I beg to move,
That this House has considered the sustainability of the nursery sector.
It is a pleasure to serve under your chairmanship, Mr Gapes. I appreciate the opportunity to have this important debate on the sustainability of the nursery sector. In recent years, I have increasingly seen and heard concerns about the sector, both through the media and through conversations in my constituency. What really brought the issue to a head for me was a meeting with the Federation of Small Businesses and a couple of local nurseries. They raised their current concerns about sustainability, rising costs, and the lack of a level playing field within the sector. Following that, I surveyed all of the nurseries in my constituency and got an incredibly strong response. Most of the nurseries replied, which shows that there is a great deal of interest in improving and reforming this area.
I will first talk about the enormous contribution that nurseries make to children and families in all of our constituencies. Nurseries provide a wonderful start in life for children. They provide opportunities for socialisation for children who are at home during their earliest years, so that they can meet other children in increasingly large age-based groups. When I say “socialisation”, I do not mean socialism; I mean the broader sense of meeting other people in the local community. Nurseries are also valuable for helping children prepare for primary school, as we know that people have concerns about how ready children are to take that step in their lives.
Nurseries are also important for parents, who can get advice about what they are doing as they raise their children, and meet other parents. Sometimes, having young children can feel very isolating for parents, and nurseries provide a good forum for them to meet other parents, get advice, and feel confident that they are doing the right thing—or to seek further advice if, perhaps, they are not. Nurseries provide parents with a very useful break from the children, and increasingly both parents work. The traditional, old-fashioned style of one parent, typically the mother, staying at home to raise the children is not so prevalent these days. Normally, both parents work, and nurseries provide a very important service, enabling both parents to go to work or perhaps re-enter the workforce.
Working in a nursery can be a great deal of fun: it is an enjoyable, rewarding form of work, and a nursery is also a really good business to own and run, because it is an interesting part of a local community. People who work in nurseries can see the children develop over the years, and the importance of the contribution their nursery makes to all those families.
The initial introduction of the universal 15 hours a week of free childcare was followed by a further 15 hours, but since then, there has been concern that funding has
not kept pace, and does not provide all the moneys that nurseries require for the care that they deliver. Funding not keeping pace with costs is a concern, and nurseries have been finding ways of supplementing that income without increasing their hourly rate. For example, some nurseries have been charging additional money for lunch that far exceeds the actual cost of that lunch. Across the country, the average charge is about £10 per day. That is a very significant amount of money for a family to have to contribute on a weekly basis when they believed that the 30 hours of childcare was free. There is a strong narrative that what is offered is 30 hours of free childcare, which leads to problems for families when they are managing their budgets. They may have had a family conversation about whether a parent staying at home should go back to work, and what the household accounts would look like if they did, but if they then get a request from the nursery for more funding, that creates problems for that family. Having to have a conversation right from the off about what looks like a demand for more money also creates a difficult start to the relationship between the family and the nursery.
This support is there to help people; of course, there is an aspect of education for the children, but the support is clearly also there to support people in the workplace. However, it last for only 38 weeks of the year. Most people do not work 38 weeks in the year, so what about the remaining weeks in which the family has to make up the difference? Again, many people have the understanding that what is offered is 30 hours of free childcare a week; they would not think that meant 30 hours of free childcare just during school term time, in essence. Of course, that is a concern for many parents, but especially for parents on very low pay, for whom any surprising additional outgoings will be quite a shock to the system.
Across my constituency, nurseries have raised concerns about business rates. If children are supported for 38 weeks, they will often attend for 38 weeks; the parents will look after the children for the rest of that time, or will perhaps find some mechanism involving their extended family. However, the business rates are set as though the business is being operated for the entire year, so if that nursery is over the threshold to pay business rates, it will in effect be receiving the money for 38 weeks but paying business rates for 52 weeks. If there is not flexibility over that 30 hours of bringing in more money, that creates a challenge.
There is also a concern about VAT. If a nursery is associated with a primary school, that nursery has the ability to reclaim VAT, because it is part of an educational institution. However, a nursery not associated with a primary school does not have the opportunity to claim that money back, which does not demonstrate a level playing field between the two. That is a problem. Councils also take a cut, and I welcome the fact that the Government have driven the expectation that the amount of money going from national Government to the council and then on to the nursery will go up from 93% to 95%. I am pleased that Wigan Council has already achieved that goal of 95% of money going to the nursery, and that Bolton Council is a level ahead, with 97% of its money going from the council to the nursery. It is important that councils are recognised for that commitment to ensure as much money goes to nurseries as possible.