The free entitlement to education for three and our year olds - Public Accounts Committee Contents

Conclusions and recommendations

1.  We welcome the fact that over 800,000 three and four year olds now receive an entitlement to free education. The significant funding supplied by the Department, alongside the work of local authorities and providers, means that early years provision has expanded significantly since this policy was first introduced over a decade ago. The following recommendations are intended to push the Department, working with local authorities, to build on this success and improve the value for money of this important programme.

2.  The Department has a limited understanding of how the funding it provides for early education is spent. Until 2010-11 the Department did not have sufficient data to estimate spending on early years education and even now the data contains errors. The Department also has very little knowledge of how funding for specific purposes has been spent. The Department must collect and publish further information on spending and outcomes. This should include the results from funding supplied for specific purposes, such as increasing capacity and participation. It is important that proper systems and data are in place to monitor and assess the investment in two year olds properly.

3.  The Department has not yet explored the reasons underlying the wide variations in local authority spend and performance and the opportunities to improve value for money that these imply. Although the implementation of early years education is devolved to local authorities it is the Department which must understand and improve the value for money of the system nationally. The Department must analyse, and attempt to understand, the variations in spending and outcomes between different local authorities and types of provider. It should seek to understand better the relationship between funding and quality to ensure best value. In particular it must use the data it has to understand the impact of its initiatives, such as the local funding formula, so that it can improve outcomes for children. The Department should also identify and publish data which enables comparisons to be made and identifies best practice, enabling local authorities to benchmark their performance against each other. It should set out in its reply to us what it will do to ensure robust comparative data and how it intends to encourage best practice and ensure that local authorities work with and learn from each other.

4.  There is insufficient information available to parents to allow them to make informed choices. Parents do not have clear, comparable and up-to-date information regarding the performance of different providers. The Department should set out what information local authorities must make available to parents. This information must be clear and easily accessible.

5.  Research shows very strong effects in early years. However there is no clear evidence from the National Key Stage One results that the entitlement is having the long term educational benefits for children that the Department intended. There is evidence of educational improvement at age five, but Key Stage One results at age seven have shown very little improvement since 2007. The Department needs to better understand how the quality of early years education supports lasting benefits and what happens in the early years of primary school to lessen the effect. The Department cannot yet be confident that spending on the entitlement is having lasting impacts on child development. The Department should identify how it will measure longer term impacts on children, and examine why measured improvements at age five are not feeding through to results at age seven.

6.  Disadvantaged families have the lowest levels of take-up of the entitlement and poorer areas have the lowest levels of high quality provision. We are concerned that fewer disadvantaged families take advantage of the free education entitlements. There is a 9% gap in take-up of free places between disadvantaged families and other families. There is a clear correlation between lower quality provision and areas of poverty. The Department must capture and share practical examples of local authorities which have successfully increased take-up in disadvantaged groups. The Department should also state how it will use the funding system to raise quality in deprived areas.

7.  We are concerned that some providers may be excluding families which do not pay for additional hours. In the Department's own survey of parents, some parents stated that they could not receive the 'free' entitlement without buying additional hours. One witness suggested that compulsory top-up fees were commonplace in some nurseries and we have seen other evidence of parents being asked for further payments. Such practices risk excluding poorer families from nurseries. Although the Department told us it has acted in response to approaches by parents we are concerned that it has not been more proactive in understanding the extent of this problem and tackling it. The Department needs to work with local authorities to better understand how common this problem is and to prevent it from happening.

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Prepared 22 May 2012