Inquiry into the financial sustainability of the PVI early years sector

[FSFRebecca]

The meeting held in London on Wednesday 14^th November reconfirmed the All-Party Parliamentary Group on Child Care and Early Education for another year. Chair, Tulip Siddiq, was joined by MPs committed to representing the early years sector. With the MPs in place the inquiry into the financial sustainability of the sector was launched. The parliamentarians in attendance quizzed witnesses regarding the financial sustainability of the sector.

As you will have read in the sector press* and in the MPs' own press releases there was wide representation from the sector including parents, nursery owners and managers, membership and training organisations. It was unsurprising that the views held were unanimous – reducing childcare and education costs for parents is a positive move by Government. However, due to insufficient funding providers cannot implement the policy and remain financially viable in the long term.

The calculations upon which the funding is based are outdated and inaccurate. Providers face rising costs due to large increases in National Minimum Wage, pensions, business rates and training contributions. Additionally, many nurseries have had to employ administrators purely to manage the 30 hours scheme. The administration is further complicated by varying requirements from different local authorities.

The experience for parents has been patchy. Although relatively easy to sign up online, the ongoing code renewals has been problematic. Both parents and providers report that the 30 hours scheme has tested their relationship. Providers have had to make charges to cover their shortfall and parents have resented that the scheme is not free. Parents feel that the description ’30 hours free’ is misleading – the Government do not explain to parents that the funding is only for 38 weeks a year. There was irritation that if you work all year round, the funding covers only 22 hours a week.

Given that there was shared understanding and agreement between the witnesses the questions from MPs moved to ask what could be done to improve the situation.

Thoughts such as ‘remove the word ‘free’ from the offer and call it ‘funded’’, ‘remove the business rates liability’ or ‘remove the VAT liability’ were offered as possible ways of alleviating the financial stresses for the sector.

Lord Russell of Liverpool suggested that the sector needed more evidence to convince MPs that there was an issue with the funding as at the moment the Government were adamant that the scheme was working – because parents are happy.

The second panel of witnesses: National Day Nurseries Association (NDNA), Pre-school Learning Alliance (PLA), CEEDA and CACHE shared a frustration that a great deal of evidence has already been submitted and yet more was considered necessary. It was clear from the MPs that there potentially was a ‘certain’ piece of evidence required; a piece that would be easily understandable and which would provide the catalyst for change. Research evidence from PLA and NDNA (England Annual survey report (1).pdf)  was felt to be too subjective and therefore too easily rejected with ‘Well, you would say that wouldn’t you?’ CEEDA research on the other hand was recognised as being independent and objective. It was more research of this nature that the sector needed to provide.

Julie Hyde, Director of Cache, shared some shocking figures with the MPs. Ofqual had reported a significant reduction in candidates achieving a full and relevant qualification at Level 3 and a similarly falling number of candidates achieving at Level 2. This downward trajectory for qualifications will impact significantly on settings.

This made me think that those of us that are qualified to a high level will be looking to retire in the next 10 – 15 years, if there are not the numbers of staff achieving qualifications coming up behind them – what will happen to settings? Who will be sufficiently qualified and experienced to run them? We know that the Government tell us that 93% of providers are Good or Outstanding yet these excellent results are the outcome of previous investment in early years, such as the Graduate Leader fund. Now that investment has ceased, these strong inspection outcomes will decrease (Rebecca FSF)

Jo Verrill, Managing Director, Ceeda, put it succinctly “the 30 hours has taken away the capacity for the sector to support and invest in itself”.

The concern ‘that the Minister only counts ‘that parents are paying less’ as a measure of success’ was voiced frequently during the discussions.

There was considerable debate about the possible ways forward with a strong feeling that although the ideas mooted such as ‘remove the word ‘free’ from the offer and call it ‘funded’’, ‘remove the business rates liability’ or ‘remove the VAT liability’ would help in the short term, they were not long-term solutions. The long-term solution is to fund the ‘free’ offer properly.

It is not fair that providers are ‘managing and muddling’ (Ruth George MP). It is well evidenced that early interventions and high-quality early years provision improves outcomes for children. If nurseries are struggling it becomes a downward spiral which will impact on the 0-5s and will affect them later in life. There needs to be respect for the sector and what they are doing for the benefit of future generations.

Witnesses were asked to identify their ‘wish’ for the sector. Among the responses were the following:

• Appoint an independent panel to review sector costs annually, and adjust funding rates accordingly
• Treat providers with respect and trust them.
• Allow the funding money to be used to suit the parents – if they want to go to a more expensive setting, let them pay a ‘top up’
• Provide clarity regarding the policy goals: are we trying to improve outcome for children (a DfE goal) by getting more children access to high quality early years provisions. Or, are we trying to get two parents back to work (a DWP goal)?

It was clear at the end of the discussion that the sector representatives had articulated their issues with clarity and that the MPs understood their very real concerns for the future sustainability of the PVI sector. The second session of the inquiry (12^th December) will hear further from sector experts and treasury select committee members.

 *Press reports about the inquiry

Tulip Siddiq MP

Daynurseries.co.uk

NDNA