It calls for a review of funding and says that underfunding of the private and voluntary sector ‘cannot continue’ because of the impact it has on the provision and quality of early education.
Early years organisations that have long campaigned to have the underfunding issue acknowledged called on the Government to tackle the issue urgently and work with them to find a solution to the longterm problem.
However, the report does not call for more early years funding, but says that it should be ‘re-prioritised’ to achieve better value for money.
The Government currently invests £5.2 billion into early education and childcare each year, set to rise to £6.4 bn in the next Parliament.
The Committee on Affordable Childcare, which led the review, said that there was ‘a lack of robust data’ evaluating the effectiveness of the Government’s free early education policy.
There was ‘a legitimate cause for concern about the uneven allocation of funding’ for free places in the PVI sector and a need to review how local authorities distribute early years funding, it said.
The report also highlights the ‘inherent tension’ in early education policy, which promotes child development but also aims to make it easier for parents to work through cheap childcare.
Underfunding meant that nurseries were struggling to survive in deprived areas and parents were having to pay more for extra hours outside the free entitlement.
While acknowledging that there was some ‘very good provision’ in the PVI sector, the report said that evidence showed that on average quality was lower than in the maintained sector.
It pointed out that underfunding meant that PVI nurseries were unable to employ as many graduates as the maintained sector, a key indicator of quality.
Two-year-olds should only be in good or outstanding settings, it said.
Lord Sutherland of Houndwood, the committee’s chair, said, ‘The PVI sector provides the majority of free early education places to three-year-olds and yet it is paid a much lower rate, on average, than maintained settings.
‘This underfunding of free early education places leads to other practices - such as the cross-subsidisation of free early education by charging parents more for additional paid-for hours in order to recoup the shortfall. This has other knock-on effects - private nurseries struggle to survive in areas where parents are less likely to require hours in addition to the free hours.
‘This leads to a paucity of childcare provision in the most deprived areas, which impacts on the ability of parents to enter employment. So this really needs to be looked at properly and a solution found. We cannot continue with a situation where the Government’s flagship early education policy is underfunded to such an extent, with such far-reaching effects for children and families.
‘Part of addressing the under-funding of early education places will be to review the role of local authorities in the allocation of resources. There is legitimate concern about the uneven allocation of resources and we recommend that the Government looks at how local authorities are discharging their duties in this respect.’
Two-year-olds
Lord Sutherland said that it was ‘a poor investment’ to provide free places for two-year-olds but not to ensure that they were in early years settings that could help them to develop and catch up with their peers.
He recommended that all two-year-olds who are eligible for free early education should be accessing it at a setting rated good or outstanding by 2020.
The early years sector has overwhelmingly welcomed the report's acknowledgement of the underfunding issues and called for urgent action from the Government.
Sector reaction
The National Day Nurseries Association welcomed the report’s recognition of the value of quality childcare.
Chief executive, Purnima Tanuku, ‘The report acknowledges the current underfunding of free nursery places and that this makes any extension of free childcare unsustainable.
'Free childcare is very important to parents but it needs to be adequately funded for nurseries and other settings to deliver high-quality care and keep fees affordable for all parents.
‘The committee agrees with NDNA that the shortfall must be addressed before any more free hours are offered by the next Government.
‘Nurseries in disadvantaged areas struggle to be sustainable if they are only delivering free places without the extra income brought by selling additional hours. While we support additional funding for disadvantaged children, we need to recognise that the whole system needs a funding overhaul. The system needs to work for all children.’
The Pre-school Learning Alliance said the finding that the sector was 'significantly underfunded' was contrary to the Government's 'constant denials'.
Chief executive Neil Leitch said, 'It is vital that all children, and particularly those from disadvantaged backgrounds, are able to access high-quality early education – but quality costs. At the moment, the Government is demanding a first-rate service on second-rate funding – and as a result, more and more providers are being forced to raise the cost of paid-for childcare hours to stay afloat.
'Neither providers nor parents should have to carry the financial burden of a scheme that the Government claims to be adequately funding, and the Department for Education should never have allowed this situation to go on for so long.
'It is crucial that the Government takes the findings of this report seriously and finally accepts that tackling free entitlement underfunding is vital if we are to build a sustainable, affordable and high-quality childcare sector. We hope that the DfE will work with the sector going forward and engage directly with those on the frontline in order to find a viable solution to this long-running problem.'
Dr Mary Bousted, general secretary of the Association of Teachers and Lecturers (ATL), said, ‘Our members are concerned at the increasing numbers of children starting school with little spoken language and other social skills. Ensuring money is best spent to support these children is of utmost importance.
‘In ensuring that provision for two-year-olds is high quality, the Government must ensure there are well-trained, qualified professionals within all settings.
‘However, the Government should not overlook nursery schools when they are reviewing funding; these are high-quality, professional-led settings which are currently being allowed to wither on the vine.’
Stephen Dunmore, chief executive of the Family and Childcare Trust, said, 'We are pleased that the House of Lords Committee has echoed the Family and Childcare Trust's calls for an independent review and a simplification of childcare funding. The current system does not work, with too many children in poor quality settings and too many parents unable to go to work or take on more hours because they either cannot find or pay for childcare. We want to see all political parties listen to this cross-party panel of experts and implement its recommendations as a matter of urgency.'
Anne Longfield, chief executive of 4Children, said, 'To get parents back to work, they need access to childcare as much as they need access to roads and rail.
'While politicians are happy to discuss spending billions on transport infrastructure projects, the next Government should see childcare as a vital long-term infrastructure project and kick start it straight away - helping families to flourish and boosting the wider economy too.'
Liz Bayram, chief executive of the Professional Association of Childcare and Early Years, said,'Childcare settings cannot deliver high quality early education without adequate funding to invest in and reward the professionals working in those settings.
'Childcare remains an undervalued and poorly paid profession, despite all the evidence that shows how important high quality early years interventions are to children’s future achievement and well being. So PACEY supports the committee’s recommendations but would go further and extend its ambition so that all children receive their early education in a good or outstanding setting by 2020.'
- Read the full Affordable Childcare report here
