When it comes to childcare costs in England, there’s something that doesn’t quite add up.
The government says it invests a record amount into the early education sector each year, and yet parents in England face some of the highest childcare costs in the Europe, while the – majority female - workforce are paid some of the lowest wages seen in any industry.
So what’s going wrong? Where is the money going?
The problem all stems from what the government misleadingly calls ‘free childcare’.
All three and four-year-olds, and the 40% most disadvantaged two-year-olds, in England are entitled to 15 hours a week of funded care and early education a week for 38 weeks of the year, while three and four-year-olds from working families entitled to an additional 15 hours a week (the ‘30 hour offer’).
You might expect that government-funded early years places would be, well, funded by the government. In reality, the money that early years providers (i.e. nurseries, pre-schools and childminders) are given for these places – money that needs to cover a range of costs such as wages, rents/mortgages and utilities – isn’t anywhere near what it actually costs to deliver them.
In fact, analysis from independent researcher Ceeda carried out last year estimated that, even putting aside the financial impact of the pandemic, early years providers would still face a funding shortfall of 20% for every government-funded place they offer to a three or four-year-old, and 37% for every place offered to a two-year-old on existing funding levels.
As the largest early years membership organisation in England, we at the Early Years Alliance have repeatedly challenged the government on this underfunding, which has seen the number of nurseries, pre-schools and childminders plummet by nearly 13,000 (just under 18%) over the last six years – only to be met with a stubborn refusal to admit there is any problem, and an insistence that funding levels are more than enough.
So back in December 2018, we filed a Freedom of Information (FoI) Act request asking the Department for Education to explain the calculations it had used to determine the funding rates given to the sector. A reasonable enough request, you would think, but it is only after two and a half years of fighting against government rejections and appeals that we now, finally, have the information we asked for.
And now we have it, we know why they wanted to hide it.
The information we obtained came in the form of a series of private government briefing documents from 2015, intended to inform the then-Spending Review. And they reveal three key things.
First, that the government decided that “fully funding” early years places – which includes giving nurseries, pre-schools and childminders enough money to support children with SEND and disadvantaged children, and ensuring that they had enough money to meet the national living and minimum wages as they inevitably rose – was “unaffordable” and so the sector would have to make do. To put this in context, the document states that the government estimated that by 2020, a fully-funded early years places for a three and four-year-old would cost £7.49 per hour. What the sector actually got, on average, was £4.89.
Second, that the government knew that introducing the 30-hour offer, which for many nurseries and childminders meant that the vast majority of three- and four-year-old income now came via government funding, could cause early years providers to “increase prices for younger children – potentially by as much as 30%”.
In fact, a briefing note to the then-early years minister Sam Gyimah stated that rather than fully-funding the sector at an estimated cost of £2bn per year, the government could do so at the cut-price cost of £500m if ministers were happy to “accept that prices will rise for [children under 3]”. In the end, they only invested £300m.
Not only that, but the government was happy to parents to pick up the bill via additional costs for things like meals. The document states: “We will strip out funding for consumables (food, nappies) – and set an expectation that providers charge parents for these.”
And finally, that government knew that the funding levels they were offering would only work if providers compromised on quality by working to the absolute maximum child-to-adult ratios allowed by the law.
So-called “free childcare” is anything but. Not just because the offer isn’t free – neither for the parents, nor the providers, who are paying the price for government underfunding – but also because what nurseries, pre-schools and childminders offer isn’t just childcare. It is high-quality, Ofsted-monitored early education, supporting learning during the most critical period of a child’s development.
We all deserve better. The parents of babies and toddlers who aren’t eligible for any government funding, whose childcare fees account for a huge proportion of their monthly wage, meaning that, for many mothers, returning to work after maternity leave just doesn’t add up. The parents of funded children who were promised ‘free childcare’ and instead have been unexpectedly hit by additional fees and charges. And the nurseries, pre-schools and childminders trying to provide quality care and early education on a shoestring, who have been forced to take these actions because if they don’t recoup their losses somehow, their businesses may not be able to survive another year.
That’s why we at the Early Years Alliance are supporting the call by Grazia and Pregnant then Screwed for an independent review into childcare funding and affordability.
Because what our Freedom of Information investigation has now proven is that these are all preventable problems if the government actually funds the early years sector properly.
It is only by working together, parents and providers, that we can finally force the government to admit its failings and address this long-running problem. We can all agree that such action is long overdue.
The DfE told The Guardian that the EYA data pre-dates increases to the rates paid by government, with additional investment announced by the chancellor in 2019 and 2020. A spokesperson said: 'We’ve made an unprecedented investment in childcare over the past decade, spending more than £3.5bn in each of the past three years on our free childcare offers and increasing the hourly rate paid to councils above inflation for the past two years.'