Small Business, Enterprise and Employment Bill

Written evidence submitted by the National Day Nurseries Association (SB 26)

1 About NDNA

1.1 National Day Nurseries Association (NDNA) is the national charity representing children’s nurseries across the UK. We give nurseries and the early years workforce information, training and support, so they can provide the best possible early education and childcare for young children. NDNA is the voice of nurseries, a sector of over 18,000 nurseries employing 200,000 people and an integral part of the lives of one million children and their families. NDNA works with local and national government to develop an environment in which quality early years education and childcare can flourish. For more information please visit our website at

1.2 NDNA welcomes the opportunity to submit evidence to the Public Bill Committee, in advance of our oral evidence on 16 October 2014.

2 Evidence

Part 5

2.1 National Day Nurseries Association strongly objects to the provision in Part 5 of the Bill to remove the requirement for schools to register separately with Ofsted in order to provide for children aged two. If retained in the Bill, this provision will mean that childcare and early education for two-year-olds in schools, including for the most disadvantaged children, is not subject to a specific early years registration and inspection process so could be established and operate without the quality assurance of expert scrutiny.

2.2 It is fundamental that regulation is driven by the needs of children. The wellbeing of children and consistency for parents is best protected by the present clear requirement for all providers for under-threes to be on the Ofsted Early Years Register, requiring them to comply with the internationally highly-regarded Early Years Foundation Stage curriculum.

2.3 Deregulation for schools alone is inconsistent with Ofsted’s drive to raise the bar for quality in early years and its proposal for a Common Inspection Framework announced last week, reducing its ability to scrutinise all settings on a level playing field. The majority of early years provision in schools is not via England's 418 maintained nursery schools, which are well known for their almost universal good and outstanding quality, but via 16,400 primary schools. Latest Ofsted statistics show 78% of primary schools to be good or outstanding, compared to 83% of private and voluntary nurseries. Therefore there is no rationale that schools can be trusted to deliver high quality in early years without equal scrutiny by Ofsted to that required of private and voluntary nurseries.

2.4 It is important that schools with nursery provision are inspected and rated on the basis of their capacity and performance specifically in early years. This is especially so for ensuring opportunity and progress for England's most disadvantaged young children. It should not be assumed that a school performing well in primary education will provide good or outstanding care and education for two-year-olds.

2.5 The protection of children by robust, consistent regulation should not be sacrificed to the drive to expand provision for two-year-olds. Schools willing to offer places for two-year-olds should be prepared to commit to regulatory requirements that meet the needs of these children. If testing themselves against a regulatory framework specific to the needs of young children is too burdensome, then schools should not be taking on the responsibility of providing places. It should be noted that childminders and private and voluntary nurseries, many of which are small enterprises without the resources of schools, manage to cope with the requirements of Ofsted early years registration and inspection requirements.

2.6 It remains essential that the Early Years Foundation Stage applies in full to schools. The EYFS must also be delivered in schools by specialists in the 0-5 years age range; primary school teachers are not trained or qualified to provide for such young children. As a national framework that protects children and promotes the best quality early learning for them, the full EYFS must follow the child whatever their setting.

2.7 Deregulation for schools would entrench a competitive advantage over private and voluntary childcare provision. Schools providing childcare do not contend with the costs of business rates and VAT that private and voluntary nursery provision must bear. In school early years provision many of the overheads are absorbed by the general school budget and local authority back office functions, such as human resources support. Relaxing regulation and thereby making it easier for schools to open up childcare places for two-year-olds than private and voluntary providers will give schools further advantage without having to meet equal regulatory requirements.

2.8 Clause 64 works directly against the stated purpose of the Bill to support business and enterprise; it will make it harder for childcare businesses to grow and thrive. The private and voluntary nursery sector has already seen occupancy of childcare places fall following the lowering of the school starting age to four, making provision less sustainable, particularly in areas of disadvantage. If two-year-olds move into school provision in large numbers, the private and voluntary nursery business model becomes unsustainable. With private and voluntary provision accounting for 91% of full daycare the impact could be to destabilise childcare provision with the unwanted effect of reducing choice, flexibility and quality for parents. Clause 64 should be removed from the Bill.

2.9 Rather than investing in expanding school provision, government should focus on the capacity that is available in high-quality early years settings which specialise in provision for under fives. Occupancy in the nursery sector is 80%, with 25% of vacant places in areas of disadvantage (DFE). Private and voluntary nurseries have the capacity, expertise and environment that best meets the needs of under-fives. The 2013 National Audit Office report on the pressure on school places caused by the increase in the birth rate also shows that primary school capacity is very much stretched and would be best focused on over fives.

Part 2

2.10 We welcome the Bill's introduction in Part 2 of a Small Business Appeals Champion - described in the Bill as a Reviewer. There is presently no independent voice in the Ofsted appeals process for early years providers, meaning that whilst the Independent Complaints Adjudicator for Ofsted (ICASO) may judge that Ofsted's process has been faulty, incorrect decisions can only be overturned by Ofsted itself. The consequences of incorrect judgements are extremely serious for continuity of care and learning for children and for nursery providers' businesses and their employees' jobs.

2.11 The powers of the Reviewer should be extended from merely reviewing the complaints and appeals processes of regulators, to scrutinising and overturning flawed regulatory decisions.

2.12 As set out in Small Business: Great Ambition the aim of the Small Business Appeals Champion is to ensure effective procedures for businesses to challenge regulatory decisions. The Focus on Enforcement Review, to which NDNA contributed, found there were ineffective procedures with businesses left unable effectively to challenge regulators’ decisions such as inspection judgments. In the case of nurseries, Ofsted's decisions can have a devastating impact, leading in some cases to closure, unemployment and the displacement of many children. This became even starker when recent changes to statutory guidance for early education and childcare came into force, meaning that an inadequate Ofsted judgment will result in the provider losing early education funding and for satisfactory/requires improvement judgments, the loss of two-year-old funding.

2.14 Under current Ofsted procedures, there is no transparent, fair and effective appeal procedure against regulatory decisions such as inspection judgments. There is an internal complaints procedure which at the first substantive stage, in the case of inspections, the complaint is investigated by Ofsted's outsourced inspection service provider against whom the complaint has been made. Even at the third stage, ICASO has no power to order Ofsted to change decisions or inspection judgments and it has a very narrow remit in looking at whether or not Ofsted followed its own complaints procedures. There is therefore, no independent oversight. There is no effective way to challenge Ofsted save for a Judicial Review which is prohibitively expensive and risky litigation which places businesses on a very uneven playing field, as Ofsted is legally represented by either its central government-funded legal department or the Treasury Solicitor.

2.15 Genuine transparency, independent oversight and a wide enough remit either to order Ofsted to change a decision, or in the case of a finding of a flawed regulatory decision with an economic impact such as an inspection judgment, to set aside that decision and order for example a further inspection would be key to making the role of the Reviewer meaningful. The Bill's provision for the Reviewer to review regulators' complaints and appeals processes, reporting annually and recommending improvements, with the regulator required to publish a response does not go far enough. Clause 15, subsection 5 explicitly preventing the intervention in individual appeal or complaint cases should be removed and replaced with provisions to enable intervention when the regulator's appeal process has been exhausted. The procedure for this would need to vary according to the regulator and under Clause 17 the Bill could allow for this to be set out in guidance. Guidance should be developed in consultation with each regulator, its business stakeholders and their representative bodies to ensure a fair process balancing strong regulation with fair and transparent processes for businesses.

2.16 A Reviewer must have the sector experience and technical knowledge to have the respect of the sector and effectively to hold Ofsted to account against the revised Regulators' Code for example ensuring that the officers these regulators employ have "the necessary knowledge and skills to support those they regulate."

2.17 The private and voluntary childcare sector is dominated by SMEs but does include a substantial number of larger nursery groups who are subject to the same regulation under Ofsted. Together these large groups provide 10% of places and make a significant contribution to provision of government funded free early education. Our understanding of the Bill is that the scope of the Reviewer will include all childcare providers regulated by Ofsted and not be restricted to those that fall into the SME category.

October 2014

Prepared 15th October 2014