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One in three families promised free childcare before the election now set to lose out

Hulme_bridge.jpg·         One in three families that were promised free childcare before the election by the Tories are now set to lose out, as the Government desperately tries to plug the funding gaps in its childcare offer. Less than half of all 3 and 4-year-olds will now be eligible for the free childcare extension.

·         New analysis by the House of Commons Library reveals that the shortfall in the Government’s childcare plans is £480 million over the parliament – up to £470 per child each year.

·         Childcare experts and providers warn that the shortfall in the childcare offer could drive down the quality of care and fail to meet the needs of working families.

Lucy Powell MP, Labour’s Shadow Education Secretary, said:

“The Government’s childcare plans are in complete chaos. One in three working parents promised free childcare by David Cameron at the last election will now miss out because Ministers are unable to make the funding for their manifesto childcare pledge add up. Their back of a fag-packet calculations mean that many families who thought they would get more help with childcare will receive none and despite reducing eligibility by 200,000 families, the Government still has a half a billion black hole in their plans.

“With no strategy to raise the quality of childcare, and the sustainability of many childcare providers in doubt due to the shortfall, Ministers must do better. The Tories’ pre-election rhetoric on childcare has failed to match reality and parents, children and our economy will pay the price.”

Ends

Notes to editors

·         In their manifesto, the Tories announced that they would extend free childcare from 15 to 30 hours to working parents of three- and four-year-olds.[i] When the Tories first announced this extension during the election campaign, they said 630,000 three and four-year-olds would be eligible:

“When the pledge was initially announced prior to the 2015 election, the Conservative party stated that: “We expect around 630,000 3- and 4-year-olds in total will be covered by the extended entitlement” (source: Conservative press office).”

Pre-School Learning Alliance, 8 December 2015,http://www.publications.parliament.uk/pa/cm201516/cmpublic/childcare/memo/cb08.htm

·         The Tories then subsequently revised this to 600,000[ii]:

“This estimate was subsequently revised to 600,000 (Gov.uk: “Currently around 600,000 families in England have 3 or 4 year old children with both parents in work).”

Pre-School Learning Alliance, 8 December 2015,http://www.publications.parliament.uk/pa/cm201516/cmpublic/childcare/memo/cb08.htm

·         Following the changes to the eligibility criteria in the November budget, the Government has said that now just 390,000 families would benefit. If the changes to the eligibility criteria mean that just 390,000 three and four-year-olds will be eligible, one in three families that were promised free childcare before the election, will now miss out. Less than half of all 3 and 4-year-olds will now be eligible for the free childcare extension. Many of these families will include parents who work as cleaners, school support staff and checkout operators.

“These eligibility criteria mean that around 390,000 three and four year olds will be eligible for 30 hours of free childcare.”

DfE, Childcare Bill policy statement, December 2015https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/482517/Childcare_Bill_Policy_Statement_12.03.2015.pdf

·         However, at the same time as they made the changes to eligibility the Government said “around 50,000 fewer children will be eligible as a results of these income thresholds”. This shows that the Tories evidently cannot make their numbers add up on this childcare offer.

“However, following the revision of quality criteria, the government both stated that "We estimate that around 50,000 fewer children will be eligible as a result of these income thresholds” (source:http://bit.ly/1YKiWQB ) and that “the extended entitlement will be available to up to 390,000 families” (source: http://on.fb.me/1Pv7B5E ). Given the clear discrepancies here, it is vital that the government is clear how many children it expects to take up this offer as sustainable funding cannot be ensured without this information.”

Pre-School Learning Alliance, 8 December 2015,http://www.publications.parliament.uk/pa/cm201516/cmpublic/childcare/memo/cb08.htm

·         Childcare Minister Sam Gyimah has previously admitted that extending the free childcare entitlement by ten hours could cost “about £1.6bn”. Before the election, he said that if a party is willing to commit to it, “it is something they should be able to fund”.[iii]

·         However, new analysis by the House of Commons Library reveals that there is a black hole of £480 million in the funding of this childcare offer. This shortfall represents up to £470 per child each year for those taking up the full 30 hours of free childcare 

Shortfall in  funding for the extension of the free childcare offer

1017/18 - £157m

2018/19 - £160m

2019/20 - £163m

Total over the parliament - £480m

*Pre-School Learning Alliance commissioned independent research into the funding of the childcare budget after the November budget. This research identified a shortfall of £157m each year over the parliament following the extension of the offer in 2017/18. The House of Commons Library has calculated that based on current HM Treasury predictions of inflation, this would result in a total shortfall of £480 million – around half a billion - between 2017/18 and 2019/20.

Sources: House of Commons Library analysis, 20 January 2016

Pre-School Learning Alliance, 8 December 2015,http://www.publications.parliament.uk/pa/cm201516/cmpublic/childcare/memo/cb08.htm

“Independent research undertaken by research company Ceeda, commissioned by the Alliance, suggests that the funding review undertaken by the DfE has underestimated the cost of delivering childcare. This research has found that if funded at the average rate announced by the government on 25 November of £4.83 per hour (£4.88 minus early years pupil premium, estimated by the DfE to be worth £0.05), PVI non-domestic providers (nurseries and pre-schools) would face an annual shortfall of £233.70 per child for three- and-four year olds taking up the existing 15-hour entitlement, and £467.40 for those taking up the full 30 hours. This equates to a total sector-wide shortfall of over £157m per year.

Pre-School Learning Alliance, 8 December 2015,http://www.publications.parliament.uk/pa/cm201516/cmpublic/childcare/memo/cb08.htm

·         IPPR have warned that a shortfall in the childcare offer could drive down childcare quality and leave the needs of working families unmet, with worse outcomes for children and less choice for parents as the market shrinks.[iv]

·         Experts in the childcare sector have also raised concerns about funding. The Pre-School Learning Alliance have said that existing schemes are “significantly underfunded” warning that this is “crunch time” for the sector.[v]

·         The cost of a part-time nursery place has soared over the last five years, meaning parents are already paying over £1,500 more for this type of childcare than they did in 2010.[vi] David Cameron did not give any help to parents with the cost of childcare in the last Parliament.

·         The Family Childcare Trust report that one quarter of the local authorities have shortages of places for three and four year olds who qualify for free childcare. In addition, 36 per cent of local authorities lack places for two-year-olds who qualify for the 15 hours free childcare.[vii]

·         The Professional Association for Childcare and Early Years (Pacey) has said there will be a challenge in delivering the places.

The research was backed by a separate report from the Professional Association for Childcare and Early Years (Pacey), which found many providers “are being forced to cross-subsidise their free places through higher fees or retracting the number of funded places, both undermining government’s aims to increase the affordability, accessibility and quality of early years education”.
Liz Bayram, Pacey’s chief executive, said: “These findings should provide serious cause for concern for the government.
“Now that a commitment has been made to extend the number of free early education places, the challenge remains how to ensure the childcare sector is supported to deliver these places.”

The Guardian, 1 June, 2015 - http://www.theguardian.com/money/2015/jun/01/childcare-free-nurseries-challenge-david-cameron-pledge-double

[i] “bring in tax-free childcare to support parents back into work, and give working parents of 3 and 4-year-olds 30 hours of free childcare a week.”

Conservative Party Manifesto 2015

[ii] “More than 600,000 free childcare places will be created under a future Conservative government to ensure that “work pays”, David Cameron will say.”

The Telegraph, 22 April 2015, http://www.telegraph.co.uk/news/politics/david-cameron/11553618/David-Cameron-pledges-600000-childcare-to-make-work-pay.html

[iii] “Based on the numbers that I have seen, extending the free entitlement from the current 15 hours to 25 hours – not adjusting for inflation or any increase – could cost about £1.6bn,” he said.

“If £1.6bn is something a party is willing to commit to, it is something they should be able to fund

Sam Gyimah, Tory Minister for Childcare, 15 January 2015,http://www.cypnow.co.uk/cyp/news/1149147/labours-childcare-pledge-cost-gbp16bn-claims-gyimah

[iv] IPPR, 4 October 2015, http://www.ippr.org/news-and-media/press-releases/1-billion-shortfall-in-government-childcare-extension-pledge

[v] “Given that the childcare extension plans have been costed at just GBP350 million a year - a figure that our research suggests is around a quarter of what is actually needed - we are concerned that the Government is still significantly under-estimating the scale of the existing funding shortfall.

"I think this is crunch time, I think there will be a meltdown. You will see more and more providers withdrawing from the system and that will undermine and just railroad the entire policy.”

Neil Leitch, Chief Executive of the Pre-School Learning Alliance, Press Association, 1 June, 2015

[vi]Family Childcare Trust, Childcare Cost Survey 2015, 19 February 2015,http://www.fct.bigmallet.co.uk/sites/default/files/files/Childcare%20cost%20survey%202015%20Final.pdf#overlay-context=childcare-cost-survey-2015

[vii] Family Childcare Trust, 2015,http://www.familyandchildcaretrust.org/sites/default/files/files/Sufficiency%20report_7.pdf

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