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Baroness Morris of Bolton: My Lords, we have had another interesting debate on quality, although not as
 
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long as an earlier one. I accept what the Minister said about affordability but shall return to the matter in Amendment No. 13 on accessibility. I understand that if childcare is not accessible it is not sufficient, and that is fine. In relation to quality, I really am perplexed. The Minister says that the Government have no intention of diluting quality, that there are levers to ensure that quality is not compromised and that local authorities in their provision of sufficient childcare will have to look at quality. I am therefore at a loss to understand why quality cannot be on the face of the Bill. I hope that the Minister will consider this issue between now and Third Reading and that he may be able to find a means of putting it on the face of the Bill, otherwise he may find there is a coalition on quality, suitability and training. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Morris of Bolton moved Amendment No. 9:

The noble Baroness said: My Lords, Clause 6, as we have already discussed, places an obligation on local authorities to secure sufficient childcare places to meet the requirements of the Bill. The amendment inserts into subsection (1) the words,

The amendment seeks to highlight the need for sustainability in childcare provision and therefore for stability. The concept of sustainability, much like the term "quality", is notably lacking from the Bill.

There is much overlap between the individual issues to which we return today. There can be no doubt that adequate finance, quality and sustainability all influence each other in turn. What is sufficient now will change over time. Childcare—indeed family life—is dynamic. Within the arc of one's career there are many fluctuations in family life as children change and grow. For childcare to be sustainable, we need to try to account for those changes and for changing trends. During passage of the Work and Families Bill we welcomed the Government's extension of paid maternity leave and statutory maternity pay, but that, alongside the debate over the age at which to send children to nurseries, will have an impact on the sector.

The Government have said that local authorities must account for that change, but they have not convinced us how that will be achieved. We are particularly sceptical when current government figures suggest that three childcare places are closing for every five that open. We are told that local authorities must take account of the childcare needs of the local community, but can the Minister clarify what definition of "community" local authorities will use when assessing sufficiency? Will it be the residential community or the day-time community, including people who come in from other areas to work? Will it be based on ward boundary lines, or will it be based on a set number of people? Will local authority planners be involved in the decision?
 
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There are genuine concerns within the private, voluntary and independent sectors about sustainability, which remains a serious issue. Last year, 18,000 places were lost in the private, voluntary and independent sectors and the number is accelerating. As it costs roughly £1.5 million to set up a 100-place nursery, that is like nailing £250 million to a palette and setting fire to it.

I shall share with your Lordships a few examples of where sustainability does not seem to have been considered. A Sure Start placement in Reading has been opened with 500 childcare places, yet there are only 300 children in the area who fit the required criteria. In East Anglia, a 70-plus-place neighbourhood nursery, hoping to achieve children's centre status, opened in the middle of last year. Despite the opening of this new setting, another children's centre, which will also offer full day-care facilities, is reportedly planned for development within 150 metres of the existing nursery's front door. It is further reported that another four centres will be developed within the surrounding area.

I am afraid that such examples only support the fears of the private, voluntary and independent sector that demand and sustainability studies are not high on the public providers' agenda, and that some are merely responding to the tasks set by central government, playing a numbers game. What happens to private, voluntary and independent providers in these situations? Occupancy may drop, or simply not mature, due to competition from the public sector. More often than not, there is a drain on the workforce. It used to take two years to fill a nursery to 90 per cent occupancy. Now it takes three to four years to reach 75 per cent occupancy—if you are lucky—which is often too little to make the provision viable. So you have an unhappy workforce and, subsequently, unhappy children. There is also an inevitable closure and reduction in choice of different provision in that area. That goes against the Government's stated aims of working with the sector to maintain market diversity, enabling parents' choice and flexibility, and stability in the choice they make.

There is also the question of how the Government are going to encourage use of the placements provided. The sustainability of childcare must be looked at in the round, another point well made by the IPPR report out today. It is all very well creating these places but not, as the Prime Minister admitted the other day, if they are failing to reach the very people they have been set up to help because of a failure of joined-up government.

The amendment will help to focus the local authorities' minds on sustainability rather than just a number-crunching exercise for the Government. The only way we can protect real choice and diversity is by supporting the role of the private, voluntary and independent sector, and not trying to fit it into a box that the Government make for it. I beg to move.

Baroness Walmsley: My Lords, I come at this from the point of view of the child. Every time a setting closes, a child is unsettled; in fact, a lot of children are
 
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unsettled. They must then start making relationships with a new set of staff in a new, unfamiliar place. Such needs are particularly difficult for children with problems such as autistic spectrum disorder.

We need a whole heap of common sense, such as was obviously completely absent in the planning of the examples just given by the noble Baroness, Lady Morris of Bolton. It is not unreasonable to expect a local authority to pay attention to the location and quantity of provision, to competition between settings and whether one is duplicating the other. They should not encourage the opening of too many places too near others, as long as the existing provision is of suitable quality. Obviously, there are some provisions that are not good quality which should go to the wall; that is only right. But when you have perfectly good ones competing with each other and neither is viable, somebody must bring some common sense into it. That should probably be the local authority.

5.15 pm

Baroness Howarth of Breckland: My Lords, I thought that, in terms of the local authority having a responsibility for strategic planning in the development of childcare places, this was one of the things that the Bill was going to put right. Indeed, in Grand Committee I raised my concerns about schools not being part of that strategic planning and therefore being able to develop services on their campuses outside and causing this kind of difficulty. I had all sorts of reassurances from the Minister on that and I look to the future to hope that that works through.

I speak as an ex-director of social services so I know about the temptation to provide your own services. It can be extraordinarily difficult for the voluntary sector in an area where something grand like a children's centre is planned. Some services will close and there will be turnover. I am sure the Minister will tell us in his reply that that happens and that there are some services which are not of the quality that we would wish. It is crucial that the local authority takes that strategic planning very much to heart. I would be interested to know how Ofsted, or whoever is going to take over the responsibility for the Commission for Social Care Inspection, will look at that broader programme of services on the ground and ensure that it meets the needs of children, as outlined so ably by the noble Baroness, Lady Walmsley.

Lord Adonis: My Lords, when the noble Baroness moved the same amendment in Grand Committee, she raised three particular concerns, which she has reiterated this afternoon. First, given rapidly changing demographics, especially in relation to working patterns, there might be an expectation that local authorities would become—and she used a graphic phrase—"crystal ball gazers".

Secondly, the noble Baroness was concerned that overheads and financial pressures differed between the public, private and voluntary sectors and that a level playing field might not be operating, making the sustainability for private, voluntary and independent providers more difficult. Finally, she was concerned
 
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that new, heavily subsidised childcare might be created at the expense of existing good quality provision, which again she has reiterated with particular reference to the case of Reading local authority. I am afraid that I have not come equipped with briefing on Reading, although I will note carefully what she says about it in Hansard and reply to her with any knowledge we have about the specific instance. Indeed, I might even invite the local authority to comment on what she has said. Since she has made remarks about its policy in this area, it is important that it should address any concerns.

I will deal with each of these issues in turn. First, on the issue of future changes in demographics and working patterns, I stress that we do not expect local authorities to become "crystal ball gazers", in the sense of having their eyes ever fixed on changes in the future and not firmly rooted in trying to provide for the present. However, we expect them, and we think that this is reasonable, through the assessment duty in Clause 11, to consult at least every three years—so they do not have to peer into the crystal ball that frequently—with the local community, which we define as local parents, prospective parents and childcare providers as well as employers, to establish not only the current availability and requirements for childcare, but also likely future requirements.

That does not require them to make assumptions by themselves. It simply requires them, through the assessment process, to talk to people in their local area to find out which factors are likely to impact on the future demand for childcare. This could reasonably, for example, include talking to employers to find out whether they intend to expand their businesses and recruit additional staff over the following years, and talking to parents to establish what childcare they intend to use, or think they might wish to use, in the future. The authority would also be expected to take into account other demographic information such as substantial local plans to build new housing. Often that may simply involve one part of a local authority talking to another to ascertain what its development plans are in a wider sense in its area and therefore to adjust its plans in respect of childcare accordingly.

I cannot stress enough that the private and voluntary sectors are crucial to maintaining a diverse childcare market that is responsive to the needs of children. We wish to see their role properly respected by local authorities and, indeed, at every available opportunity. A few moments ago I cited the words of the Prime Minister, who could not have been clearer on the subject. I note that the statistics from our surveys of local authorities show that 58 per cent of childcare provision in children's centres is provided by the PVI sector, and that 82 per cent of children's centres have contracts with the voluntary sector. So there is no evidence of any widespread discrimination against the private, voluntary and independent sectors. On the contrary, all the evidence shows that local authorities of all political persuasions are seeking to engage with good quality private, voluntary and independent providers as a matter of course.
 
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In respect of nursery settings for three and four year-olds, there is also a very healthy diversity of provision. National data show that just over 20 per cent of four year-olds and 57 per cent of three year-olds take up provision from private, voluntary and independent providers. Overall, in 81 local authorities—which comprise 54 per cent of those local authorities for which we have returns—50 per cent or more of three year-olds take up their free entitlement in a private, voluntary or independent setting. So the evidence on the role of the private, voluntary and independent sectors is good.

We recognise that closures have been an issue. This has been a very rapidly expanding market in recent years and it would be surprising if there had not been a high turnover as a large number of new providers seek to enter the childcare market. I am glad to be able to tell the House that closure rates are today lower than at any time since June 2003. Since last March, both total closures and the closure rate of childcare places have fallen in each quarter.

Our guidance on private, voluntary and independent providers could not be clearer. The code of practice on the provision of free nursery education places for three and four year-olds, which I have previously circulated to noble Lords, states on page 19:

I stress those words: fairly, transparently and equitably. It also states at paragraph 10.5 on page 27 that local authorities should work in partnership with providers to,

So we have fully recognised the role of the PVI sector in this area. We have backed it up with the strongest possible guidance to local authorities. We stand ready to consider particular cases where that is not being honoured. If any pattern of local authorities discriminating against private, voluntary or independent providers were to emerge, we would not hesitate to consider what further steps needed to be taken. However, at the moment, all the evidence that we have is of strong and constructive partnerships between local authorities and the private, voluntary and independent sectors. Frankly, local authorities would be mad to act otherwise as so much high quality provision is already in the private, voluntary and independent sectors and we believe that the concerns that animate the amendment have been met. I hope that the noble Baroness will feel able to withdraw the amendment.


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