View from the House: Childcare system faces ‘toxic’ pressures

PUBLISHED: 17:28 21 November 2018 | UPDATED: 17:28 21 November 2018


I don’t use the word “crisis” lightly, but that is exactly what our early education sector is facing.

A toxic combination of financial pressures has resulted in childcare becoming unaffordable for providers and parents alike, forcing the closure of nurseries across the country. As the chair of the All Party Parliamentary Group (APPG) on Early Education, I am determined to campaign for the investment that would put the sector on a sustainable footing.

Hikes to business rates, increased costs for employees, and inadequate funding for the government’s 30-hour childcare programme have all pushed many nurseries to the brink. The think tank Ceeda has illustrated the scale of the challenge, calculating that private and voluntary day nurseries and pre-schools face a funding deficit of £616million in 2018.

It is no surprise that so many providers can’t see a future beyond the next 12 months.

This sense of desperation has prompted my APPG to launch an inquiry into the financial sustainability of the early education sector. With our first session held in parliament last week, witnesses included the Pre-School Learning Alliance, the National Day Nurseries Association, Ceeda, and individual parents. They all reported on their experiences of the current system and it was striking to hear their unanimity of concern.

The parents present at the inquiry spoke of how their nurseries had started charging large sums for food – even on weeks when their children were on holiday. Far from limited anecdotal evidence, these testimonies tell the story of a nationwide problem. Only last year, a TUC report revealed that in England the cost of childcare for young children had risen over four times faster than wages since 2008. For many young parents, these costs mean that work simply doesn’t pay.

Government initiatives such as “tax-free childcare” have done little to ease the burden. This is not just because the system is complicated and inaccessible, but more fundamentally because the hikes in childcare costs have cancelled out the support on offer.

However, as the APPG inquiry also heard, providers are forced to choose between adding additional fees and facing closure altogether. To look at one particular source of pressure – the average cost of looking after a three- or four-year-old is around £5.08 an hour for each nursery, but on average childcare settings receive just £4.34 from the government to do this, with many receiving even less. Clearly, this is unsustainable.

The government must change course if the sector’s outlook is to improve. At the recent Autumn Budget, the chancellor failed to reallocate significant underspend on tax-free childcare (because of poor take-up) thereby causing the sector to miss out on £600m of promised investment that could have eased the burden on providers. This was compounded by his refusal to exempt childcare settings from paying premium business rates, despite the fact that thousands of settings have talked of it as a priority in staving off the imminent risk of closure.

On December 12, my APPG’s inquiry will hold its second evidence session, due to be attended by the chairman of the Treasury Select Committee, Nicky Morgan. This will be an opportunity to further discuss the key means by which the government can address the funding crisis. If ministers fail to acknowledge the overwhelming degree of consensus that exists amongst those who are passionate about the state of our early years education, I fear things will only get worse for those in need of childcare and those who are trying to provide it.

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