It is an honour to serve under your chairmanship, Mr Gapes. I thank the hon. Member for Bolton West (Chris Green) for securing this important debate. It has been absolutely fantastic to hear so many contributions from Members across the House.
I pay tribute to the hon. Members for Bolton West and for Rugby (Mark Pawsey), who are obviously listening MPs and are very much connected with their communities. The survey that the hon. Member for Bolton West instigated was a great tool for getting to the nitty-gritty of what is going on in his community. He talked about
business rates, about primary schools that cannot get their VAT back when non-school nurseries can, and about ratios, which I am sure the Minister will want to look into. Given the way the world works now, we need flexibility more than ever. The hon. Member for Rugby talked about the stark costs and the shortfall of £1 an hour in his community, and asked how nurseries can keep going with that shortfall.
My hon. Friend the Member for Burnley (Julie Cooper) has worked very hard with the maintained nursery sector in her area—in fact, I visited a group of nurseries in her community. She said that they are a lifeline for many families. She made a powerful argument, and she is a massive advocate for her community.
I am so grateful that my hon. Friend the Member for York Central (Rachael Maskell) made a contribution, because she was an early implementer and was at the coalface of the roll-out, so she has seen the effects of the funding shortfall. I am glad that she mentioned Sure Start and SEND provision, which are vital parts of our offer for families. I congratulate her sister, who is working very hard in the sector.
My hon. Friend the Member for Worsley and Eccles South (Barbara Keeley), who is no longer in her place, made a powerful intervention about losing five outstanding nurseries, and she talked about the prospects for SEND children. My hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) has done incredible work in her community, where the school for deaf children potentially faces closure. Her work on the Treasury Committee was really helpful a few months ago in helping us to understand the landscape in more detail, and it gave us a granular understanding of the funding shortfall. I congratulate her on her work and on the way she has supported her community. It is a pleasure to follow so many fantastic contributions.
The Minister and I have discussed the financial sustainability of the early years sector many times in the Chambers of this House. Our discussions have focused on the funding levels the Government set for their policies. As hon. Members are aware, Government-funded childcare schemes have become an increasingly large part of early years settings’ incomes in recent years. The biggest single change was arguably the introduction of 30 hours of free childcare per week, which came into effect in September 2017. In many instances, those free extra hours result in some financial support being available for all the childcare hours a family uses in a week. Of course, there is a wider discussion to be had about top-ups and the additional charges placed on those hours, but it is undeniable that, for many working families, financial support is welcome overall. However, the change means that what nurseries and childminders can charge is limited, as a larger proportion of their income comes from an amount set by central Government.
That would not be a problem, however—this is where the Minister and I stop agreeing—if the funding levels set by the Government were not too low. I do not want to ruin the surprise for anyone, but I imagine that the Minister will point to a report by Frontier Economics and to a 2016 National Audit Office report that called the Government’s spending review “thorough and wide-ranging”. I have heard that response many times, and read it in the responses to many written questions. However, I want to push the Minister a bit further
today. In the same sentence in which the NAO said that the review was “wide-ranging”, it also stated that the review
“used a variety of sources, including evidence from 2,000 providers and other stakeholders.”
Although the Government did receive about 2,000 provider responses to its call for evidence about delivery costs, they subsequently admitted that, because the providers’ responses
“were often not supported by figures”,
they were
“unable to determine from the responses what providers’ unit costs were”.
I would therefore be grateful if the Minister could confirm the number of providers whose evidence was used in the review. If the number is below 2,000, has the NAO been made aware of that?
The early years sector is in a precarious financial position and is one of the lowest-paid sectors in our economy. I am sure every hon. Member in the Chamber will have visited nurseries in their constituencies and seen the passion, talent and commitment of practitioners. I hope we can agree that the low pay is a scandal. Margins in the sector are always tight, and we see a considerable churn of providers. However, I am extremely concerned by some of the recent research. For example, the Pre-school Learning Alliance survey of more than 1,600 early years practitioners in September found that eight in 10 said that it would have a somewhat or a significantly negative effect on them if their funding rate stayed the same next year. Half of providers have increased their fees because of the 30 hours offer. Four in 10—42%—have introduced or increased charges for additional goods and services, and, incredibly, four in 10 say that there is a chance that they will have to close their setting in the next academic year due to the 30 hours offer and/or underfunding.
That survey is not a one-off. The National Day Nurseries Association unearthed a yearly funding shortfall of £2,166 per three and four-year-old child. That has contributed to a 66% rise in nursery closures over the past 12 months—a loss of a staggering 5,000 places. A Department for Education-commissioned report conducted by Frontier Economics, released last month, found that 25% of providers had moved from making a profit to breaking even or making a loss.
Despite the weight of evidence clearly showing that there is an urgent need for a funding increase for early years policies, the Government remain defiant. Later today, “Save Our Nurseries” campaigners will be outside Parliament, and campaigns are springing up in Salford, Birmingham, Tower Hamlets, Burnley and elsewhere, but for too many there is nothing to be saved. Bright Beginnings in Stockport said that
“the reality is that we can’t provide Outstanding nursery care on the funding provided.”
The Ark Nursery in West Sussex is closing because of a decade of underfunding. Windymiller, in my own constituency, where I grew up, closed its doors a few months ago because of funding pressures. It seems that at least once a week, I hear of another outstanding nursery closing its doors for good.
What is to be done? Well, the Budget is coming up this month, and I wonder whether the Minister could enlighten us as to whether he or the Secretary of State
have held conversations with the Chancellor about a funding increase for free childcare. In recent days, a petition calling for a review of how business rates are applied to nurseries has reached 10,000 signatures. Perhaps the Minister could let us know his thoughts on that, and whether he supports the decision in Wales to scrap business rates for nurseries.
Maintained nurseries remain concerned that there has been no commitment to extra funding, considering the extra costs that they incur. With budgets requiring sign-off two years in advance, can the Minister tell us when a decision will be made? As the Government occupy a larger role in the funding of nurseries, they must also face up to their responsibility to nurture the sector. If we continue on our current trajectory, we will see a growing recruitment crisis and an exodus of experienced and outstanding providers. Nobody wants that. I look forward to hearing what plans the Minister has to halt this growing problem.
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