Funded Childcare

Oral Answers to Questions — Education – in the House of Commons at 12:00 am on 10th September 2018.

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Photo of Liz Twist Liz Twist Labour, Blaydon 12:00 am, 10th September 2018

What assessment he has made of the effect of the Government’s policy on funded childcare on the financial viability of childcare settings.

Photo of Nadhim Zahawi Nadhim Zahawi The Parliamentary Under-Secretary of State for Education

By 2019-20 we will be spending £1 billion extra annually to deliver 30 hours a week of free childcare and pay our higher funding rates. Those rates were based on our review of childcare costs, described as “thorough and wide-ranging” by the National Audit Office. We have commissioned further new research to understand providers’ current costs.

Photo of Liz Twist Liz Twist Labour, Blaydon

Last Friday I visited Bright Sparks nursery in my constituency, which is rated “outstanding” and is long-established. The staff told me how difficult they are finding it to make ends meet under the new funding regime, and that is borne out by a report by the National Day Nurseries Association. Can the Minister tell us how nurseries are supposed to remain open when facing that shortfall? I am glad to hear that he is looking again at the costs, but I hope it will be a thorough look.

Photo of Nadhim Zahawi Nadhim Zahawi The Parliamentary Under-Secretary of State for Education

We continue to monitor the costs and, as I said earlier, we have commissioned further research. The evidence that we currently have shows that the majority of providers are willing and able to deliver the extended entitlement. Some 340,000 children have benefited from 30-hour funding places in the scheme’s first year, so it is certainly a success story, but the hon. Lady is right that we have to monitor what pressures there are.

Photo of Robert Goodwill Robert Goodwill Conservative, Scarborough and Whitby

On 31 August the Daily Mail ran a front-page story stating that a third of nurseries could shut because of school funding levels. Given that there are actually now more nurseries in other settings providing free childcare, does the Minister think it should apologise and issue a correction for gullibly following the lines being peddled by the Opposition Front Benchers and for misleading so many parents in such a worrying way?

Photo of Nadhim Zahawi Nadhim Zahawi The Parliamentary Under-Secretary of State for Education

I am grateful to my predecessor for that question. I think I will leave it to the Daily Mail to decide what it does. Suffice it to say that the number of non-domestic providers has remained stable.

Photo of Lucy Powell Lucy Powell Labour/Co-operative, Manchester Central

I am sure the Minister can guess what I am going to ask about.

Among early years provision, the jewel in the crown for social mobility is our maintained nursery schools. The Minister will know from the conversations that we had before the summer that the supplementary funding that they receive from the Government is due to run out before the comprehensive spending review, so does he have an update for the House on what he and the Treasury are doing to ensure that our maintained nursery schools have a secure future beyond next year?

Photo of Nadhim Zahawi Nadhim Zahawi The Parliamentary Under-Secretary of State for Education

I am grateful to the hon. Lady for her question. Maintained nurseries offer a valuable service to communities such as hers and others around the country, and we are conscious of the value that they provide. Both I and the Secretary of State have visited a number of them. Decisions about the future funding of maintained provision will be taken at the spending review, but I repeat that it would be premature for local authorities to make decisions about the future of their maintained nurseries before seeing the spending review outcomes.

Photo of Tracy Brabin Tracy Brabin Shadow Minister (Education)

The National Day Nurseries Association survey last week exposed the scale of closures caused by underfunding the 30-hour entitlement—a rise of nearly half over a year. Bright Beginnings in Stockport said that

“the reality is we can’t provide Outstanding nursery care on the funding provided.”

The Ark nursery in West Sussex said that it was

“closing because of a decade of underfunding.”

Windymiller, in my own constituency, on the estate where I grew up, closed its doors a few months ago due to funding pressures. Those are not outliers. Four in 10 providers fear that they will have to close in the coming year. These are viable businesses that just cannot square the circle of frozen funding and rising costs. If the Minister will not listen to us, will he at least listen to them?

Photo of Nadhim Zahawi Nadhim Zahawi The Parliamentary Under-Secretary of State for Education

Let me attempt to address that point specifically. National average hourly funding rates for local authorities for three and four-year-old entitlements increased from £4.56 an hour to around £5 an hour in April 2017. Our rates compare very favourably with the published research on the costs of childcare by Frontier Economics, which shows that the mean hourly cost of delivering a place is £3.72 an hour. I know that this is technical, but it is worth listening to, because the hon. Lady keeps going back to points that she clearly has not followed the details of. The research also showed that the average cost of two-year-olds’ places was £4.30 an hour, and our average funding rate is £5.92 an hour. All local authorities saw a 7% increase in the two-year-old rate in April 2017. We continue to monitor this, but those are the facts, and I hope that she will look and them and think about what she is saying about them publicly.