PARLIAMENTARY DEBATE
Childcare Entitlements - 23 April 2024 (Commons/Commons Chamber)

With permission, Mr Speaker, I will make a statement on the successful first stage of the largest ever expansion of childcare in England’s history, achieved by this Government.

The Government have a strong track record of helping parents with the cost of childcare, supporting disadvantaged children and ensuring that childcare is of high quality, with 96% of early years settings rated as good or outstanding by Ofsted. In 2010 we extended the three and four-year old entitlement, commonly taken as 15 hours a week for 38 weeks of the year; in 2013 we introduced 15 hours of free early education a week for disadvantaged two-year-olds; in 2017 the three and four-year old entitlement was doubled to 30 hours per week for working parents; and in March 2023, recognising that childcare is one of the biggest costs facing working families today, my right hon. Friend the Chancellor announced the biggest investment in childcare by a UK Government in history, so that by September 2025 working parents will be able to access 30 hours of free childcare a week from when their children are nine months old until they start school.

By the time this expansion is complete, parents using the full 30 hours can expect to save an average of £6,900 a year, a hugely significant saving for their family finances. We are staggering the expansion to ensure that there are the staff and places available to meet parental demand, and this month marked the first stage of the roll-out, with eligible working parents now able to receive 15 hours of Government-funded childcare for their two-year-olds for the first time. Last month my right hon. Friend the Secretary of State for Education told the House that we expected 150,000 children to benefit from the expansion from the beginning of this month. As we said in our official statistical report, 195,355 parents were already benefiting from it on 17 April, and we have subsequently broken the 200,000 mark. We will publish further official statistical reports in due course.

As Members will know, the system involves parents applying for a code that they take to a provider to be validated in order to obtain a place. The first phase of the roll-out is showing a trajectory similar to that of our last expansion of childcare, in 2017. On 5 September 2017, 71% of codes had been validated; as of 17 April this year, 79% had been validated, and we have broken 81% as of this week. With every roll-out, some eligibility codes go unused for a variety of reasons, such as parents changing their minds about formal childcare, or being issued with a code automatically although they did not need one. In the case of our well-established offer for three and four-year-olds, about 12% of codes have not been validated, but as with previous roll-outs, we expect the number of children benefiting from this new entitlement—and the number of codes validated—to grow in the coming weeks and months.

As was the case in 2017, no local authorities are reporting that they do not have enough places to meet demand. I pay tribute to early years providers, local authorities, membership bodies and other key stakeholders who have worked closely with us to ensure that the first phase of the roll-out was successful and parents could access places, and we will continue to work closely with them for the next phases of the roll-out. The first of those will begin in September, but parents will be able to start applying for 15 hours of childcare for their nine-month-olds from 12 May. I am also delighted to announce that parents on parental leave, and those who are starting new jobs in September, will be able to apply for childcare places from 12 May, instead of having to wait until 31 days before their first day of work, as has been the case until now.

Delivering such a large expansion requires more staff and more childcare places. We estimate that we will need 15,000 more places and 9,000 more staff by September 2024, and that for September 2025, which is the largest phase of the roll-out, a further 70,000 places and 31,000 staff will be needed. Last year the number of childcare places increased by about 15,000, and the number of staff by about 13,000, even before the roll-out began and before the significant steps that the Government are taking, beginning with rates, to increase capacity in the sector.

The Institute for Fiscal Studies has independently confirmed that funding for the new two-year-old entitlement is significantly higher than average parent-paid fees. According to the Government’s provider pulse survey published last week, the largest barrier identified by the sector—by 45% of respondents—to expansion of its provision was future funding certainty, a message that I have heard clearly from the many providers I have visited in recent months. In his 2024 Budget, the Chancellor committed himself to ensuring that funding rates for all entitlements would increase in the 2025-26 and 2026-27 financial years by the measure used last year. That estimated £500 million of additional funding over those two years will provide a level of certainty that we are confident will help to unlock tens of millions of pounds in private sector investment, ensure that rates keep up with provider cost pressures, and give providers a greater opportunity to increase staff pay.

This year, to support recruitment to the sector, we launched a £6.5 million recruitment campaign entitled “Do something BIG. Work with small children”, and thousands of people are visiting the campaign website every week to find out more about the great early years and childcare careers that are available. In January we introduced changes to the early years foundation stage to give providers greater flexibilities to attract and retain staff, and yesterday we launched a technical consultation setting out the Department’s proposals for how a new “experience-based route” could work for early years staff who have relevant experience from other sectors but do not have the full and relevant qualifications that we require.

Owing to the falling birth rate over recent years, some primary schools have space that they are no longer using, and some have closed entirely. In order to support our expansion of childcare, we have launched a pilot to explore how some of the unused school space could be repurposed to enable childcare settings to offer more places. If the pilot is a success, the Government will roll that out more widely.

Our progress in delivering this transformative expansion in early education and childcare underscores this Government’s unwavering dedication to empowering families, supporting the childcare sector, and building a prosperous future. I look forward to Labour Members welcoming this month’s news and/or finally telling us what their plan for childcare is, and I commend my statement to the House.

Well, I did not hear a plan there, Madam Deputy Speaker.

It’s not our job—

The shadow spokesperson says it is not her job. With a general election later this year, it is not her job to have a plan.

Staffing had gone up by 13,000 people before we even started the expansion. Our winter survey showed that at the end of last year, applications for vacancies at group-based providers went up from two for each vacancy to five for each vacancy. I did not entirely hear the question asked by the hon. Member for Dulwich and West Norwood (Helen Hayes), but I think she asked how many children had received something as a result of the expansion—if that was not her question, I will write to her. The answer is 200,000 and counting. We expect the number to go up in the coming weeks and months, as it has with other expansions.

The funding for 2025-26 and 2026-27 increases to rates will come from day-to-day spending. The April expansion is the point at which providers will see a significant increase in their rates. By the way, that increase is £4 more per hour than parents are currently paying for under-twos provision. That is a significant increase in the rates that are being provided. Just as I was confident about the April roll-out, which has now been delivered, despite all the noise and sniping from the Opposition Benches, I am confident about the September roll-out.

The shadow Secretary of State has said that the hours model has failed and that we should move away from it. She said that she would have a childcare plan that would be like the creation of the NHS. Nobody knew what that meant, and 15 months later, it seems that neither did she, because she has had to ask somebody to write a plan for her instead. The truth is that while this Conservative Government have just successfully delivered the first stage of their childcare expansion, which 200,000 parents are benefiting from, Labour still has no plans, no policy and no idea how to help families with childcare.

I call the Chair of the Education Committee.

There is much in this statement to be welcomed. The Education Committee welcomed the expansion of childcare, broadening the offer, and the increase in funding for the funded hours, and this delivers on some of that. It is an early success story, but as the Opposition have said, there are clearly serious risks as the plan expands exponentially over the coming years. In order to address those risks, the Minister needs to secure more funding and more places.

The 13,000 places are a welcome start and more staff in the sector are vital, but can he assure me that on top of the very welcome half a billion pounds that was secured in the spending review, he will keep making the case and keep listening to the providers about the funding they need to keep moving this forward? Can he ensure that the same quantum of increase is there for the under two-year-olds as it is for the two-year-olds, compared to what is currently paid in the private sector?

I thank my hon. Friend for raising some important issues. He is right that certainty and increasing those rates have been some of the most important things that the sector has asked for. It was very warmly received that we were providing that certainty for 2025-26 and 2026-27, which we think will help the sector. According to various reports that have been carried out, it will help them to unlock private sector investment and capital to help them expand, because that was the biggest thing they felt might be holding that back. It is part of a doubling of the amount that we are spending on childcare, from £4 billion to £8 billion. I will continue to work with my hon. Friend in ensuring we address the sector’s needs.

I start by declaring an interest as a parent of a two-year-old child. What all of us parents are talking about is the cost of childcare, and the Minister did not address the cost. The survey clearly showed that over half of all nurseries and pre-schools say that the funding does not cover the cost of providing the service in the way that the Government are asking them to provide it. It does not take a rocket scientist to work out that somebody’s got to pick up the bill—a toddler could do it.

The estimate before the Government announced the new hours was that fees would rise by 8.5%. Every single parent of a child in a nursery in my local community who has come to me has said that their fees have gone up as a direct result of this policy, because that is how nurseries are trying to stay open and make ends meet. Will the Minister prove me wrong? Will the Minister commit to publishing the data on the fees that parents of all children under five in nurseries and pre-schools are paying in this country, prior to and post the changes in hours?

We have a survey of 6,000 parents and 9,000 providers to set our rates based on exactly what they are paying. The hon. Lady must have missed my saying that our rate for under-twos is over £4 more per hour than that paid by a parent privately. I know that she does not like these facts, because they are at odds with her narrative. She asked me to prove her wrong; this month, we have just done so.

The expansion of Government-funded childcare is going to be a major benefit to many families in my Chelmsford constituency, so on the first day of the expansion I went to visit Scallywags Nursery, one of the many outstanding childcare providers in my constituency. I was overwhelmed by how happy and loved the children are. They would like to expand, but they rent premises from the local council, which is run by the Lib Dems who wrote to me last night saying the council will not give more space to expand this amazing nursery. Is there any capital funding available to help nurseries expand?

That sounds like typical behaviour from a Lib-Dem council. At the end of last year, we allocated £100 million in capital funding—every local authority got some of it—precisely to help providers like the one my right hon. Friend described to expand, upgrade their buildings and so on. I would take that answer and see what the council is doing with that money.

Last year, 3,000 childminders left the sector, with the Early Years Alliance estimating that the current offer for three and four-year-olds is underfunded by £1.8 billion. That is impacting hard-working parents, particularly in rural areas such as the one I represent. Amelia, a provider in Cullompton, let me know that Devon gets just £5.20 of funding per hour for the care of three to four-year-olds, which is way below the rate in some urban areas. Westminster, for example, gets a rate of £8.17 per hour. What will the Minister do to address that imbalance and ensure that people struggling with the cost of childcare in rural areas are not short-changed?

In September we put in more than £200 million to increase rates, and in April we have put in a further £400 million to increase rates, in part to help providers meet the costs of the 9.7% increase in the national living wage that the Government have made, so rates are going up. Specifically on childminders, we have been doing a few things. We have a childminder grant scheme to try to encourage more childminders into the sector, and we have also been consulting on things that would make their lives easier and more flexible, and allow them to be part of more networks, so that we can grow what is an important part of the childcare market.

To listen to the gloomsters on the Opposition Benches, anyone would think that childcare policy was a triumph under the last Labour Government. In 2010, widespread funded childcare was just not a thing, and where the Labour Government did provide subsidies, they were in schools latching on to nurseries, in direct competition to independent providers.

Among the expansion, which I very much welcome, what is being done to help workplace providers, particularly in places such as hospitals where we have public service workers in short supply who are working irregular hours and cannot necessarily use mainstream nurseries? What is the Minister doing to try to encourage more men into the profession, too?

My hon. Friend is absolutely right: we inherited some families being able to get 12.5 hours of childcare. Thanks to the Government’s expansion, they will now be able to get 30 hours each week from when their children are nine months old until they start school.

My hon. Friend raised two other important issues. First, on people who work irregular patterns, it is important to say that we do not require the childcare pattern to be 9 to 3; we want that flexibility for people working awkward hours, and to make it easier to have that provision in other settings. He is also entirely right about trying to encourage more men into the sector. In addition to our big recruitment campaign just to get more people into the sector, we have a specific focus on trying to encourage more men.

For all the Minister’s glib responses, he has failed to address the fact that the children’s organisation Coram has reported that just 6% of local areas have sufficient childcare places for children with special educational needs and disabilities. What is he doing to ensure that all children with additional needs in constituencies such as mine can access childcare and that providers have the staff, the resources and the space they need to do so?

I do not think the hon. Lady has listened to the content of any of the answers I have given. We work with every local authority in the country. Local authorities have a statutory duty to ensure that there are a number of places available, and we work with every local authority to ensure that they have sufficient places, including for children with special educational needs. Not a single local authority is reporting that it does not have sufficient places.

I very much welcome my hon. Friend’s statement, particularly because in Basingstoke two in three parents of two-year-olds are already using childcare, so they can apply for and benefit from this extra support. Will he talk a little more about how this will help give more parents the opportunity to get back into employment, which can be particularly important for us when we are looking to address the gender pay gap?

My right hon. Friend is absolutely right. One of the things that might happen with this expansion is that parents will for the first time have childcare for their two-year-olds. The other thing is that, because they can claim 15 hours, they might increase the hours they were already paying for, to relieve the pressure on their finances. So she is absolutely right about the labour market impact. The Office for Budget Responsibility said that it expected 60,000 people to enter the workforce and 1.5 million to increase their hours as a result of being able to access this childcare, which will be a huge benefit to the economy.

Childcare in Northern Ireland is in a critical condition, and we are not even receiving these new changes, flawed as they may be. On Saturday, I joined thousands of parents on a march in Belfast demanding immediate intervention, because £10,000 a child per year is far from unusual. The Northern Ireland Executive promised that that would be a day one priority, but they have not delivered more than warm words. One interim solution could be raising the £2,000 tax-free limit—even just in line with inflationary pressures, as applies to other benefits—certainly for Northern Ireland parents who miss out on what the Minister has just outlined. Will he commit to exploring that with the Treasury in order to, in his words, “empower” parents?

The precise parameters for that are set by the Treasury, but we would like more people to claim that tax-free childcare, because many people could claim it but do not do so at that level—and, of course, it is doubled for children with SEND. People can have that with the existing entitlements in England, which can further boost their finances. We are keen to encourage people to do that.

To declare an interest, my youngest son Rupert, who is two, enjoyed his first day at pre-school last week under this scheme. I know from talking to many other parents across my constituency just how transformational this expansion of the childcare offer is. However, with Buckinghamshire, which is the natural and obvious place where people want to move to bring up their families, I fear that demand may well outstrip supply soon. We also have competing cost pressures from bordering London, where, when it comes to recruitment, the challenge of moving to an outer London borough to get London weighting at work is real. As my hon. Friend continues his superb work in ensuring that we have that expansion in childcare provision, will he ensure that counties such as Buckinghamshire and others across the south-east are given special consideration, given those cost pressures?

I am delighted to hear that Rupert has been able to take advantage of the offer. My hon. Friend is right that in different parts of the country we see different rates required by providers, based on the costs they are facing. That is why our rates are different in different parts of the country. Local authorities have to pass through 95% of what we give them to ensure that as much of that goes to the provider as possible, but we will continue to ensure that they are set according to what providers tell us they are having to pay, so that they have the money that they need.

An increasing number of constituents are coming to me because they are struggling to access childcare when they need it, which is partly exacerbated by staff shortages and sickness and overstretched providers. However, I want to press the Minister on this point. He said in his statement that the estimated £500 million of additional funding will

“ensure that rates keep up with provider costs pressure”.

What modelling has been done to ensure that that is the case, particularly with reference to places such as Bristol, where we know that a lot of overheads will be higher than in many other places outside London? I do not expect him to have the figures at his disposal today, but will he promise to write to me to give me an assessment of what has been done in relation to Bristol?

Yes, I will. The projections for the years 2025-26 and 2026-27 are based partly on economic conditions at the time—a few factors going into them will determine those rates—but I will write to the hon. Lady about specifically what has been happening in Bristol to date.

As a parent of a 20-month-old, I know that this new entitlement will be very much welcomed by many parents across Stoke-on-Trent and Staffordshire and will make a massive impact on many working families in particular. However, I also know there are challenges in getting the right place for a child. With the Minister look at what more can be done to ensure we support the sector as much as possible and expand those places in Stoke-on-Trent and Staffordshire?

My hon. Friend is right. Our key focus is on ensuring that places and staff are available in every area of the country, as we have shown in April with 200,000 benefiting from the new entitlement. We are pulling every lever, in time for the roll-out next September and the September after, to up recruitment, up rates, encourage more people into the sector and help expansion to ensure that provision is there.

I will start on a consensual point: it is not a bad thing that the Government want to extend early years childcare provision. We all want to see that and we want it to work. In answer to my hon. Friend the Member for Luton North (Sarah Owen), the Minister said, however, that not a single local authority is telling him that there are not sufficient places, yet Coram says that 35% of local authorities—a decrease of 29% since last year—reported that there was sufficient childcare for children under two. Both statements cannot be correct, so why does Coram think that in some local authorities there are insufficient places?

I have seen those figures. Many of these surveys are based on a measure of confidence taken at some point before the roll-out; all I can tell the hon. Gentleman is that we worked with those local authorities all the way up to that roll-out, to ensure that they had those places. Sometimes, when people say they are not confident, they turn out to be able to provide all those places. My point to the hon. Member for Luton North (Sarah Owen), and now to the hon. Gentleman, is that since the expansion for April, no local authority is reporting that it does not have sufficient places. We will now work with them on the next stage of that expansion for September—the first 15 hours for nine-month-olds and upwards—to ensure that that is the case again.