Poorest children bearing brunt of early years funding crisis, new research shows

By agency reporter
June 13, 2019

New research has revealed how the early years funding shortfall – now two thirds of a billion pounds – is having a negative impact on the poorest families in England.

The research, produced by independent research agency Ceeda, found almost one in five childcare providers (17 per cent) in the most deprived areas of England anticipate closure in the next twelve months – over twice as many as those in the most affluent (eight per cent). 

The report, which uniquely combines an in-depth analysis of provider’s opinions and financial information with government data, also revealed that the early years funding shortfall is increasing at an alarming rate, rising by almost £50 million in the last year to £662 million. 

The impact of the funding shortfall is being felt across the country with almost half of providers saying they are forced to make savings by cutting back on learning resources (43 per cent). Nearly one in five said they have lowered the quality of food they give to children (19 per cent). 

Many providers reported they had little choice but to pass on the shortfall in funding to the parents. One in five childcare providers now require private hours to be taken alongside the government’s flagship funded childcare offers (18 per cent) – leading to additional costs that the most disadvantaged families may struggle to afford. 

Some providers are also limiting the number of funded places they offer, with over one in ten (12 per cent) capping the places for disadvantaged two year olds and 15 per cent capping the number of 30 hour funded places. 

Commenting on the new research, Neil Leitch, chief executive of the Early Years Alliance said: “How much bigger does the early years funding shortfall have to grow before the government acts? Thousands of providers have closed, many more are charging for things that were previously free and now we see the impact this is likely to have on the poorest children in the country.

“We’ve heard countless times from ministers about the importance of social mobility and yet the evidence is that their policies are having the opposite effect. This report is just the latest in a growing list of studies, including several commissioned by the Department for Education, revealing government childcare policy is failing, even on its own terms. 

“This is what a sector in crisis looks like. Providers are straining to deliver quality childcare on funding levels set in 2015, leaving them forced to choose between reducing quality and charging ever higher fees or closing their doors. There’s only one conclusion to draw from this: the government can no longer afford to underfund the early years. It must invest properly in its flagship childcare schemes and review the funding annually to make sure it stays in line with rising costs.” 

Dr Jo Verrill, managing director of Ceeda, said: “These findings tell an all too familiar story of rising costs and widening funding gaps. Statutory pay rises, increased pensions contributions and rising business rates are fuelling provider costs, whilst funding rates remain fixed. Childcare providers have little choice but to try a range of strategies to recoup or limit losses, from caps on funded places, to cuts in staffing levels. 

"Whilst a logical response to financial pressures, these actions have important consequences, particularly for those families least able to pay for early education.” 

The Ceeda research is published during the Early Years Alliance Fair Future Funding action week, when dozens of MPs are visiting childcare providers in England to witness first-hand the impact of underfunding on the sector. 

Responding to the report Councillor Anntoinette Bramble, Chair of the Local Government Association’s Children and Young People Board, said: “Research shows that effective, high-quality early years provision makes a real difference to young children, helping to break the cycle of disadvantage, improving social mobility and offering them a good start in life.

“Recent changes to early years provision, including the 30 hours free childcare scheme for working families, are a positive step. However, we have repeatedly raised concerns that the funding rates are insufficient and this is risking both the sustainability of many providers and the quality of provision.

“We have particular concerns around provision for disadvantaged children and those with special educational needs and disabilities if funding rates continue to fall below the cost of delivering services. It is vital that early years providers are properly funded to allow them to deliver the high quality childcare that gives children the best start in life.”

* The report can be downloaded here

* Early Years Alliance https://www.eyalliance.org.uk/

* Local Government Association https://www.local.gov.uk/

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