Education Bill

Memorandum submitted by National Day Nurseries Association (E 85)

1. About the National Day Nurseries Association (NDNA)

2. Extension of free nursery education [Part 1, Clause 1]

3. The Early Intervention Grant [Part 1, Paragraph 341]

4. Allowing maintained schools to charge for early years provision [Part 5, Clause 47]

1. About the National Day Nurseries Association (NDNA)

National Day Nurseries Association (NDNA) is a national charity representing children’s day nurseries across the UK, giving them information, training and support, so they can provide the best possible care to young children. NDNA is the voice of the day nursery sector, an integral part of the lives of nearly one million children and their families. NDNA works with local and national government to develop an environment in which quality early years education and care can flourish. For more information please visit our website at www.ndna.org.uk

2. Extension of free nursery education

Part 1, Clause 1: Free of charge early  years provision

2.1 The new section 7 of the Childcare Act 2006 will enable local authorities to secure free early years provision for disadvantaged two-year-olds, while retaining the universal free nursery education for three and four-year-olds.

2.2 However, paragraph 63 of the Bill states that the regulations under the new section 7 will be able to define an entitlement for children based on criteria other than age, such as criteria related to the family’s economic circumstances as the government intends for two-year-olds. This is welcome, subject to sufficient and sustained funding at local level. However, the current wording appears to say the new section 7 could allow local authorities to choose to move away from universal free places for three and four year olds for 15 hours a week.

2.3 The coalition has stated its commitment to free nursery places. But due to the ambiguity of this paragraph, we are seeking clarification on whether new regulations could give local authorities the power to vary the free entitlement:

2.3.1 Would the new regulations under section 7 mean that local authorities could move away from universal free provision if they wished to, considering entitlements could now be defined by criteria other than age? For example, if this is the case, could local authorities in future choose only to offer free places to disadvantaged three and four-year-olds?

2.3.2 If so, would the government implement means to ensure local authorities continue to provide universal free places for three and four-year-olds? It is important that the government makes clear that provision will be universally consistent. For example, any move towards means-tested free places must be centrally driven and not left to gaps in the legislation which could allow local authorities to vary the free entitlement from one locality to another.

2.4 In addition, we would welcome indication of what criteria will be set out to define disadvantage in two-year-olds. We are aware this will follow in regulations but it is imperative that indicators for disadvantage are thoroughly considered and can be effectively implemented. In deciding that, it will be important for government to engage and consult with providers to work towards an agreed definition of disadvantage which can be effectively implemented in practice.

3. The Early Intervention Grant

Part 1, Paragraph 341: Financial effects of the bill

3.1 Part 1 amends the secretary of state’s power to make regulations to place a duty on local authorities to provide 15 hours a week early years education to disadvantaged two-year-olds. It is stated that the Department for Education will fund this with approximately £308 million per year (the Early Intervention Grant).

3.2 NDNA welcomes this commitment to fund free nursery education to the most disadvantaged two-year-olds. However, we would be keen for reassurance that the funding allocated for the delivery of provision for two-year-olds reaches the frontline of nursery provision rather than being spent on administration or diverted into other local services. Private and voluntary day nurseries, who provide a large proportion of places for two year olds will be key partners for local authorities in delivering on their commitments.

3.2.1 This is particularly important for nurseries in the private and voluntary sectors which, in some local authority areas, have already encountered problems with funding free nursery education for three and four-year-olds, receiving much less per hour from the local authority than it costs the provider to deliver early education.

3.2.2 It is therefore important that local authorities fund the two-year-old free offer at the required rate in order not to threaten nursery sustainability further and enable providers to participate in the scheme. Equally, the legislation should clarify that a provider’s eligibility for the three- and four-year-old offer should not depend on them being willing to offer free places for two-year-olds as these are separate schemes, with separate objectives and different funding arrangements: early education and early intervention. Childcare for two-year-olds requires a 1:4 staff to child ratio, much higher than for threes to five year olds and is, as such, more costly to provide.

3.2.3 Crucially, as the Early Intervention Grant is not ring-fenced, there is a risk, given current budget restraints, some local authorities may apportion money for two-year-olds to other services covered by the grant. It is therefore vital that funding reaches the frontline to ensure the childcare sector is sustainable and that all eligible two-year-olds receive the provision allocated to them.

3.3 Private and voluntary nurseries support the additional funding for two-year-olds, but the issues outlined above underline our main concerns with the Early Intervention Grant. Many nurseries are already not receiving sufficient funding to cover the costs of delivering free nursery education for three and four-year-olds and are naturally concerned about encountering similar problems with the two-year-old offer. This could further affect nursery sustainability and therefore reduce parent choice and two-year-old provision in disadvantaged areas.

4. Allowing maintained schools to charge for early years provision

Part 5, Clause 47: Determination of permitted charges for early years education

4.1 Paragraph 223 states that the government intends to make regulations under section 451 (2A) to lift the current prohibition on maintained schools to charge for early years provision in addition to the compulsory free entitlement hours.

4.2 NDNA is concerned about the impact of these regulations on local sufficiency and sustainability. Maintained nursery schools generally receive higher rates of free entitlement funding from local authorities. In 2009/10, the median funding per hour provided by local authorities for free nursery education was £6.44 in maintained nursery schools and just £3.50 in private and voluntary settings (Laing and Buisson).

4.3 Private and voluntary nurseries are able to compensate for some – though often not all – of these funding shortfalls by charging fees for childcare outside of the free hours. However, the Bill does not make clear why maintained settings, which generally receive higher rates of funding, might need to do this.

4.4 There is a risk that schools will be able to provide additional childcare at a lower cost than private and voluntary settings due to the hidden subsidies they receive. These lower costs could prompt parents to move their children to school-based settings, thus decreasing occupancy levels and threatening sustainability in the private and voluntary sector. The private and voluntary sector would then be less able to invest in quality improvement and workforce development.

4.5 However, due to public spending constraints, it would not be possible for school-based settings to maintain low-cost charging for additional provision. In the longer term, childcare fees overall would rise as a result; but with the balance of provision potentially having shifted to the maintained sector, there would be less choice and diversity for parents and children. There may also be also a potential state aid issue from hidden subsidy that distorts competitive provision and value for money.

4.6 Evidence shows that bespoke childcare settings with specialist staff – which the private and voluntary sector can provide – are key to positive child outcomes. Child development experts also doubt that schools offer a suitable environment for two and three-year-olds to grow in emotionally, cogitatively and physically. Additionally, the maintained sector cannot always provide the flexibility in care that parents want and it would be more costly for the maintained sector to do this.

4.7 NDNA therefore believes the Bill must require schools to provide transparent charging for childcare without subsidy to enable a fair playing field within the childcare sector, diversity of provision and continued choice for parents. Charges levied to parents must reflect actual cost and not a lower, subsidised rate.

4.8 NDNA is available to discuss further with the committee any of the issues raised in this submission.

March 2011