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Clause 190

Apprenticeships, Skills, Children and Learning Bill – in a Public Bill Committee at 10:30 pm on 26th March 2009.

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Free of charge early years provision: budgetary framework: England

Photo of Maria Miller Maria Miller Shadow Minister (Children, Young People and Families)

I beg to move amendment 526, in clause 190, page 109, line 25, leave out subsection (1) and insert—

‘( ) A local education authority in England must allocate funding for free of charge early years provision for a funding period outside a maintained school out of the authority’s individual schools budget for the period.’.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

With this it will be convenient to discuss amendment 525, in clause 190, page 110, line 18, at end insert—

‘( ) The Code of Practice on the provision of free nursery education places for three- and four-year olds shall cease to apply in a local authority area until that local authority has introduced a single funding formula for free of charge early years provision.’.

Photo of Maria Miller Maria Miller Shadow Minister (Children, Young People and Families)

Many organisations have been battling for consistency and funding throughout the maintained and PVI sectors in child care for many years, and the Bill recognises that there has not been a level playing field in funding since the early years entitlement was introduced in 1998. Amendment 526 is important and  would ensure that all local authorities allocate funding for that entitlement through the individual schools budget, thus helping to ensure a fair and sustainable approach to that important funding stream. The Bill could be open to interpretation, and perhaps the Minister will help us with that. If there is to be a consistent approach to funding—I am sure that she wants that as much as I do—amendment 526, which is a probing amendment, might provide the necessary clarity. I hope that the Minister will respond positively to the intention of the amendment.

An important change in early years funding is tucked away in the Bill. I heard what the Minister said about some sort of thread holding that together, but I am finding it difficult to see that thread. With so little time for debate in Committee, perhaps those who have been battling with the issue for some time could be forgiven for thinking that the Government want to make the changes as inconspicuous as possible.

Ensuring that maintained nurseries are paid in the same way as the PVI sector, based on participation, is a long-overdue change, and the need for clause 190 raises concern about the Government’s previous analysis of the financial pressures on PVI providers over the past decade. Back in 2005, my right hon. Friend the Member for Maidenhead (Mrs. May) highlighted this issue for the Minister who was then responsible for the matter, and is still responsible for it, the Minister for Children, Young People and Families, the right hon. Member for Stretford and Urmston (Beverley Hughes), and received the response that the facts do not stack up and that her analysis was incorrect. I assert that the facts do stack up and that some nursery funding has shown signs of inequity for years. The Government’s own analysis underlines that point, because the DCSF’s benchmarking data on early years expenditure, which was collected rather late in the day and included in the Library’s excellent briefing note for this Bill, clearly shows a stark funding difference between maintained nurseries and the PVI sector. Indeed, funding for a maintained nursery place is £6.90 an hour versus £3.72 an hour in the PVI sector. In 87 per cent. of local authorities, the funding level for the PVI sector was between £3 and £4. I fail to see how the Government can assert that there was a level playing field.

It should come as little surprise to the Committee that as a result of the problems with finance the number of child care places that have closed has increased by 48 per cent. since 2003. Indeed, in 2007-08, for the first time ever, more child care places closed than opened. More than 190,000 places closed, which is an indictment of the financial situation in the sector.

Amendment 526 would help to ensure a level playing field in future, and would clear some of the Bill’s ambiguity on whether local authorities have a choice to pay PVI providers from the independent schools budget. The amendment would oblige local authorities to do so, and if they are obliged to have a single funding formula, they should be obliged to pay the nursery grant from the ISB. Without doing so, local authorities would not be able to meet their requirement to have a single funding formula, so I hope that the Minister will respond positively to the amendment.

Amendment 525 offers a practical way of ensuring that PVI nurseries are given the help that they need now. I have outlined the inequity that has been in the system, so the Committee should not be surprised that in a  Laing and Buisson survey in 2008 almost two out of three nurseries said that the free entitlement funding did not cover their costs of delivery. Two out of every three nurseries in the survey said that, and that has been the situation for some time. Indeed, in 2006 the National Day Nurseries Association found that one third of all nurseries lost more than £5 per session. A single funding formula to address those issues is not due to be in place in all local authority areas until 2010. The Government do not need me to point out that if that trend continues, the cost of replacing lost places will be considerable.

Photo of David Laws David Laws Shadow Secretary of State (Children, Schools and Families)

Will the hon. Lady clarify whether amendment 525 would allow top-up fees to be charged?

Photo of Maria Miller Maria Miller Shadow Minister (Children, Young People and Families)

I thank the hon. Gentleman for his intervention. The intention behind amendment 525 is to allow nurseries to ensure that they cover their costs. If that includes charging a supplementary fee before the new funding regime is in place, we must consider whether that is preferable to allowing nurseries to go out of business, which the figures that I gave suggest would happen. The financial pressure has been increasing over time, and has been made worse by the recession. A report in January from the NDNA showed that 40 per cent. of nurseries have bad debts. The report also highlighted that occupancy is down in one third of nurseries with one in 10 reporting a drop of 11 per cent. or more. Further work by the Federation of Small Businesses shows that about 200 PVI nurseries could close in 2009.

The hon. Gentleman asked whether top-up fees were involved, and no hon. Member wants that, but we must ask whether we want those organisations to go out of business because the Government have ignored the core structure of the financing for far too long, or whether we want parents and children to have the stability that they need in child care and to help nurseries to stay in business. We would all like entitlement to be free, but the evidence is that the money is not going to the providers as intended, and there is a gap between now and when the single funding formula comes into place to fix the problems.

Photo of David Laws David Laws Shadow Secretary of State (Children, Schools and Families)

Is the hon. Lady not concerned that the consequences of her policy, which seems to be to allow top-up fees, could undermine the universal entitlement for some youngsters in particular parts of the country?

Photo of Maria Miller Maria Miller Shadow Minister (Children, Young People and Families)

I thank the hon. Gentleman for his contribution. I believe that that is already the case. The evidence suggests that some organisations already charge incremental costs to try to keep their businesses together. We can either ignore the problem, or try to give them some practical help. I am concerned that the funding stream has not worked as it should have done. The recent research into the true cost of delivering child care in the PVI sector should have been done years ago.

Photo of David Laws David Laws Shadow Secretary of State (Children, Schools and Families)

I am grateful to the hon. Lady, who has been very patient. Is she implicitly rejecting the option of slowing down the roll-out of the increase in the number of hours that are allowed free, and saying that the top-up mechanism would be her preference in relation to that other option?

Photo of Maria Miller Maria Miller Shadow Minister (Children, Young People and Families)

No, that is not what I am saying. The two issues are linked, but not entirely mutually inclusive. Other issues concerning increased flexibility cause far more of a problem for some providers than others. I am not saying that we would delay the roll out, but if the hon. Gentleman were to read some of the parliamentary questions that I have asked on that point, he would be aware that the Government are less than sure how to finance it. Some of the more ambitious statements made at the Labour party conference last year by the Prime Minister may not necessarily be achievable in a reasonable time frame.

Temporarily suspending the 2006 code of practice, which forbids parents to be charged, would help by recognising the extreme pressure that some nurseries are under. As I said earlier, we could bury our heads in the sand, or we could face up to the reality of helping those people. After all, those nurseries provide the lion’s share of the nursery places that the Government have relied upon to deliver their free entitlement. Suspending the code of practice will allow us to help keep them in business in these difficult times. The amendment would give private nurseries breathing space to ensure that they can deliver the free hours and the stable child care that parents and children need and deserve. The code of practice could come into force once a single funding formula has been adopted by all local authorities.

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary (Schools and Learners), Department for Children, Schools and Families 10:45 pm, 26th March 2009

As the hon. Lady said, amendment 525 seeks to disapply the code of practice for the provision of free nursery education places to three and four-year-olds in a local authority area until the local authority has introduced a single funding formula. Although I share the view that we want the single funding formula implemented quickly, and all local authorities will come under that obligation from April 2010, I am concerned that the amendment would have some unintended and undesirable consequences by affecting children’s ability to benefit from the free entitlement and the safeguards provided by the code of practice. Free entitlement is just that; it is free at the point of delivery. Top-up fees would bar some children from gaining access to provision because of unaffordable costs—in particular, disadvantaged children, who would have the most to gain from the offer.

Independent research in 2008 showed that funding at national level is sufficient. In the clause, however, we are seeking to implement the single funding formula as quickly as possible; as I said, it comes in from April 2010.

Photo of David Laws David Laws Shadow Secretary of State (Children, Schools and Families)

Did I hear the Minister correctly when she said that existing funding is adequate to roll out the full 15-hour entitlement?

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary (Schools and Learners), Department for Children, Schools and Families

The 15-hour entitlement does not come into effect until September 2010. The research done in 2008 was on the existing offer.

Photo of David Laws David Laws Shadow Secretary of State (Children, Schools and Families)

As the period the Minister mentions is within the existing spending review, she must have made an assessment of whether the funding is in place to deliver the 15-hour entitlement on that time scale.

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary (Schools and Learners), Department for Children, Schools and Families

We have an additional £590 million to support the extra two and a half hours being flexibly delivered from September 2010.

Amendment 526 seeks to make it a legal requirement for local authorities to allocate funding to private, voluntary and independent providers of the free entitlement from the individual school’s budget. We want local authorities to do that. The current separation of funding for PVI providers from that of the maintained providers leads to unjustifiably different levels of funding, and a perception that the education received is not the same. We want to ensure that the funding provisions for PVIs are integrated with the funding provisions for the education of pupils in maintained nursery schools and classes and the rest of the school funding system.

I shall explain the difference in funding between maintained nursery schools and PVIs. Nursery schools get higher funding because they are schools and must therefore have head teachers. The rates between maintained nursery classes and PVIs are fairly comparable.

We believe that the requirement can be better achieved through regulations, which would allow for the necessary flexibility to make changes to the funding framework without the need to change primary legislation. We have already shared indicative regulations with the Committee, setting out our intentions in that regard. I therefore invite the hon. Member for Basingstoke to withdraw the amendment.

Photo of Maria Miller Maria Miller Shadow Minister (Children, Young People and Families)

I thank the Minister for her reply. I note that she did not refer to her analysis of the cost of delivering child care and to the work done by the Department showing the difference in funding between the PVI and the maintained sectors—or the data on the shortfall in funding faced by so many providers to which I drew her attention. We will want to come back to the matter.

Although I am reassured by the Minister’s comments on the need for local authorities to ensure that all local authorities are using the independent schools budget as a way of distributing the money, thus removing that flaw in the system, she ignores at her peril the significant issues faced by the PVI sector. The Government made their policy on free entitlement work through the tenacity and hard work of the private and voluntary sectors, but Ministers fail to appreciate that the cost structures the PVI sector has to deal with are significantly different from those in the maintained sector.

I shall not press the amendment to a Division, but many Members will want to return to the matter at a later stage because it is causing great concern to many parents and providers in our constituencies. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Maria Miller Maria Miller Shadow Minister (Children, Young People and Families)

I beg to move amendment 524, in clause 190, page 109, line 30, at end insert—

‘(2A) The regulations made under subsection (2) must promote the maintenance of a range of different types of providers of services, including those from the private and voluntary sector.’.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

With this it will be convenient to discuss amendment 523, in clause 190, page 110, line 18, at end insert—

‘(4A) Regulations made under subsection (4) must specify that consultations about the determination of the amount of financial assistance must include a requirement for private, voluntary and independent early years providers outside a maintained school to be consulted.’.

Photo of Maria Miller Maria Miller Shadow Minister (Children, Young People and Families)

These are two final amendments on nursery funding. All families have different child care needs. The range of child care options in the country reflects the fact that parents want to care for their children in different ways. Evidence suggests that far from increasing the diversity of child care, which one would expect given the Government’s rhetoric on flexibility and trying to meet the needs of parents, choice has declined significantly. Between 2003 and 2006, the proportion of privately owned nurseries has declined from 78 to 65 per cent. Indeed, the number of child minders has decreased by nearly 40 per cent. since 1997. The latest statistics from Ofsted show that nearly 1,600 child minders left the profession between September and December 2008; there have been two years of continuous decline.

The amendment would ensure that local authorities have to take into account the importance of diverse provision of child care. Yes, they have to ensure the necessary amount of child care in the area, but there is no requirement to ensure diversity. It is important that we do not drift into only one form of child care being available, because parents have differing needs, live in very different circumstances and have differing work responsibilities. Choice must be available to ensure that children get the care they need.

Child minders have an invaluable role in providing specialist care for disabled children. I have seen at first hand child minders with special training dealing with children who have particularly challenging needs; they do so in ways that centre-based nurseries may find difficult. Looking after those children will allow their parents to get back to the workplace—the Minister will be aware of the correlation between poverty and parents who have children with disabilities. It is important to protect and nurture diversity in child care.

Parents who are cautious about leaving a child in a centre-based nursery may be able to build a relationship with a child minder. That choice must be available. The amendment tries to embed the importance of a diverse cross-section of child care into local authorities’ thinking in a way that does not happen at the moment; the figures certainly suggest that it does not.

On amendment 523, so many of the problems that we have faced in the funding of the early years entitlement could have been avoided if there had been effective consultation with the PVI sector. I apologise for yet again mentioning the importance of effective communication with that sector; I do so because communication has been so ineffective in the past. There are no provisions in the Bill to acknowledge the importance of involving the PVI effectively in future. The sector is now involved in local schools forums, but despite its overwhelming importance in providing early years places, its voice in those forums is merely one of many. If the Minister spoke to some of the PVI providers who are representatives on local schools forums, as I have done, she would understand that point clearly. It is simple: the Government could not have delivered the free entitlement without the PVI sector, because 65 per  cent. of full day care provision is owned by the private sector and 24 per cent. is owned by the voluntary sector. The Government are on a knife edge and they ignore it at their peril.

The amendment requires local authorities actively to engage and consult PVI providers when determining the allocation of funds. PVI providers are the most knowledgeable about the costs relating to the service they provide, so it is only right that they are engaged in the costing process.

I hope that the Minister will consider the amendments positively. I am only sorry that there is not more time to discuss nursery funding in the Committee, because it is of great concern to so many people, both parents and providers, throughout the country.

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Under-Secretary (Schools and Learners), Department for Children, Schools and Families

I shall deal first with amendment 523, which would specify that private, voluntary and independent providers must be consulted about the determination of financial assistance for the free entitlement. We already have in place a consultative process for the funding of all education, including the free entitlement, through the local schools forums that the hon. Lady mentioned, which must include representation of private, voluntary and independent providers.

The current regulations for schools forums state that all local authorities that include non-school members on their schools forum must have appointed one or more persons to represent private, voluntary and independent providers. That is bolstered by section 165 of the Education and Skills Act 2008, which requires all schools forums to have non-school members and, by implication, PVI representation. Draft regulations are about to go to consultation, which, when laid, will require the remaining schools forums that do not have PVI representation to have it from January 2010. However, that is likely to apply to less than 10 schools forums.

We expect all local authorities as a matter of good practice to consult all stakeholders where significant changes are made that are likely to affect their interests. Guidance on the creation of the single funding formula specifically stresses the need to work in partnership with all providers. We expect that good practice to continue for the single funding formula and early years providers from whichever sector.

Amendment 524 would require local authorities, in building their funding formulae for the free entitlement to early years provision for 3 and 4-year-olds, to support and promote a range of different types of provider, including those from the private and voluntary sector. That already happens and is clearly set out in the statutory guidance—in paragraph 5.1 on page 16 of the code of practice. Local authorities should ensure that a suitably diverse range of providers, including schools, nursery schools and classes, private and voluntary sector providers, independent schools and accredited child minders, can deliver the free entitlement in line with parental choice. The guidance is currently being revised to reflect the flexible extension to the offer but that element will not change. Indeed, the intention behind the changes we are making in the Bill is to strengthen that diversity, and we think that the best way to achieve that is through the single funding formula.

With those assurances I hope that the hon. Lady will ask leave to withdraw her amendment.

Photo of Maria Miller Maria Miller Shadow Minister (Children, Young People and Families) 11:00 pm, 26th March 2009

I think that I have made my point by raising these two issues. Although I am sure that the Minister is happy with the reply she has given me, I am sure she understands that if things were quite as rosy in the garden and all the provisions were in place already, we would not be experiencing problems.

The figures speak for themselves. We are seeing a decline in the number of child minders and the number of PVI providers in the nursery sector. We cannot ignore the hard facts. We also cannot ignore the fact that although the Minister is entirely right to say that, in theory, provision is already in place to ensure that the PVI sector is consulted about the funding regime, it is not effective. I hope that having raised these points and having elicited the Minister’s response, it reinforces for her the fact that we all have to work even harder to make the existing provisions effective for people who are providing an important service.

I will not detain the Committee at present, but it may be necessary to address the issues again in future. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 190 ordered to stand part of the Bill.