High quality, affordable, convenient and flexible early years childcare in all rural areas?

We know the early years are a crucial time in every child’s life and that childcare provision can help close attainment and equality gaps and help to transform children’s lives. The Government is aiming to invest an additional £1 billion every year by 2019-2020 to expand early years provision. Will this funding deliver sustainable provision in rural areas? Jessica Sellick investigates.

The Childcare Act 2016 contains provisions which are intended to secure an additional entitlement of childcare support for working parents. The Act seeks to ensure that parents are able to access information about free childcare and about other provision/services which may help them to meet their childcare needs. It also places a duty on Local Authorities to publish information about childcare and other services available for parents locally. The Government’s overarching intention is to make childcare more affordable for working parents; and to increase the use of formal childcare by parents. What does this mean for rural areas? I offer three points.

Firstly, why provide publicly funded childcare support and what type of provision is available?

Successive Governments [Labour, Coalition and Conservative administrations] have considered evidence about the impact access to nursery care can have on a child’s life chances: from studies identifying a ‘gap in potential’ between children from middle and low income families evident among babies of 22 months and slipping away further by aged 3; to research on the ‘home learning environment’ which distinguishes between parents of all social classes who read, talk and sing to their children and those who do not. This evidence suggests that access to quality pre-schooling from the age of two can be the critical factor on outcomes not just through childhood but on into adulthood too. Those children that may benefit most are not only those from the most disadvantaged backgrounds but from all social classes. The Government’s drive therefore has been to invest public funding into informal play-based nursery settings for children from the age of two years to help them with the transition into formal school life.

Yet much of the resultant policy and childcare provision has been targeted at working parents. This has opened up a series of debates around whether it should lie with parents to provide for their children (should childless couples fund other people’s offspring?) and the lack of similar public childcare support available to stay-at-home parents.

In March 2017 the Department for Education (DfE) published guidance for Local Authorities detailing how they should pay providers to deliver free entitlement places. Crucially the guidance specifies the outcomes the DfE is looking for: that all children are able to take up their free hours in a high quality setting; that fair and transparent funding supports a diverse range of providers to deliver free places on a sustainable basis; that parents are able to work because childcare places are available, accessible and affordable and are delivered flexibly in a range of high quality settings; and that high quality provision amongst providers is promoted.

The driver here and now is no longer concerned solely with early years education but with helping parents to work. A study by IPPR, for example, has shown how making affordable childcare more widely available could raise revenues in the form of increased maternal employment rates. IPPR’s analysis shows a 5% increase in the maternal employment rate could generate £750 million a year in benefit savings and tax revenue.

Bringing both of these strands together, the European Commission analysed cross-national evidence to conclude “access to universally available, high-quality inclusive Early Childhood Education and Care (ECEC) services…not only helps children to unlock their potential but can also contribute to engaging parents and other family members with related measures to improve employment, job-related training, parent education, and leisure-time activities.”

In 2015 there were some 1.5 million children receiving publicly funded childcare from 105,000 providers – with the DfE contributing some £2.7 billion of funding towards this. Providers include facilities run by local authorities (maintained settings) and those run by private, voluntary or independent (PVI) organisations. Some provision is group based (e.g. nurseries) and others home-based (e.g. childminders, childcarers). Other options include crèches, children’s centres and playgroups.

While social and economic cases for early-years childcare are now well rehearsed, funding and delivering it remains a challenge.

Secondly, how is childcare provision funded?

All families in the UK can receive some help with childcare through early education entitlements. The Government website ‘childcare choices’ provides information for parents about getting help with childcare costs, including a childcare calculator. The Government offers various schemes for children under 16 years old (or under 17 for disabled children): (i) Working Tax Credits – where the childcare element means families can claim back up to 70% of their childcare costs, up to a cap. (ii) Universal Credit –where working families can claim back up to 85% of eligible childcare costs. (iii) 15 hours of free childcare for all three and four year olds and some qualifying two year olds for 38 weeks of the year, equivalent to 570 hours a year. Similar schemes exist in Scotland, Wales and Northern Ireland. (iv) Since September 2017 working parents, subject to a means-test, of eligible three and four year olds in England are entitled to an additional 15 hours of free childcare, on top of the existing universal provision of 15 hours. (v) Other schemes exist to provide support for childcare costs while studying such as care to learn, discretionary learner support and childcare grant.

In the 2017-2018 financial year the DfE introduced a new early years funding formula. This stipulates how much funding each Local Authority will receive from the DfE in respect of free childcare for up to 30 hours for three and four year olds. It remains for Local Authorities to determine the actual funding rate that providers receive. The formula comprises three parts: (1) a base rate of funding for each child; (2) an additional needs factor (based on free school meals eligibility, having English as an additional language, being in receipt of Disability Living Allowance); and (3) an area cost adjustment (a general labour market measure based on business rates data). Supplements are available on top of this base rate, including “sparsity/rurality to support providers serving rural areas less likely to benefit from economies of scale.” Local Authorities are required to pass a minimum proportion of funding from DfE onto providers – 93% in 2017-2018 rising to 95% thereafter; with retained funding for Local Authorities central services constrained to 7% in 2017-2018 and falling to 5% thereafter. The national average hourly funding rate was set at £4.94 for 2017-2018, with an average rate of £4.30 paid to Local Authorities who in turn pay providers an average funding rate of £4.00 an hour.

This funding rate is interesting because back in November 2015 the DfE undertook an economic assessment of the early education and childcare market. The review considered the costs of childcare provision at provider level, the current demand for and supply of places for two, three and four year olds, how Government regulation and funding had shaped the market and future cost pressures facing the sector. The review revealed how costs varied according to staffing levels (statutory level or average level), the type of provider (private, voluntary or primary school), the age of the child (2 or 3-4 year olds), occupancy levels and the providers business model. The unit cost per hour of childcare was found to vary, for example, from £5.00-£5.87 for two year olds to £3.56-£4.25 for three and four year olds. The review suggested scope for efficiencies in the staffing model (staff to child ratios) which could save a typical provider in a private setting 15% of its unit delivery costs by staffing within the statutory requirements. The review also suggested providers would benefit from using spare capacity within their premises to care for other age groups of children and/or sharing back-office functions with other providers. In October 2017 the Department published insights from successful providers on business sustainability (e.g. understanding the local market, managing occupancy levels, diversification). How have some providers taken up the findings of the review to fit with the average hourly rate of £4.00 that many will receive?

Local Authorities are responsible for ensuring sufficient places for the funded hours and allocating money to providers. They are legally required to provide information to help parents find an appropriate place for their child, and should give support and training to providers to ensure childcare in their area is high quality.

As per the DfE guidance, the actual funding distributed to providers is set by Local Authorities so the choices they make and other factors such as demography and geography means they may pay different base rates to different types of providers and can make supplementary payments for quality, flexibility, deprivation and rurality. A report by the National Audit Office (NAO) found large variations in funding allocations. For example, the rate for two year olds varied from £2.75 in Torbay to £9.06 in Camden.

In April 2016 the DfE called for expressions of interest from Local Authorities looking to work with local childcare providers to bid for capital funding to expand childcare provision in their area. The funding is administered by the Education Funding Agency (EFA) and is aimed at allocating to projects in areas most in need of capital funding to deliver the additional 30 hour places needed to meet local sufficiency need. Funding is available for new-build nurseries; and extensions, conversions or refurbishments of existing buildings including the creation of kitchen facilities. The first projects approved under the bidding round were announced in January 2017; with the results of a second bidding round announced in April 2017.

If families can receive support for childcare, are also paying themselves for childcare and Government is investing £ 1 billion+ a year in early years entitlements, why isn’t childcare provision affordable, flexible and sustainable?

From a Local Authority perspective, the Family and Childcare Trust 2017 Childcare Survey found, on average, the price of 25 hours of childcare per week for a child under 2 years was £116 for a nursery place or £110 for a childminder. There are significant regional variations, with London and the South East the most expensive areas. It is more difficult to estimate the costs for parents of three and four year olds because of the universal free early education entitlements which is operated differently by providers and measured differently by Local Authorities. Parents of primary-school age children will pay an average of £53 a week for an after-school club and £67 for afternoon care from a childminder. Some parents are spending up to 45% of their disposable income on average childcare costs. The majority of Local Authorities in England reported they did not have enough care in their area available for two year olds entitled to free childcare, for after-school care, for disabled children and for the children of parents who work non-typical hours such as shift workers. Since September 2017 some working parents have been entitled to 30 hours a week free childcare for three and four year olds: only one-third of Local Authorities believe they have enough childcare in their area for eligible families.

From a parent perspective, analysis by Save the Children found over 450,000 mothers with children under five in England are looking for work/would like to increase their hours but are unable to do so because they cannot find convenient childcare – with the average mother losing £3,400-£11,400 a year because they are not able to work more.

From a provider perspective, according to the NDNA the majority of nurseries admitted being concerned about whether they could afford to extend the number of state-funded hours they offer, with the current 15 hours a week resulting in an average annual loss of £34,000 per nursery. Providers suggest the Government does not fund them enough to pay higher wages and keep childcare costs down. A study carried out by the Family and Childcare Trust found nurseries and pre-schools awarded a rating of ‘outstanding’ by Ofsted paid their staff an average of £8.37 an hour compared to £7.44 in nurseries achieving a ‘good’ rating and £6.92 in providers receiving a ‘requires improvement’ or ‘inadequate’ ratings.

From a childcare professional perspective, research on the provision and use of preschool childcare in Britain by UCL in 2015 collated data from the Labour Force Survey and Ofsted registration statistics identified trends around declining workforce (a decrease of 5% for the childcare workforce between 2005 and 2015 and 7% in childminders over the same time period); the average age of the workforce is 36 years but 27% of the workforce are 25 years of age or younger; while qualification levels are rising (with a 12% increase in NVQ Level 3+ qualifications between 2005 and 2014) as the figures above show some are persistently low paid.

Thirdly, what does this all mean for childcare provision in rural areas?

Data on childcare provision in the Statistical Digest of Rural England reveals in August 2016 there were just over 8,000 Early Year Register (EYR) providers, comprising 4,700 childminders and 3,300 childcare providers – together offering over 152,000 places. Between March and August 2016 there was a 7% fall in the combined number of EYR childminders and childcare providers in rural areas, compared with a 2% fall in urban areas.

In 2016 the Family and Childcare Trust asked Local Authorities to use their childcare sufficiency data to estimate if they had enough childcare for different groups of children. This revealed 45% of authorities reported they had enough childcare for working parents, but just 14 Local Authorities in England (4 in Scotland and none in Wales) reported having enough childcare in rural areas compared to 23 Local Authorities in 2015.

An evaluation of the rollout of 30 hours free childcare in August 2017 found Local Authorities were paying higher rates to encourage childminders to participate in rural areas where there was concern about sufficiency; and because of a lower proportion of registered providers delivering extended hours in rural areas. In some instances early years provision was being jointly delivered alongside after school clubs and other nursery/education settings.

Amid this decline in providers and lack of sufficiency, we’ve heard first-hand from RSN members about some of the challenges you face in accessing childcare in rural areas. This is often exacerbated by the lack of affordable transport, access to other services and low incomes. From a provider perspective we’ve heard concerns about infrastructure (facilities), sustainability (smaller numbers), transport and workforce. We also recognise how alongside and outside of publicly funded and inspected provision a lot of informal care takes place (e.g. with parents/carers relying on grandparents, other relatives, friends or neighbours). While it is estimated that one-third of all childcare usage is from grandparents there is no national data collected on the type, volume and frequency of informal childcare. All of this suggests models of childcare provision are needed which fit rurality, involve working in partnership with others (e.g. health visitors, schools), and build capacity, capability and ties to local communities. What is currently missing is a comprehensive picture of the state of early years provision in rural areas.

In January 2018 the Treasury Select Committee launched an inquiry into the role high quality, accessible, flexible and affordable childcare can play in supporting labour productivity. The Committee is considering the effectiveness of the package of Government initiatives (are they delivering adequate provision that facilitates parental employment?) alongside the processes within which childcare schemes are delivered. Will the inquiry ‘think rural’ in helping children unlock their potential as well as improving the employment prospects of their parents? I certainly hope so…

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Jessica is a researcher/project manager at Rose Regeneration; an economic development business working with communities, Government and business to help them achieve their full potential. Her current work includes supporting a Lottery programme to help people into paid work; research for the NHS on rural workforce issues and a project looking to deliver higher level technical education and skills in rural areas. She can be contacted by email jessica.sellick@roseregeneration.co.uk or telephone 01522 521211. Website: http://roseregeneration.co.uk/ Blog: http://ruralwords.co.uk/ Twitter: @RoseRegen

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