare programme, which is at the very minimum a significant subsidy of the cost. The roll-out of those programmes has not been without teething troubles—I am one of many parents who experienced frustrations in accessing the tax-free childcare service and making sure that payments due under that scheme were made on time—but they have been of significant benefit to many mums and dads the length and breadth of the country, and reflect the Government’s considered policy position, which is to ensure tax-free childcare arrangements are focused on supporting people who are accessing work. I hope that gives the strategic picture on financing.
I turn to the local authority sufficiency duty, what it means in practice and how it affects the market. For a long time, local authorities have played a significant role in the provision of high-quality childcare at a local level, going back to the neighbourhood nurseries initiative in the late 1970s. Currently, that role is expressed via the sufficiency duty. It is important to be clear that the duty involves the planning rather than the provision, although many local authorities, including mine, both provide childcare under the policy and work with local providers to ensure that sufficient places are available.
A number of challenges arise from that, especially for children who have special educational needs and disabilities. As I know from personal experience, it is often only through the local authority that children with significant medical conditions can access nurseries, because it has sufficient resources in the background to provide the training, and the experienced staff who know how to deal with complex medical conditions in a way that a private profit-making provider may struggle to within the funding envelope.
The Department’s finance guidance clearly expresses the expectation that there be a minimum pass-through rate of funding of 95% for local authorities. In many cases, local authorities passport a significantly higher rate of funding; in Kent County Council, the rate is 99%. In a number of local authorities, 100% of the funding from the Department is expressed in the funding rate paid per hour to providers.
There is a challenge around that. It would be helpful for the Minister to consider in the round, although not necessarily straightaway, the role of schools forums in the distribution of funding. The early years block is one of the three main components of the ring-fenced dedicated schools grant. The local authority is not permitted to deduct resources from the grant, although schools forums have some discretion in how the 5% for overheads may be used. In most cases, because of the capacity and planning issue, it is used to ensure that free training in paediatric first aid and resuscitation is available to local nursery providers. It may also be used for up-front grants for nursery providers who are seeking to expand, and who need money ahead of time to recruit staff, so that they have enough people, under the child-staff ratios, to take extra children into that setting.
As any local authority will say, schools forums tend to be dominated by the voices of large secondary schools. For the most part, the early years sector is fragmented and made up of many small private providers, so it is hard for it to bring the leverage to the discussions that secondary headteachers can bring, who are supported by large unions and research organisations. In practice, therefore, many debates at schools forums focus on how to distribute the secondary school money, with only a passing glance at what happens in early years. The view among secondary heads is often that an early years underspend is good, because if that persists, it justifies the redistribution of money into secondary school budgets.
I spent some time with the Children’s Commissioner’s early years board in the last couple of weeks. The importance of making a great start and having a cohesive response, from a nursery or somewhere else, was heavily emphasised. I ask the Minister to understand the number of families with children in the gap between nine months and two years, and how many are directly affected before the Government funding kicks in, and to examine the opportunity to provide targeted support in that area to troubled families through family hubs or children’s groups.
My hon. Friend makes a good point, which I will touch on in my concluding remarks. Too often, that issue has been absent from schools forums’ deliberations about the distribution of funding. We hear repeatedly from primary and secondary heads that they would like more to be invested in the early years, but when it comes to the practical decision-making that would ensure that money got to the sharp end to deliver the benefits that she touched on, the drive is often absent.
It is important that the Department’s guidance and messages to schools forums appropriately consider the value of early years education. Money spent there has the biggest impact on a child’s life prospects, and the arguments about disadvantage have been well rehearsed, so I will not cover that. In the language of priorities, childcare can be expressed as an issue about enabling people to access work—as purely economic: “money in, productivity out”—or, which is more complex, as something through which we seek to measure the impacts that specific early interventions have on a child’s life.
Anecdotally and from research, we know that access to high-quality early years education is hugely beneficial over a child’s life, more so than money spent on young people of sixth-form age. It is harder to identify, however, which specific interventions yield the most value. From my experience as a trustee of the Early Intervention Foundation, which I have been at since its inception, although I have now stepped down, I know that a challenge of the Sure Start programme was that money was spent on many things that were popular and well-received by parents, but there was a real lack of evidence that they effectively tackled the issues in the communities for which the money was provided. As a result, there has been a growing interest in identifying through research, by using the gold standard of a randomised control trial, which interventions should be chosen by an individual centre or by a local authority when it is planning that provision in a local area. As we begin to look at the development of family hubs, to which my hon. Friend the Member for South Ribble (Katherine Fletcher) referred, we need to identify the things that not simply were popular and well regarded in the past, but will actually change outcomes for children in the medium to long term.
The work of the Early Intervention Foundation and the other What Works centres founded by the Department to look at each of the different life stages gives us the opportunity to make much better decisions than in the past about how the Government deploy those resources. As a Conservative, I am interested in the efficiency of public money, but having been there from the inception of Sure Start, through its implementation and the days when it was extremely well funded, back to now, when we are looking at winding back some of that activity, I would like there to be a focus across the activity of the Department and the Government on demonstrating what leads to an improvement in outcomes.
I hope that gives a flavour of what I learned in the world of local government. The Minister is listening attentively, and I know from discussions with the Department that it is an area of great interest for a variety of reasons, so I look forward to her response.
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell), the Chair of the Petitions Committee, on brilliantly articulating the problems that families face in deciding when to start a family; the costs involved, including the 5% increase in childcare costs in one year, which is concerning and incredibly shocking; and the impact on women and the gender pay gap. I look forward to the Committee’s future debates and its work under her brilliant chairmanship.
I welcome the comments of the hon. Member for Ruislip, Northwood and Pinner (David Simmonds) and agree that those additional costs are not often initially considered when discussing free childcare. I particularly note his concern about the adequate provision for children with special educational needs and disabilities, which is an issue up and down the country. As someone has who worked in children’s nurseries, I congratulate him on his two youngsters being at nursery. I have first-hand experience of how delightful, curious and playful they are at that age, and I am sure that he is kept busy when is he at home in his constituency.
I also thank the nearly 150,000 people who signed the petition and, by doing so, brought this important debate to Parliament. How best to provide for children in the first two years of life and to support their parents to work is an issue that we should debate far more often and take far more seriously, if we are to tackle inequality in our society. It is a shame that today’s debate unfortunately clashed with the urgent question on coronavirus; I am sure many more Members would be present if that was not the case.
Sir Michael Marmot described the early years of a child’s life as the time when inequalities have the greatest impact on their life chances, and when interventions to disrupt those inequalities make the biggest difference. All the evidence shows that the foundations for a child’s future prospects are laid in the critical 1,000 days between conception and the age of two. A report last year by the Health Committee argued that:
“Investing in the early years is the best investment any government can make”.
As my hon. Friend said, the poorest children in this country are already 11 months behind when they start school. As a former infant teacher, it was something I saw at first hand.
Over 4 million children live in poverty—an increase on 10 years ago. Sir Michael’s report on health inequalities, published this month, showed that we have gone backwards in key measures of early development as a result of policy choices in the past decade. It is not just young children who have been let down by this failure; entire families are struggling to cope with the lack of support available for the early years. According to the OECD, we have the second most expensive childcare system in the world. Extortionate childcare costs force parents who want to spend more time with their children to work long hours away from home, and they force mothers who want to work to have to stay at home.
In 2018, there were 870,000 mothers who wanted to work but could not for financial reasons. Research conducted last week by Pregnant Then Screwed, which is an inspiring organisation that campaigns for mothers who are unfairly treated, found that just over a third of those who return to work say their earnings are either completely used on childcare, or do not cover the cost of it. Previous research by Pregnant Then Screwed found that 62% of parents work fewer hours as a result of high childcare costs. Report after report has shown that by increasing female employment and ending the penalties on women for returning to work, we could boost GDP by billions of pounds. However, economic benefit is not the main reason we should do this; the overwhelming evidence should give us pause for thought about why it is not happening already.
On providing support for families in the first two years of a child’s life, we are clearly getting things badly wrong. It is our job to debate the solutions and put the situation right, and we already know some of the solutions. Improving education, health and family support services for all young children and their families, and bringing them under one roof, dramatically improves the outcomes for children and takes pressure off struggling parents. That is exactly what the last Labour Government did with Sure Start. By 2009, there were over 3,500 Sure Start children’s centres providing support to families, which transformed lives. According to the Institute for Fiscal Studies, it saved the NHS millions of pounds. Since then, we have lost over 1,000 children’s centres, and spending on such services has fallen by over 60%.
There is also the issue of maternity pay. At the moment, mothers are allowed to take only a year off work after having a child, and they only receive statutory pay for the first nine months. I was proud to stand at the last general election on a manifesto that promised to extend maternity pay for a full year and to double paternity leave. From many of the comments shared on social media ahead of the debate, I know that the low level of maternity pay can cause huge problems. Employers should see the statutory maternity pay as a starting point rather than the maximum amount, and we need to consider encouraging employers to view it in that way.
Flexible working is also crucial for supporting families with young children. There are excellent companies and organisations such as Transport for London, which is leading the way on flexible working, but the share of people working flexibly increased by just 4% from 2005 to 2017, and we still have a long way to go. A right to flexible working in large companies would give thousands of mothers who want to work the opportunity to do so, and we should legislate for that as soon as possible.
However, early years funding is the key to the challenges we face, for two reasons. First, the amount of money that childcare providers receive from the Government has a direct impact on how much childcare they can offer, and at what cost. The annual survey by Coram Family and Childcare, published earlier this month, showed that average childcare costs for children under two surged twice as fast as inflation this year. It also found a postcode lottery in the quality and availability of childcare, with just over half of local authorities having enough places.
We know that childcare costs are particularly high in London and the south-east, but they are also very high in the place where I live—up in the north, in Hull. We can see that from the number of people who signed the petition right across the UK. In fact, nearly 500 people in my constituency signed it. The crisis of childcare costs affects the whole country, which is why it is important to give parents access to affordable, subsidised childcare rates outside their free childcare entitlement, and to end the needless complexities and fragmentation of the current system by funding providers directly.
The second reason why early years funding is so important is its impact on the workforce. The Marmot review argued that a highly educated, well-paid childcare workforce is essential in order to tackle health education inequality. Under this Government, however, early years staff suffered a real-terms pay cut of nearly 5% between 2013 and 2018, and nearly half of childcare workers currently claim universal credit.
We know that low pay is driving childcare workers out of the sector, and research published last week by Ceeda showed that staff shortages in nurseries are forcing them to offer fewer childcare places, depriving children of education and making it harder for parents to work. That particularly affects younger children, who require more restrictive adult-to-child ratios in childcare settings, which is why we are committed to tackling the early years recruitment crisis, with national pay scales, better career progression and a minimum wage of at least £10 an hour. If we accept that caring for young children is important, we should accept that people need to be paid properly to do the job. The UK spends just 0.1% of GDP on early childhood education and care, compared with the OECD average of 0.7%. We have all seen the consequences of that appalling choice in our constituencies, and it is time the Government started to invest in the early years.
I turn now to the specific policy suggested by the petition: giving 15 hours of free childcare to working parents with children aged between nine months and two years. Labour’s manifesto pledge was to extend childcare provision for one-year-olds, in addition to offering 30 free hours of childcare for two, three and four-year-olds. We should continue to debate how we can better support parents of one-year-olds. As neither the UK, Scottish nor Welsh Governments are extending free childcare entitlement to under-twos, the debate should be relevant not only to English MPs; it should be about debating as a United Kingdom how we can support such children.
We need to look at childcare provision holistically. The Conservatives have shown that better outcomes for children and parents cannot be achieved just by expanding free childcare entitlements, especially if they are not funded properly. Almost all childcare providers in England are experiencing financial difficulties as a result of the Conservatives providing 30 free hours at a time when early years has been so badly underfunded by the Government. In fact, the hon. Member for Ruislip, Northwood and Pinner highlighted some of the additional costs that parents have to meet from their own pockets.
Many childcare providers choose not to offer the full free entitlements because of the financial hit in doing so. We on the Labour Front Bench support the expansion of free childcare entitlements, but it has to go hand in hand with sufficient funding. The all-party parliamentary group for childcare and early education found a £63 million shortfall in the funding given to childcare providers. As a result of the shortfall, many have closed and many more face closure. Research has shown that providers in deprived areas are twice as likely to close as those in affluent areas. Indeed, a report from the Education Committee—I was a member when we wrote it—found that the Government’s approach to free childcare was
“entrenching inequality rather than closing the gap”.
That is from a cross-party Committee with a Conservative Chair. This is not about party politics, but about supporting young children. Whatever approach we take, we must avoid such outcomes at all costs.
We must address important questions about childcare provision for under-twos, and I want to ask the Minister a few questions. First, ahead of the Budget on Wednesday, what representations has she made to the Chancellor about increasing early years funding? Secondly, what steps is she taking to tackle the unaffordability of childcare, particularly for parents with children under two, and to address the variation in availability and quality? Thirdly, how does the Minister plan to tackle the recruitment crisis in the early years workforce and improve staff qualifications so that we can provide more and better quality childcare?
We must all do more to give our children the best start in life and to support mothers who want to go back to work. I hope that we can all work together to find solutions to the important question raised by the petition.
It is a pleasure to serve under your chairmanship, Mr Davies. I thank the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) for opening this important debate, and I congratulate her on her new role as Chair of the Petitions Committee. I also congratulate Harley Cuthbert on starting the petition, which has sparked so much interest. In my remarks, I will address the issues that hon. Members have raised.
The debate is most timely and allows me the opportunity to set out clearly the Government’s position on childcare and our commitment to helping working families with accessible, affordable, high-quality childcare. As the new Under-Secretary of State with responsibility for children and families, I thank all who work in the early years sector and who dedicate their time, effort and skills to providing high-quality early years education and childcare. They all do an excellent job in helping our youngest children to learn and grow. That is essential to those children’s development and to ensuring that they are ready for school.
A child’s early years are a crucial time for their development. We are already doing more than any previous Government to ensure that as many families as possible can access high-quality and affordable childcare. The good news is that that work has made a difference not only for families but, crucially, for children. The latest early years foundation stage profile results show that the proportion of all children achieving a good level of development is improving year on year, with 72%—nearly three out of every four children—achieving a good level of development in 2019, compared with 52%, or one in two, in 2013. There has been some discussion of the attainment gap. Since 2013, the attainment gap between children who are in receipt of free school meals and their peers has narrowed, in terms of outcomes at the age of five. The difference in their attainment of a good level of development was 17.8 percentage points in 2019, compared with 19 in 2013.
I am aware of that report, but it is extremely important that we give credit to the early years workforce for ensuring that the attainment gap at the start of the school years has narrowed, because when there is a gap, there is a risk that it will widen during each individual’s school years.
The early years workforce plays a key role in the delivery of high-quality early education and childcare. It is a testament to that workforce that 96% of childcare settings—or 19 out of 20—are now rated “good” or “outstanding” by Ofsted; that represents an increase from 74% in 2012. Our investment in the early years entitlements not only allows us to support high-quality early education, helping children to thrive in the crucial early years, but helps us to make childcare more affordable, supporting more families to work. We are continuing to increase our investment in childcare to support parents to work.
The Government plan to spend more than £3.6 billion on the early years entitlements in the coming year. That includes the universal 15 hours of childcare for all three and four-year-olds, which was introduced in the early 2000s; the entitlement to 15 hours of free childcare a week for disadvantaged two-year-olds, which was rolled out in 2013 under the Conservative-led Government; and the additional 15 hours for working parents of three and four-year-olds, which was introduced in 2017—again, under a Conservative Government. Those entitlements save parents up to £5,000 per year in total if they use the full 30 hours of free childcare available. The Government’s manifesto at the last general election committed to investing a further £1 billion to create more high-quality wraparound and holiday childcare places. I have noted the challenges of holiday periods that hon. Members have mentioned.
All three and four-year-olds, and the most disadvantaged two-year-olds, benefit from 15 hours a week of free early education, regardless of whether their parents are in work. The entitlement for two-year-olds is in place to help to give the most disadvantaged children a great start in life by closing the attainment gap between them and their better-off peers.
The Department for Education’s study of early education and development, or SEED, and the study of effective primary, pre-school and secondary education, or EPPSE, are clear that good-quality early education at the age of two has a variety of positive benefits for children. I believe in evidence-based decisions, however, and evidence from the EPPSE also indicates that children who start pre-school under the age of two do not show more positive outcomes than those who started between the ages of 24 and 36 months, which is why we targeted the policy at the most disadvantaged two-year-olds. It is extremely encouraging to see that more than 850,000 two-year-olds have benefited from an early education place since the scheme began in 2013.
Achieving a good level of development is important. It is excellent news that three out of four children are reaching that level, because children who do not are more likely to have an education, health and care plan or to become children in need. That is why we have announced a range of initiatives to support disadvantaged children, including a significant investment in professional development for early years practitioners and the development of the evidence base for what works in the early years. I hope that that addresses the point raised by the shadow Minister, the hon. Member for Kingston upon Hull West and Hessle (Emma Hardy), about the importance of supporting professional development in the early years sector. A range of initiatives are under way.
Capital funding is also important. We have allocated £24 million to build more school-based nursery places in deprived areas. That supports our commitment to social mobility, ensuring that we provide more quality places for those who will most benefit.
Early language has a major impact on all aspects of young children’s non-physical development, contributing to their ability to manage emotions, communicate feelings, establish and maintain relationships, think symbolically, and learn to read and write. The evidence is clear that children who start school behind stay behind. Children with poor vocabulary skills at the age of five are twice as likely to be unemployed when they reach adulthood, and three times as likely to have mental health problems.
We want to enable more parents to support their child’s early communication, language and literacy development at home. The Department for Education has launched the hungry little minds campaign, which I hope all hon. Members present will help me to champion. That three-year campaign aims to encourage parents to chat, play and read with their children to help to set them up for school and beyond.
As part of that campaign, the Department for Education recently awarded a quality mark to eight early years apps with a focus on literacy, language and communication. That comes after new data revealed that three quarters of children aged five and under had used smartphones or tablet apps at least once in the past six months to learn. A panel of experts recommended that the apps should be accredited to help parents to make informed decisions about the use of technology in creating a positive learning environment at home.
As well as improving children’s outcomes, the availability of high-quality childcare is a key factor in enabling parents to work, a subject that has been raised a number of times today. The 2018 Office for National Statistics report on families and the labour market in England shows that many parents return to work and need childcare when their child turns three.
The primary focus of the 30-hour childcare entitlement is to support all working families with the cost of childcare, and to support parents to go back into work or to increase their working hours, if they so wish. As I said, 600,000 three and four-year-olds have benefited from a 30-hour place in the first two years of delivery, helping parents to keep more of their salary through the doubling of free childcare. According to the Department’s independent year-one evaluation, the 30-hour policy is making a real difference to families’ lives, with many parents reporting that they now have more money to spend. In our most recent parent study, which was published last December, the vast majority of parents—80%—said that their family’s quality of life was better since using the 30 hours. We are clear that the 30-hour offer aims to support working families with the cost of childcare and to support parents to go back into work or to work more hours, should they so wish.
A point was made about gender pay equality and support, especially for mothers returning to work. The Government’s parental leave, flexible working and childcare policies all work together, and they have supported a closing of the gender pay gap. Back in 1997—that was before I had my first child—the gender pay gap was 27.5%. The last number we have is for 2018, when it was 17.9%. Over the past two decades, there has been a really significant improvement in employment for mothers. The maternal employment rate has gone up from 62% in 1996% to 74% in 2018. There is more to do, of course, but I ask Members to please recognise the huge improvements that have been made with the gender pay gap and maternal employment.
Early years entitlement supports families with two, three and four-year-olds to work more hours and supports their children’s development. Other childcare offers across Government support families with younger children. It is important to enable parents to spend more time with their children in the very early months and to allow families more flexibility to find the right balance for them. That is why the Conservative Government introduced shared parental leave in 2015. It has given parents the chance to share up to 50 weeks of leave and up to 37 weeks of parental pay in the first year following the child’s birth or adoption.
My hon. Friend the Member for South Ribble (Katherine Fletcher) raised the issue of family hubs. I am positive about family hubs and, in fact, visited the hub in my constituency last Friday. I was deeply impressed with the support that it gave to families across a wide age range, and for the nought to three-year-olds especially. I would like to see more family hubs opening across the country.
My hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) made a large number of really important points, as ever. He brings great experience to this House. First, he spoke about special educational needs and disabilities. He knows that we are in the midst of a review of the entire SEND system, but our disability access fund is worth £615 per eligible child per year. All local authorities are required to have special educational needs inclusion funds for all three and four-year-olds with SEND who are taking up the early years entitlement. A two-year-old in receipt of disability living allowance or an EHCP—education, health and care plan—would also be eligible for the universal 15-hour entitlement.
The Minister covered a number of the key issues in her speech. Does she agree not only about the benefit from the early years pupil premium, which helps to boost the funding rate, but that it is important for the Department for Education to put pressure on the Department of Health and Social Care? One of the consistent issues for children with special educational needs and disabilities is that local authorities have for many years been doing statements for children with special educational needs and are used to that process, but local NHS colleagues who are required to contribute towards the clinical and medical aspects of a child’s early years experience do not have any history of doing so at the local level. In fact, I am sure that many Members find, when we investigate SEND casework in our constituencies, that the blockage behind getting a child what is needed sits with the local NHS provider, rather than with the local authority.
My hon. Friend absolutely hits the nail on the head. I have been in my role for two weeks and one day, and the issue of education, health and care plans has been raised a number of times. SEND review is right at the top of my list of priorities. The plan is meant to cover education, health and care—that was a huge step forward in the 2014 reforms—and it needs to ensure that they are all delivered. I have a meeting scheduled with my counterpart, the Health Minister, but the Health team seems rather busy at the moment. However, it will happen, and we will look at those plans as part of the review.
My hon. Friend also raised the important issues of the school forums, which I will look into, and of tax-free childcare. I was quite disappointed that neither of the two Opposition speakers mentioned tax-free childcare, because it is an important introduction that helps up to 1.3 million families whom we estimate could be benefiting.
Let me go through the availability for the record. Tax-free childcare is available for all parents who work more than 16 hours at the national minimum wage or above, and who earn up to £100,000. For every £8 that parents pay into an online account, the Government will pay £2, up to the maximum contribution of £2,000 per year for children aged under 12. Parents with disabled children will receive extra support worth up to £4,000 per child each year until their child is 17. More and more families are benefiting annually from tax-free childcare. I asked to be updated on the latest numbers. The numbers benefiting have more than doubled since this time last year: 205,000 families used tax-free childcare for 243,000 children in December 2019, compared with 91,000 families for 109,000 children in December 2018. I accept the points made about the bureaucracy sometimes, but the scheme is more targeted and fairer.
To correct the record, I did not specifically reference the tax-free childcare scheme; I referenced the Government’s interventions, which very much included the tax-free childcare scheme. The Treasury Committee’s conclusions were that the scheme is not as targeted a use of Government resources as it could be; it results in those already in work benefiting much more than those looking to re-enter the workplace, and that is the subject of the petition.
I am sure that the hon. Lady will welcome the news that the number of people using the tax-free childcare scheme has more than doubled. The scheme benefits the parents of very young children, which is the entire point of the debate, and it is more targeted and fairer. Unlike vouchers, which were mentioned, it is available to everyone who meets the eligibility criteria, including those earning the minimum wage and the self-employed. Often, vouchers were available only to those employed by larger organisations. This scheme is available per child, whereas childcare vouchers were available per parent. Therefore, parents with younger children, disabled children or multiple children, whom the hon. Lady mentioned and who are likely to have higher childcare costs, will be better off under TFC.
Clearly, any support for childcare is welcome, but the Government’s so-called tax-free childcare scheme benefits most those who are wealthier and earn more. The petition focuses on those on lower incomes who consider themselves to be caught in the middle: people who do not earn enough to get the maximum benefit from that scheme, but who are not eligible for the free element of childcare. It would be helpful if the Government recognised that squeezed middle.
Let me get on to those who are sometimes on lower incomes. As I hope the hon. Lady is aware, eligible families can now get help with 85% of their childcare costs through universal credit, compared with 70% under the previous tax credit system. That is the highest ever level of support. Furthermore, we committed in our manifesto to creating a £1 billion fund to help with high-quality, affordable, wraparound childcare for the holiday, before-school and after-school periods. We have already started working on the details of that, which will be rolled out from 2021.
I understand that some working families who contribute hugely to our society face additional pressures. I am thinking in particular of people such as nursing students, who work shifts, and armed services families, many of whom move around regularly. That is why the Department of Health and Social Care has already announced that, from September this year, it will increase the parental support allowance for students of nursing, midwifery and allied health professions from £1,000 to £2,000 per year. That is on top of the additional £5,000 that all students on those courses will get access to, whether or not they have children.
The Ministry of Defence is setting up a childcare support team, the aim of which will be to work at fulfilling the manifesto commitment and ensuring free wraparound childcare for four to 11-year-old eligible children from armed services families. That team will also look at other areas of potential disadvantage that service families face when trying to access appropriate childcare, whatever the age of their children.
I am extremely grateful to the hon. Member for Newcastle upon Tyne North for raising this important issue. I listened carefully to the debate and noted all the contributions. I am honoured to be responsible for this extremely important part of the Government’s agenda to support parents and children. I am proud of the significant range of childcare support that the Government offer families, and of the improvements that have been made over the past decade. As Members will know, a spending review is due this year. I cannot make any commitments ahead of that about the shape or amount of the Government’s childcare funding, but I will ensure that the points raised today feed into the Government’s evidence base for that spending review.
Thank you, Mr Davies. This has been a wide-ranging debate. We had the opportunity to put on the record a range of concerns and to consider the range of measures that successive Governments have put in place to try to tackle this issue. The one point I must make is that, clearly, this is not job done. The petition would not have been signed by 146,000 people if families out there felt that their childcare requirements were already being met and they were able to pay for it.
I want to correct something I said in my intervention on the Minister. The report I mentioned was by the Education Policy Institute, which found that the attainment gap had widened by 0.6%. I said that that gap would not be closed until 2050, but the report shows that it will take well over 100 years for the disadvantage gap in maths and English to close. I just wanted to clarify that.
I thank my hon. Friend for that clarification, which very much goes to my point that this is nowhere near job done.
I congratulate the Minister on her appointment to what I agree is a vital part of Government. I hope it will be central to the Government’s offer, so that, by the end of this Parliament—I hope we can assume that that will be in 2024—families are better placed to pursue their careers and to ensure that their children are well cared for, happy and educated, and arrive at school on a more equal footing.
I congratulate the hon. Member for Ruislip, Northwood and Pinner (David Simmonds) on his first speech in Westminster Hall. My first speech in Westminster Hall was back in 2010 in a debate on volcanic ash. I do not wish to diminish the importance of that crisis at the time—Newcastle airport is in my constituency—but I must say that his contribution was vital and will be of long-standing importance to the work of this Parliament.
Clearly, this is a complex issue to which there is no one solution. There are important elements for families, children, social mobility, wider society, our economy, our productivity and our gender equality, and for the progress we must make as a country on all those fronts. I welcome any support for childcare that the Government can offer, but they must recognise that the support available at the moment is not sufficient. In too many cases, it does not keep pace with inflation. People are working harder and feel ever more squeezed and compromised when it comes to meeting the costs of childcare and making choices for their families and their careers.
I thank the petitioners—Harley, who started the petition, and the 146,000 people who signed it—for bringing this issue to Parliament’s attention and ensuring that the Government are tasked with considering not only what has been done to date but what more they can do, in particular to support families who feel a bit squeezed between the support available for very low-income families and the support that many more affluent families are able to take advantage of.
Question put and agreed to.
That this House has considered e-petition 255237 relating to the provision of free childcare.