Still work to be done

What a difference a few months makes.

Back in November, the Alliance released the findings of an independent report into the free entitlement offer, undertaken by research company Ceeda, which found that for every five children accessing places under the scheme, only four were covered by Government funding, leaving providers to make up the shortfall.

When we published this data, the Department for Education said it was 'nonsense' to suggest that the early years sector was underfunded and that our report was an attempt at 'headline-grabbing'. But now, just six months later, the Government has publicly acknowledged that funding needs to increase and set up a taskforce to look at doing just that.

It is remarkable how much the conversation has changed in such a short space of time. In the past, any media reports on childcare focused on rising costs for parents, with early years providers often depicted as money-hungry profiteers, squeezing every last penny they could out of struggling families. Today, however, there is far greater understanding of the fundamental role that government funding (or rather, a lack of Government funding) is playing in the problems facing both parents and providers. Even those parents featured on news reports bemoaning rising childcare costs are now pointing out that providers are struggling too.

This is a huge step for a sector where concerns about historic underfunding have long fallen on deaf ears. The question we now need to ask is: what will this mean in practice? Because, as with all things, the devil is in the detail.

When the Conservatives made their pre-election pledge to tackle early years funding, they said that they would 'increase the hourly funding rates paid to providers in different parts of the country, and ... consult on the appropriate level and design of the uplift'. Now, on the face of it, this is great news – and it would be very easy to welcome it blindly without hesitation.

But we at the Alliance do have some reservations, for three main reasons. Firstly, as it stands, the Government has no idea what it actually costs to deliver early years care and education. We filed four separate Freedom of Information requests to the Department for Education asking for any data they had on the cost of delivering funded places and how this compared to current funding rates – and on all four occasions, they were unable to provide this data. Without hard data on what it costs to deliver funded places, any promises to tackle sector underfunding are impossible to keep. The Government chose to dismiss the figures from the CEEDA report we commissioned – so it needs to come up with its own.

Secondly, what the Government is promising sounds a lot like a one-off increase – a token gesture that tells the sector: ‘Look, we’ve listened to you and increased rates’. But at a time when business costs are constantly rising year-on-year, a one-off ‘uplift’ is going to do little to tackle funding gaps in the long term.

Lastly, the Government has severely under-costed the scheme. According to Ceeda figures, the extended offer for three-and four-year-olds will cost the Government around £1.5bn a year if funded at current rates – and yet the Government has claimed that the plans will cost just £350m a year. This is despite the fact that, when giving oral evidence session to the House of Lords Affordable Childcare Committee last year, the childcare minister said of Labour’s pledge to offer 25 hours of funded childcare to three- and four-year-olds (and this is a direct quote): ‘The increased cost of that is quite enormous. Going from something like 15 hours to 25 hours would cost an extra £1.5 billion at least.’ By the Department for Education’s own calculations, this pledge is already severely underfunded. And so, while it is tempting to simply sit back, welcome the funding review and pat ourselves on the back for a job well done, there is still much to do.

We at the Alliance recognise the importance of working in partnership with government – it is absolutely vital if we are to make long-term positive changes for the sector. But working with government and pandering to government are two different things. The Alliance will always ask the difficult questions, and we will always speak out on behalf of our members, and the wider sector – even if it puts us out of favour with those in government. Because we know the impact that ill-thought-out, underfunded policies are having on providers – dedicated, experienced and passionate practitioners struggling to stay afloat, to pay staff the wages they deserve, to feel confident that they can survive another rent increase or minimum wage rise. And we think you deserve better.

So what are the next steps? We are calling on the Government to:

• work with the Alliance to undertake a full, in-depth review of the free entitlement funding system, including a large-scale analysis of the cost of delivering funded places
• introduce a statutory requirement on local authorities to collect annual data from local providers on the cost of delivering free entitlement places
• undertake an annual review of free entitlement funding levels and how they compare to the cost of delivering places using data collated from local authorities, with a report published on the findings
• ringfence the Early Years funding block within the Dedicated Schools Grant

We believe that these are crucial steps to ensuring the long-term sustainability of the early years sector, and we will continue to lobby government to make sure that future policy decisions are made on the basis of both hard evidence and consultation with the sector.

The progress we have made over recent weeks and months in raising the issue of funding has been a fantastic first step, but there is still a long journey ahead. Now is the time to be proactive and focus on implementing specific, practical solutions to this historic problem – and that is exactly what the Alliance intends to do.