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Disadvantaged two-year-olds could miss out on free childcare, as nurseries struggle to implement the Government's 30 hours free plan, a spending watchdog has warned.
The National Audit Office (NAO) has said if the Government does not come up with enough money to fund its 30 free childcare hours pledge, there is a risk childcare settings will offer free places to three and four-year-olds by reducing the number of disadvantaged two year-olds they have, because two-year-olds are more expensive to care for.
Poorer children's childcare in jeopardy
In its report 'Entitlement to Free Early Education and Childcare', published today, the NAO said such a move would jeopardise the Department for Education’s (DfE) aim to improve the educational lot for children who most need free childcare.
4.5 per cent funding cut
The 15 hours of free childcare, currently offered to parents of disadvantaged two-year-olds, has been in place since September 2013. However since 2013-14, the report said funding for free childcare has stayed the same, with childcare providers facing (in cash terms per child) a 4.5 per cent real-term cut to funding for three-and four year-olds.
The current national average rates are £5.09 per hour for two-year-olds and £4.51 for three-and four-year-olds. In 2015-16, the DfE gave £2.7bn to local authorities, with 1.5 million children taking up a free childcare place. From this, some £2.2bn is being spent on three-and four-year olds.
Amyas Morse, head of the National Audit Office, said: “Many parents and children are benefitting from the entitlement to free childcare, but the Department does not yet know what long term outcomes it is getting for its investment of nearly £3bn a year. In rolling out the new entitlement the Department should use and evaluate its pilots to make sure that certain groups do not inadvertently lose out.
"It is particularly important that the number of disadvantaged two-year-olds accessing free childcare continues to rise, in line with the Department’s own aspirations.”
Many parents of disadvantaged two-year-olds are still not taking advantage of the entitlement and some are unaware of its existence. Only 58 per cent of parents have taken up the offer against the DfE’s goal of take-up levels between 73-77 per cent.
Neil Leitch, chief executive of the Pre-school Learning Alliance, said: "It is vital that the Government looks to tackle the issue of capacity in the early years sector as a priority ahead of the introduction of the 30-hour offer for eligible three- and four-year-olds.
"As highlighted by today's National Audit Office report, providers facing a squeeze on places as a result of the extended offer may be forced to limit the number of funded two-year-old places they are able to provide. Supporting providers to respond to this increased demand will therefore be vital to ensuring the long-term success of both schemes."
Close attainment gap
The NAO recommends the DfE ‘close the attainment gap between disadvantaged children and their peers’, set out publicly how it will intervene in local authorities with unexplained lower levels of take-up for two-year-old entitlement and said the Department should make sure it understands the demand for free childcare around the country and the true cost of providing it.
The watchdog also found a massive variety in the levels that local authorities fund providers, differing by as much as £3000 annually per child, with local authority top slicing of that funding ranging from 10 per cent to 34 per cent.
The National Day Nurseries Association's (NDNA) chief executive Purnima Tanuku said: “This report reaffirms our conclusion that providers are keen to offer the new free 30 hour childcare entitlement but may not be able to if the funding is not viable for them to cover their costs adequately.
“New average funding rates announced by the Government are designed to encourage efficiency within providers, although with their rates frozen for several years, it does beg the question of how they can be more efficient than they are currently.
“The report also highlights a real worry that introducing 30 hours for three-and four-year-olds may displace the offer for disadvantaged two-year-olds, the very group the free early education scheme should be supporting the most.
“Adequate funding levels and a fair funding distribution so the maximum reaches the nursery front line is the key to meeting the free childcare pledge. All these issues need to be addressed in the forthcoming pilots.”
The NAO also found children’s outcomes at age five found steady improvement with 66 per cent of children reaching a good level of development in 2015, compared to 52 per cent in 2013. However, the NAO said the DfE cannot link this data to the quality of individual childcare settings children have attended.
According to the report there were 105,000 providers of childcare in England in 2015. Some 390,000 children are estimated by the DfE to be eligible for the extra 15 hours free childcare per week. £5,000 is the amount the Department for Education estimates 30 hours of childcare per child per year is potentially worth to parents.
To read the NAO report visit: https://www.nao.org.uk/wp-content/uploads/2016/03/Entitlement-to-free-early-education-and-childcare.pdf