Support for childcare and the early years – Report Summary

This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.

Author: Education Committee

Related inquiry: Support for childcare and the early years

Date Published: 26 July 2023

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Despite increasing Government investment over recent decades, the Early Childhood Education Care system (ECEC) in England is facing challenges of both affordability and availability. Early years providers are closing, unable to make ends meet against a background of rising costs and stagnant funding rates. Providers that remain face severe recruitment challenges and childminders have been leaving the profession at an alarming rate. Parents are struggling to meet rising childcare costs which make up an ever increasing proportion of families’ net income. Whilst the majority of ECEC provision is good or outstanding, high staff turnover rates in formal settings affects young children who benefit from consistent relationships with adult carers.

The Government announced a funding package in the Spring Budget in March 2023 that will almost double Government annual expenditure on support for ECEC by 2025. The biggest change is the extension of the subsidised 30-hours entitlement from 3-and-4-year-olds down to 9-month-olds. This is a welcome investment and demonstrates that the Government is listening to concerns about affordability and sustainability from parents and providers. However, this investment is much overdue and more will need to be done to address the structural problems in the ECEC system if the funding increases are to be implemented effectively. In particular, close attention should be paid to effective funding distribution. Settings in disadvantaged areas already struggle more than those in more affluent areas, yet we know that it is children from disadvantaged families that can benefit the most from high-quality ECEC.

Underfunding of the early years entitlements has left providers unable to invest in development and straining to survive. It is imperative now that the Government is so significantly expanding its intervention in the childcare market, that they get the rate right for the entitlements they fund. We also recommend that all nurseries are exempted from business rates and zero-rated for Value Added Tax (VAT) in recognition of their role in delivering a public good and a key Government priority. This would help them to provide enough space for the children that they care for and allow them to invest more in development.

Staff are the lifeblood of any early years setting. Their role is vital in nurturing, educating and keeping children safe. The Government should explore the potential for greater parity with other educational providers, such as those in primary schools, in pay, career development and recognition. That is why we recommend that the Early Careers Framework is expanded to all staff in Ofsted-registered ECEC settings.

Increasing the number of subsidised childcare places should not come at the expense of quality. We are deeply concerned about plans to relax staff:child ratios from 1:4 two-year-olds to 1:5. Arguments from the Government that this brings England in line with the ratio requirements in Scotland and Europe fail to recognise the higher qualification levels in these ECEC systems that allow for more leniency in ratios without compromising quality. The impact of these changes should be closely monitored and reversed if quality is degraded. Simultaneously, more needs to be done to invest in developing a better qualified ECEC workforce. To support providers to develop their staff, we have also recommended the introduction of a Leadership Quality Fund, modelled on the recent Graduate Leaders Fund but broader, to help recruit, train and retain well-qualified early years professionals.

The number of children diagnosed with Special Educational Needs and Disabilities (SEND) has been rising in recent years. Since the COVID-19 pandemic in particular, the number of children diagnosed with developmental delays and speech and language difficulties is concerning. It is vital that these children’s needs are identified and supported as early as possible. Therefore, we recommend that SEND training should be mandatory for all staff and that sources of funding for additional SEND support must also be made easier and quicker for providers to access.

Childminders form a vital part of the ECEC market, offering unique flexibility for parents and personalised care for children. It is concerning to see this part of the market struggling even more than others from administrative burdens, low pay and often loneliness. We recommend several changes that could give childminders more flexibility to set up as a business, either individually or in collaboration with others.

The message we heard loud and clear from the 1,162 parents who wrote to us in this inquiry was that their trust in the ECEC system is low, although many spoke highly of individual providers and care staff. Many who need or want to return to work struggle to access affordable, accessible and high-quality childcare. A common theme was disillusionment in the Government’s offer of ‘free’ hours, when they are not, in reality, free. We recommend that the ‘free-hours’ entitlements are renamed as ‘funded’ or ‘subsidised’ to reflect accurately the Government’s offer.

We were surprised that the limitation on parents in training or education claiming funded childcare entitlements remains. This appears to contradict the Government’s agenda in supporting lifelong learning. We recommend that this barrier is removed. This will give parents who need to retrain to re-enter the workforce or to secure more flexible work to accommodate their childcare needs equal access to support.

Parents also need more holistic support, including parenting advice, information about services, and a community that will support them in managing the complex early years of their child’s life. We welcome the Government’s pilot of Family Hub centres. These centres can and should play a vital role in developing parental trust and awareness in the ECEC system. We recommend that these are expanded as soon as possible and secured with long-term funding.

We note that better support for parents who choose to stay at home with their children was not included in the Spring Budget announcements. While this topic is not directly in the scope of this inquiry, or within the remit of the Department for Education, it will be important for the Government to complement their focus on supporting working parents with a more family-centred policy approach to early years education that recognises the importance of the home learning environment on children’s development and the value of the care that parents can provide at home. We recommend that the Government look at ways to support parents who choose to stay at home through changes to child benefits and parental leave allowances.

Government announcements in the Spring Budget indicate its willingness to better support this vital sector. To properly do so, these changes need to form part of a wider Early Years Strategy, encompassing supply side reforms, workforce development, and a considered focus on improving the quality of ECEC provision for children in all areas. Simply expanding the funded entitlements will not be enough. We recommend that the Government review and update its 2017 early years strategy.