Expansion of ‘free’ childcare has led to rationing through the backdoor

The latest figures from the Pre-School Learning Alliance (PSLA) and the Department for Education demonstrate the entirely predictable consequences of the government’s ill-thought out and poorly-targeted expansion of its ‘free’ childcare scheme.

From September last year, families where both parents are working more than 16 hours a week, but earning less than £100,000 each, are entitled to 30 hours of free childcare for their three- and four-year-olds. This is up from the 15 hours previously available.

The new data confirm earlier impressions that the scheme is not working as the government intended. The amount made available to support each childcare place is insufficient to allow many providers to offer these places. Consequently, the figures suggest, up to 18% of families who applied for an ‘eligibility code’ (evidence of entitlement) by January 8th have not been able to take up a place.

The cost of supplying childcare has risen sharply in recent years as a result of policy changes such as higher staffing requirements, increases in qualifications demanded and adherence to the Ofsted-controlled Early Years Foundation Stage. This has driven out many informal suppliers: childminder numbers, for example are now down to 43,500 from a peak of 102,600, and increasingly provision is in larger nurseries.

Costs have been further raised with the introduction and subsequent increase in the National Living Wage, an important factor in a sector which has historically been relatively low-paid.

Nurseries argue that the amount paid by the government does not reflect these rising costs, nor the variation by regions associated, for example, with differential rents, business rates and wage levels. This latter point seems borne out by huge variations in apparent childcare place shortfalls –  2% in Bath and North East Somerset, but a massive 41% in Derbyshire, according to the DfE.

Where ‘free’ childcare places are made available, the PSLA and the Professional Association for Childcare suggest, there has to be considerable cross-subsidisation from parents who are not entitled to the provision. For example, parents of younger children (2-year-olds and younger) are having to pay more. And nurseries are resorting to stratagems to make even those entitled to the ‘free’ provision pay for add-ons.

For example, meals, nappies, trips and other extras are being charged for at excessive prices. The free hours entitlement is also being organised in such a way that parents are not able to spread the hours to meet their needs. So parents may be entitled to three days a week of up to 10 hours but have to pay for the other days even if they do not use all their entitlement on the ‘free’ days.  The hours entitlement may also be stretched over a 51-week year, meaning that parents are only entitled to 22 hours a week rather than 30 hours over the term time periods which the government funding supports.

Moreover, the shortage of places has led to ‘rationing’ by such criteria as receipt of the Early Years Pupil Premium, having siblings at the same nursery, and willingness to pay for extras.

All of this is predictable and was predicted by those of us who remain sceptical of the government’s one-size-fits-all policy in this area, which has been driven by political pressures rather than rational analysis of the diverse concerns of parents and the realities of childcare provision.

The government seems complacent, with the DfE simply bleating about the amount they are spending and weakly asserting that willingness to pay for extras cannot be a condition of entitlement.  But policy needs a fundamental rethink. Otherwise the danger is that the still largely private provision of childcare will become increasingly unsustainable and the government will gradually be forced into the role of the main provider – as happened in the 19th century with schools. And state-provided nurseries are far more expensive to the taxpayer, and typically far less convenient and responsive to parents’ and childrens’ needs.


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