Memorandum submitted by Helen Penn and Eva Lloyd, Co-directors, International Centre for the Study of the Mixed Economy of Childcare (ICMEC), Cass School of Education, University of East London

 

We welcome this opportunity to submit written evidence to the Children, Schools and Families Committee's Inquiry into Sure Start Children's Centres. ICMEC was founded in 2007 in order to study the impact of market expansion on early years services, both in the UK, and internationally. We have published a series of papers on the topic [1], we work closely with a range of providers in both the public and the private sectors, and our open international seminar series attracts wide interest from across the spectrum of organizations concerned with provision of services and advocacy, as well as within the academic community. In this submission we focus on the role of the for-profit private sector in the provision of integrated early learning and daycare in Sure Start Children's Centres.

 

Summary of evidence

· The Government has strongly supported the growth of the for-profit private sector, through its Childcare Market management strategy. It has encouraged the use of for-profit providers to deliver the core childcare offer in children's centres

· The for-profit childcare sector has grown by 70%, more than any other early years sector in the last 10 years.

· The impact of this exponential growth has barely been investigated. Regulatory bodies, such as Ofsted, and survey organizations providing monitoring services for the Government such as BMRB do not generally distinguish between for-profit and non-profit childcare, which makes tracking providers problematic

· Research into early education and care suggests that for-profit care is generally of a lower quality than non-profit care in whatever country it has been investigated. In the UK the outcome evidence from EPPE, the NNI and Millennium studies consistently points to lower quality in the for-profit sector as compared to the maintained sector. Poor quality childcare adversely affects child outcomes, and is most likely to be found in poor areas.

· For-profit care raises questions about continuity and sustainability, especially in a recession

· For-profit care raises problems about co-operation and sharing of ideas and resources, because of business confidentiality issues.

· For-profit care is linked to social stratification and does not promote social inclusion

· No other country in the EU, with the exception of the Netherlands, has supported for-profit provision for policy mainstream early education and care provision

· There is a fundamental contradiction in the provision of Sure Start Children's Centres in recommending that the private sector be heavily involved, whilst the private sector itself is reluctant to invest, and offers poorer quality care. We recommend that the Government rethink the role of the private sector in the provision of Children's Centres

· We also recommend changes in regulatory practices in order to monitor and compare the quality and outcomes for different kinds of providers

 

Evidence

1.1. We wish to comment on the relationship between Sure Start Children's Centres and the for-profit private sector. Section 8 of the Childcare Act 2006 states that local authority provision should be a last resort, and that the job of local authorities is childcare market management. As a result of this legislation, for-profit businesses have featured in Sure Start Children's Centres, in particular in providing the core offer of daycare. In particular Section 3.6. of the Phase 3 Planning and Delivery of Sure Start Children's Centres issued by the DCSF stresses the importance of working with the private, voluntary and independent (PVI) sector about "where centres should be located, what services should be provided and who should run them". The Phase 3 document also points out that the 2006 act "restricts local authorities from providing childcare where there are alternative and appropriate means of delivery available". Over and above the childcare offer, local authorities should also consider with the PVI sector "options for renting space in their facilities for the delivery of some services". The Government is therefore clear that the private sector should play a role in the delivery of Sure Start Children's Centres, or at the very least adopt a business model for delivery of daycare. "Early years provision (integrated early learning and daycare) which is a key part of the offer in centres serving the most disadvantaged communities and is optional elsewhere, is intended to be self-sustaining and run on business lines".

 

1.2. Despite its promotion of the private sector, the Government has chosen to blur the distinction between for-profit and non-profit services in measuring the impact of services, and uses the word "settings" to describe provision, independently of auspices. It also uses the word "providers" for those who deliver services, and does not distinguish between ownership and non-ownership of settings. Ofsted and other monitoring agencies, following Government guidelines, no longer distinguish between different kinds of providers. For example, the most recent Ofsted report on Sure Start Children's Centres (2009) only uses the general category of "daycare providers", while the BMRB survey on childcare providers (2009)[2] can only make a minimal distinction between voluntary and private. Therefore some of the evidence we present here is indirect, rather than direct, and inferred from existing data.

 

1.3 We consider that there is a strong case for considering the impact of for-profit care. The most comprehensive information about the reach and scope of the for-profit early education and care sector is produced by a market research company, Laing and Buisson. Their recent publication Children's Nurseries: UK Market Report 2009[3] shows a 70% increase in for-profit provision since 2002. Corporate firms constitute just under a tenth of the for-profit market; the rest is made up of small and medium size traders. The total number of places available in the UK children's day care nursery market for children between 0 and 8 years is estimated at 721,215 at January 2009. The places are supplied by an estimated 15,595 nurseries. This market share is worth approximately £3 billion. The size of this sector - approximately 65% of all full daycare provision - enables it to exert considerable influence on local and national policy making, over and above any direct participation in Sure Start Children's Centres.

 

1.4 Where information is available, the evidence suggests that the for-profit sector offers lower quality care than does the maintained sector. Three large scale research studies in the UK, EPPE [4], the Neighbourhood Nurseries Initiative[5], and the Millennium Cohort study[6] all show clearly that private for-profit provision in general offers a significantly lower standard of care and education, although there is some variation, and at the top end, private for-profit provision may be good quality. Studies from Canada (Cleveland et al[7]) and from the USA (Sosinski et al[8]) also suggest that for-profit care is of a significantly lower standard than non-profit care. There are a variety of explanations for these findings but for the UK studies, the conclusion has been it is the quality of staffing, and in particular the use of trained teachers, that makes a critical difference. However, teachers can command a higher salary than non-teachers, and this impacts on profitability. Staff costs are the biggest single item on outgoings, and in the interests of profitability and sustainability, it is important for businesses to keep staff costs low. There is no obligation to provide qualified teachers in the daycare element of Sure Start Children's Centres for this reason.

 

1.5 The Government rationale in general for supporting the private sector is that it is more flexible and more responsive to consumer demand, more efficient and therefore offers better value for money. However from an owner or shareholder's point of view, the prime consideration for businesses in providing a childcare service is profitability. Private entrepreneurs are unwilling to invest unless there is a return for their money. Secure returns are more likely in a wealthy than in a poor area; there is evidence both from the UK and from the Netherlands that investors prefer to set up businesses in well-to-do areas, and are more wary of investing in poor areas[9]. As the Sure Start Children's Centres were initially located in poor areas, this constituted a risk for entrepreneurs providing the daycare element. Although the centres are now being rolled out to better-off areas, they are still likely to be a risky investment, given the overall focus of the centres is towards vulnerable families. The National Audit Office 2006 report on Sure Start Children's Centres[10] suggested that almost all centres, whoever managed them, were having problems offering sustainable daycare.

 

1.6 In the current recession, sustainability is particularly problematic. The Laing and Buisson 2009 report suggests that "the UK recession is certain to leave a higher proportion of nurseries financially vulnerable, and rein in growth and development plans for the vast majority of nursery businesses." 38% of for-profit nurseries saw their economic performance weaken in 2008, and a third of these nurseries reported "a significant worsening". If profitability fails, the main options are closure or raising fees. Fees rose by an average of 4.9% in 2008. Other strategies include more vigilant pursuit of non-payers or late payers - the very families who are most likely to be using Sure Start Children's Centres. Ofsted (2009) notes that the number of centres offering daycare as part of their core element has not risen, only 41% now do so.

 

1.7 Another concern for the for-profit sector is maintaining business confidentiality. DSCF encouragement to successful childcare businesses to share their know-how widely has met with stiff resistance. One medium size trader is quoted as saying "In a competitive environment this intellectual property or pool of trade secrets represents one of the most important assets a company owns...this is exactly what the Government is expecting the best nurseries to do in an effort to raise standards...Both the private and the maintained sector will be expecting to spend time sharing best practice with other nurseries even if they are competitors...this is neither fair nor reasonable."[11] The most recent Ofsted report (2009) on Sure Start Children's Centres suggested that sharing and co-operation across daycare and other services were lacking in about half the centres (n=10) they investigated.

 

1.8 As indicated above, the use of the for-profit sector increases social stratification. For the for-profit sector, investment in wealthy areas brings more reliable returns than investment in poorer areas. From a parent's perspective, research suggests that rich parents have the flexibility to choose and travel to the best daycare; poor parents have little or no flexibility and are deterred from looking.[12] The recent Ofsted review[13] of developments in early learning and childcare in the last few years also noted that the poorest quality care is to be found in the poorest areas.

 

1.9 The reliance on for-profit care to deliver daycare, especially for children three and over, is not mirrored in any other European country except the Netherlands. France and Belgium for example offer 28 hours free education in the maintained sector for all children aged over 30 months. The take-up once children reach the age of 3 years is over 98%; there is no recorded reluctance or avoidance by vulnerable families, for whom it is a fully universal and non-stigmatising service. The perceived need for segregated and specialized care in Children's Centres apart from mainstream education is a uniquely British phenomenon.[14]

 

1.10 For these reasons we consider that there is a fundamental contradiction at the heart of the Government's policy concerning Sure Start Children's Centres. The policy suggests that the for-profit sector has an important role to play in the delivery of centres. The evidence suggests that the for-profit sector is both unwilling and unable to make the kind of contribution the Government anticipates. We recommend the Government critically review the contribution of for-profit care in the delivery of Sure Start Children's Centres.

 

1.11 Changes in monitoring practice would enable the situation to be more closely monitored. We recommend that Ofsted and other monitoring organizations adopt the distinction between for- profit and other forms of service in their reporting.

October 2009

 

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[1] Penn, H. (2009) 'International Perspectives on Quality in Mixed Economies of Childcare.' National Institute Economic Review. 207. 83-89

Penn, H. 'Gambling on the Market the role of for-profit provision in early childhood education and care.' (2010 forthcoming) Journal of Early Childhood Research

 

 

[2] Ofsted (2009) The Impact of Integrated Services on Children and their Families in Sure Start Children's Centres. London: Ofsted

BMRB (2009) Childcare Providers Survey 2008. DCSF-RR-164. London: DSCF

[3] Laing and Buisson (2009) Children's Nurseries: UK Market Report 2009. Eighth Edition. London. Laing and Buisson

[4] Sylva, K., Melhuish, E. C., Sammons, P., Siraj-Blatchford, I. and Taggart, B. (2004), The Effective Provision of Pre-School Education (EPPE) Project: Final Report. London: DfES / Institute of Education, University of London

 

[5] Mathers, S., and Sylva, K. (2007) National Evaluation of the Neighbourhood Nurseries Initiative: The Relationship between Quality and Children's Behavioural Development. London DCSF. SSU/2007/FR/022

[6] Mathers, S., Sylva, K. and Joshi, H. (2007) Quality of Childcare Settings in the Millenium Cohort Study. London. DCSF. SSU/2007/FR/022

[7] Cleveland, G., Forer, B., Hyatt D., Japel, C. and Krashinsky, M (2008) 'New Evidence about Childcare in Canada: Use Patterns, Affordability and Quality.' Institute for Research in Public Policy: Choices V14 (12) http://www.irpp.org/choices/archive/vol14no12.pdf

 

[8] Sosinky, L., Lord, H. and Zigler, E. (2007) For-profit/non-profit differences in center-based child care quality: Results from the National Institute of Child Health and Human Development Study of Early Child Care and Youth Development. Journal of Applied Developmental Psychology V28(5) 390-410

 

[9] Noailly, J., Visser, S. and Grout, P. (2007) The Impact of Market Forces on the Provision of Childcare: Insights from the 2005 Childcare Act in the Netherlands. CPB Memorandum 176. The Hague: CPB Netherlands Bureau for Economic Policy Analysis. www.cpb.nl/nl/

 

[10] National Audit Office (2006) Sure Start Children's Centres. London: The Stationery Office

 

[11] Bentley, A. (2008) 'To the Point'. Nursery World. June 2008. p12

 

[12] Vincent, C., Braun, A., and Ball, S.. (2008) 'Childcare, Choice and Social Class: Caring for Young Children in the UK.' Critical Social Policy. V.28 (1) 5-9

 

[13] Ofsted (2008) Early Year: Leading to Excellence 2005-2008. London: Ofsted

[14] Penn, H. (2009) Early Childhood Education and Care: Key Lessons from research for Policy Makers Brussels/Lyon EU/NESSE 2009 DG Education and Culture http://www.nesse.fr/nesse/nesse_top/tasks/analytical-reports/ecec-report-pdf

EU/EGGE 2009 The Provision of Childcare Services: A Comparative Review of 30 European Countries. DG Employment, Social Affairs and Equal opportunities