Early years entitlement faces major challenges – NAO report

National Audit Office concludes government expansion of childcare entitlement for working parents faces uncertainties over feasibility, costs and benefits. 

The UK government is working quickly to expand the provision of childcare with the aim of helping parents to return to work or increasing their working hours, with benefits to the wider economy. However, a new NAO report on the initiative concludes that that this rapid expansion could impact the quality of provision and the number of places available for vulnerable children. What’s more, the childcare sector faces challenges over staffing and sustainability.

selective focal photo of crayons in yellow box

Photo by Aaron Burden

The Department for Education (DfE) is responsible for expanding childcare entitlement which was announced in the March 2023 Budget and aims to see some 662,000 more children eligible for government-funded early years care.  

The scheme works by issuing codes to the parents of eligible children, which can then be redeemed from childcare providers. According to the new report, as of April 17, 2024, codes for some 246,883 children had been issued and 195,355 (79%) of them have been validated by providers. DfE estimates that it needs to find another 7,000 places by the end of this month to satisfy demand, and a further 69,300 new places by September next year (making a total of 85,000 new places). 

The report cites DfE’s own March 2024 survey of 152 local authorities on this issue. Of the 90% who responded, just just 9% were confident of meeting this 2025 target. 

The main challenge, says the report, is insufficient levels of staffing. DfE had worked with HM Treasury to increase hourly rates paid by local authorities – for example for £6 to £8.28 for staff caring for two year-olds. The department has also revised legal requirements, reducing the mandated staff-to-child ratio to 1:5.   

DfE estimates it will still need an addition 40,000 full-time equivalent staff in the sector to meet the September 2025 target. This means increasing the current workforce by some 12% – and, for context, the sector grew by just 5% between 2018 and 2023. What’s more, the NAO raises concerns about this sudden influx of new and less-qualified staff, such as impacts on quality of provision widening the attainment gap between families with different levels of affluence, and reducing provision of places for children with additional needs and vulnerabilities. 

The NAO recommends close monitoring of further implementation to ensure children are not negatively impacted, with adjustments to the programme if necessary to achieve its targets and wider objectives. 

Gareth Davies, Head of NAO, says: ‘Following the Spring Budget 2023, the government quickly established a programme to extend early years entitlements and sensibly staggered its rollout to reduce delivery risks. 

‘Despite the crucial role providers will play in delivering these reforms, consultation with the sector was hampered by the restrictions that apply when developing budget proposals. DfE then cancelled early testing plans, which exacerbated the significant uncertainty about the sector’s capacity and financial sustainability. 

‘The next phase of the reforms will be significantly more challenging, with little contingency and flexibility in its ambitious timetable. The Department must monitor the programme closely and respond promptly to emerging risks.’

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