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Childcare changes 'will take time'

Published 01/06/2015

Free childcare reforms are being rolled out a year earlier than planned
Free childcare reforms are being rolled out a year earlier than planned

David Cameron has admitted it will "take time" to get plans to double free childcare provision right amid warnings the system faces "meltdown" unless the changes are fully funded.

The Prime Minister confirmed that working parents of three and four-year-olds in some parts of England will be entitled to 30 hours a week from September 2016, earlier than previously predicted.

Ministers say up to 600,000 families will eventually benefit from the move, worth around £2,500 a year on top of the £2,500 they can already save from existing free childcare offers.

But the Pre-School Learning Alliance, which represents 14,000 private, voluntary and independent groups, warned the existing 15 hours a week of free childcare is already "grossly underfunded" by the Government.

Research for the charity has suggested the total cost to the sector will be approximately £1.95 billion per year, but funding at current rates amounts to £1.7 billion - a potential shortfall of £250 million.

Asked about the proposals on ITV's This Morning, Mr Cameron said many parents would be "very excited" about the opportunities the policy would give them.

But he said: "It is going to take time to get this right, because obviously we need an expansion of the childcare sector...

"We need them (providers) to expand and so we are going to start talking to them immediately about what is the best way of making sure they are being paid properly for the level of childcare they provide."

Mr Cameron said: "I think there's a good argument for the whole country, which is that, if we want to be a great success, and we want to take on the world and win, then we need to make sure we are making the most of taking on everybody's talents.

"There are so many talented parents out there who can't work because of the cost of childcare that if we help them, we're not saying you have to go out to work, we're saying we want to give you the choice and that's good for the whole of the country."

Alliance chief executive Neil Leitch said the charity estimates that at least £354 million in additional funding would be required to deliver the Government's plans - a 20% increase on the £3.88 an hour currently available per child.

He said: "We warmly welcome the news that the Government will be launching a formal review into childcare funding rates this year.

"We have long warned that the existing schemes are significantly underfunded, leaving providers and parents to make up the shortfall."

But he added: "Given that the childcare extension plans have been costed at just £350 million a year - a figure that our research suggests is around a quarter of what is actually needed - we are concerned that the Government is still significantly under-estimating the scale of the existing funding shortfall.

"Simply raising funding rates by an arbitrary amount won't be enough - it is absolutely crucial that the Government ensures that the hourly rate of funding actually covers the cost of delivering funded places.

"Anything less risks destabilising a childcare system that is already struggling to stay afloat."

Mr Leitch predicted that if more money is not made available, increasing numbers of providers will withdraw from the free childcare system.

He said extending funded hours without first tackling this shortfall would make a bad situation worse, warning the childcare system faces "meltdown" if the Government does not raise the amount it pays providers.

He told the BBC: "I think this is crunch time, I think there will be a meltdown. You will see more and more providers withdrawing from the system and that will undermine and just railroad the entire policy."

Speaking on the BBC Radio 4 Today programme, Mr Leitch added: "I think we are at breaking point with just the 15 hours. Extend that to 30 and you will see a different position altogether.

"There are many nurseries that can't physically extend their number of hours. They may operate in a church hall or community centre. Nobody has considered whether in fact they will be able to offer the 30 hours."

Employment Minister Priti Patel is to chair a review of childcare funding, which she expects to deliver an "uplift" to the hourly rate paid by the Government.

"I will be chairing a Government-led taskforce on the delivery of this and we will be working with providers on the point about funding, to review the overall funding model, so that we can bring an uplift to the hourly rate for childcare entitlement which strikes the right balance," Ms Patel told Today programme.

"As part of our commitment to improve and support families with childcare and ensure that the sector helps to deliver on that, we have pledged to increase funding rates for providers in different parts of the country, and we will be starting a review of the rates across the country before the summer.

"We know that funding rates need to increase, which is why we are going to have this consultation."

Challenged over why free childcare is being made available to parents with incomes as high as £150,000, Ms Patel said: "We are committed to doing this properly, because it is right that we provide childcare for working families - for all working families - and I say this as a parent myself.

"This isn't about subsidising well-off people at all. This is about providing affordable childcare and increasing childcare provision for working families.

"As we've seen previously in the last government, our two-year-old entitlement was all about improving outcomes for children from disadvantaged backgrounds. It's important, as this policy does, to continue what we did in terms of the introduction of good affordable childcare places.

"We are now increasing the free 15 hours to 30 hours and that'll help working parents and working households."

Responding to critics who have said a Conservative Government should focus on supporting mothers who stay at home to look after children, rather than encouraging them to work, Ms Patel said: "It's important that parents choose what is right for their family and their circumstances and for those stay-at-home parents, four million couples will benefit from the transferable tax allowance.

"Our policies have been very much about supporting working families and helping parents get back into work."

Asked about the findings of a House of Lords committee which warned that free childcare may be lower quality than paid-for provision, Ms Patel said: "Our focus is on quality and the quality continues to improve, with 80% of providers now judged to be good or outstanding, compared to less than 70% back in 2010."

The move to double free childcare for working parents was a key pledge of the Conservatives' general election manifesto. T he Childcare Bill is due to be presented to the Commons tomorrow.

Following the announcement Mr Cameron visited Buttercups Nursery in Teddington, south-west London, where he helped children plant flowers and got to grips with painting with broccoli and carrots.

The Prime Minister did not stop to speak with the media, and parents at the nursery had mixed feelings over the plans.

Some were worried that if increased provision was inadequately funded it would lead to costs being passed on to parents.

Kate Thomas, 49, whose three-year-old daughter Circe Gregory attends Buttercups for 35 hours a week, said: "I am in a very fortunate position that even without the funding we could afford to bring her to nursery because we have jobs that pay enough to fund it.

"I am glad that I get some money towards that, but for people who are in a different position and really need help for childcare, if in the long run it is going to mean less places and possibly even more expensive nurseries, it is kind of short-term gain for long term-pain and it doesn't make sense."

Ms Thomas said it was a worry that any shortfall in funding for the extra hours might be passed on to parents.

She said: "Most mothers I know don't work full time and if they are lucky they will have a job that covers their childcare and have a bit extra.

"But if that bit extra then ends up being what funds the extra cost of the nursery, what is the point of working? There is no point at all."

Paul Whitehouse, the director of Buttercups, which has eight nurseries in London and Buckinghamshire, welcomed the increased provision, saying it would be a "huge benefit" for parents, but was also concerned about funding levels.

He said: "We think it is an excellent idea for parents, but it has to be done at an appropriate level in terms of funding.

"We would love to be able to offer 30 free hours, but on the current funding levels we wouldn't be able to as we would have to compromise on quality.

"Quality across the sector is at risk with funding as it is."

Mr Whitehouse said the changes would make life "very challenging" for nursery operators, suggesting that in many cases there was not the capacity for the extra hours and that by doubling the demand it would effectively halve the number of children that schools can provide for, while current funding levels would not be enough to pay for extra staff and the investment needed to keep standards high.

He also said that current funding levels vary widely, adding: "We get paid £3.27 per child per hour at our nursery in Ealing and £4.05 in Hounslow, and it doesn't put people on the same playing field.

"With the increased requirement on nursery staff to have a GCSE grade C or above in maths and English it is obviously going to make an already small pool of excellent team members even smaller, and will have the impact of significant wage inflation across the industry.

"Ultimately, the funding just isn't there for it."

Downing Street also reiterated Mr Cameron's commitment to protect child benefit in its current form, amid reports that Work and Pensions Secretary Iain Duncan Smith is again suggesting it could be limited to the first two or three children.

"The position on child benefits has not changed. As the Prime Minister said during the election campaign, 'We keep child benefit, we don't cut child benefit'," a No 10 spokeswoman said.

During the campaign, Mr Cameron was pressed in an ITV interview on whether he would keep "child benefit in the current form for the next five years".

He replied: "Correct, correct."

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