logo
by Isabelle Hillson 17th July, 2019
3 min read

Early years in crisis: will the new Prime Minister take action?

On July 1st, the APPG on Childcare and Education launched a report on the financial sustainability of the early years sector. It found a sector in crisis: with problems that echo those in the care sector: lack of funding, recruitment and retention issues, and increasing costs. It urged the Government act.

Policy Changes

In recent years, the early years sector has undergone several policy changes; notably, introduction of the entitlement to 30 hours a week of free childcare for 3-4 year-olds for eligible households over the last two years. In a further change to the policy environment this year, a new Ofsted assessment framework will come into force in September, which will see the sector having to comply with new standards.. Other recent measures introduced include the Early Years Pupil Premium, introduced by the Coalition Government in 2015 and the extension of Universal Credit to support up to 85% of childcare costs for claimants.

The sector has been subject to increased political scrutiny as these reforms have bedded in. Their aim has been to increase levels of uptake amongst disadvantaged children, due to the huge benefits for child development and parental employment that early years education can have. However, recent research by the Education Policy Institute which looked at the impact of recent childcare policy changes found that there were vast discrepancies between rich and poor nurseries, with a lower take up of entitlements in poor areas, and in areas where take up of the 30 hours increased, take up for disadvantaged two year olds fell or increased less.

Surprisingly, despite these huge returns on investment for social mobility and the economy, neither of the Conservative leadership candidates has mentioned the sector in their campaigns. In fact, neither Boris Johnson nor Jeremy Hunt have mentioned early years, or nurseries, in their speeches during their political careers. While the policy area has not featured in the Conservative leadership campaign, it is likely to receive attention once the new Prime Minister is in post.

Financial Pressure

The sector is still facing financial pressure from staffing costs, the requirement for private nurseries to pay business rates, potential changes to the staff to child ratios or qualified management and staff ratios, and the expectation for nurseries to offer the free 30 hours of childcare.

Some of these cost pressures are set to stay or increase:

  • National Minimum Wage and National Living Wage: both the Conservative and Labour parties have proposed greater than anticipated rises in the national minimum and living wages
  • Business rates: given that local authorities are under funding pressures and have greater autonomy over their budgets, they want to retain as much revenue as possible. There is the possibility that nurseries would be given a discount or an exemption as a result of the Treasury Select committee’s inquiry into business rates. Evidence was submitted to the Committee by the Federation of Small Businesses, recommending to give nurseries a discount or exemption however, this was not included in the committee’s report of recommendations to the Government.
  • Rising pension contributions: as the wage bill has increased with National Minimum and Living Wages, employer and employee contributions increased in April 2019.
  • Recruitment and retention issues: high levels of staff turnover due to low pay mean that nursery providers have to spend significant amounts on recruiting and training staff.

A new Prime Minister will appointed on the 23rd July, and this year’s spending review – despite rumours of delays – is scheduled this Autumn. Rising costs in the context of the static funding levels facing the sector, combined with political pressure from Labour on funding, entitlements and helping disadvantaged children, mean that a new minister is likely to make changes once in place.

See more articles by Isabelle Hillson