- Centre for Employment Relations, Innovation and Change
The centrepiece of the government’s 2023 Spring budget was the announcement that so-called “free” childcare hours would be extended.
Until now, working parents have been entitled to 30 hours of subsidised care per week during term-time, starting from the term after their child turns three. This announcement lowers the entitlement age to nine months in England, with a staggered introduction over the next year, with the full scheme in place by September 2024.
The initiative is intended to get parents (specifically mothers) back to work sooner after the birth of their children. This focus has come under some criticism. First, it frames early years provision as childcare and predominantly an issue of mothers’ labour market activation, rather than placing importance on the educational aspects of early years. Second, it offers greater subsidies to middle- and high-income earners, rather than those on low-incomes or not in paid work.
Notwithstanding these concerns, the announcement will require a substantial expansion of the current early years system. The reduction in costs is likely to be welcomed by many working parents who face some of the highest childcare costs in the world and is likely to encourage increased uptake of childcare by parents who have been priced out until now. The measures, however, present two fundamental problems for the early years sector: one of staffing, and one of cost of delivery.
First, the early years workforce (staff working in nurseries as well as childminders for children pre-school age) is in crisis. Labour shortages have long blighted the sector due to low pay, limited pay progression and poor job quality - all issues which worsened for staff during COVID. So, who will staff this expansion?
Before addressing this problem, we need to unravel the second problem: the “free hours” entitlements. These entitlements are, in fact, subsidised hours which have been systematically underfunded by the government since 2017, when the 30-hours entitlement was introduced.
Estimates of the funding gap differ, but this underfunding of the cost of early years provision has contributed to a situation where, according to the Department for Education (DfE), half of providers were breaking even or making a loss in 2021.
The government has committed an additional £4.1 billion by 2027-2028 to fund the expansion – which includes £204 million in 2023-24 from September to bring funding closer in line with the cost of provision – but even with this additional cash, the CBI has estimated that the full cost of this expansion would be over twice as much, at £8.9bn. This raises questions as to who will foot the bill for the proposed expansion.
To compound the issue of underfunding, early years settings have been prevented from supplementing low government-funded hourly rates with top-up fees and, instead, “free” places for three- and four-year-olds principally have been cross-subsidised in two ways. First, by providers charging higher rates to the under twos – a route no longer available when the entitlement hours are extended. Second, funding shortfalls have been cross-subsidised through low wages to staff in the sector. Low wages have long been recognised as a key driver of the recruitment and retention crisis in the sector.
Labour shortages are a long-standing problem for early years providers, but the issue has deepened due to financial strain placed on nurseries and childminders during COVID19 and wages falling in relation to comparable sectors, such as retail.
In 2021, average pay in the sector was £11.79 an hour in group-based (private, voluntary or independent) providers and £18.57 an hour in school-based providers, with 24% of the workforce earning at or below National Minimum Wage (£8.91).
Staff working in the early years have limited career progression, which most often translates into limited opportunities for pay progression. Our research on the challenges faced by early years providers and workforce during Covid-19, carried out by the Universities of Leeds and Bristol, shows that total staff hours in the sector decreased during Covid and staff leaving the sector were not replaced.
Notably, this included a sharp reduction in the number of apprentices in nurseries, indicating disruption to entry into the sector and creating problems for workforce sustainability in the longer term.
Work in the early years is widely acknowledged to be intrinsically rewarding, despite the low status and low pay. This fine balance between job satisfaction and long, demanding hours of work has tipped in recent years due to the changing nature of work.
Given the combination of financial challenges and staff shortages, work intensification is set to increase as the cost of the proposed expansion of funded hours partly will be offset by staff-to-child ratios changing from 1:4 to 1:5 for two-year-olds.
Working in the early years sector is becoming unsustainable for its workforce with staff under greater strain, yet barely earning a living. Workers we interviewed during the main period of Covid-19 pandemic found themselves picking up a wider set of responsibilities because other education, health and social service professionals started working remotely.
They were often the only front-line workers who children and families had face-to-face contact with throughout much of the pandemic and were increasingly engaged in safeguarding, initial identification and referral for Special Educational Needs and Disabilities (SEND), and providing advice and support to families.
These are all activities which early years workers historically had engaged in, but now with less support and resource from other professionals and, in some cases, without requisite training. Much of this support has not returned as Covid restrictions have lifted. In addition, more children have entered settings with delayed development and additional needs.
Despite rising to the challenges presented by the pandemic, early years workers felt their voices were sidelined in discussions about safety, and their contributions unacknowledged and underappreciated by government and the public. Working in these stressful conditions has undermined staff well-being, morale, and mental health. Many are leaving the sector for jobs with better pay and less responsibility in other sectors.
Good quality early years provision requires qualified and committed staff who have a unique mix of skills and knowledge which is critical for child development. Despite this, there is very little pay progression within the sector even when staff invest in higher skills and specialist training, such as SEND.
The knowledge and skills required for working in the early years have historically been unacknowledged and undervalued. This lack of recognition and reward may now jeopardise the implementation of early years expansion.
In making this major budget commitment, the government has been silent on the question of where and how exactly qualified staff will be sourced. This is a major oversight given the DfE - the department responsible for early childhood workforce and quality - has recorded a decline in the uptake of NVQ training in early education and childcare.
Working in the early years sector has the potential to be hugely rewarding, but the satisfaction many workers experience is being eroded by the lack of financial sustainability, work intensity, low pay, and poor pay progression – working in the sector simply doesn’t pay the bills.
Attracting workers back to the sector will require sustained reform in several key areas. To address the recruitment and retention crisis, a national early year's workforce strategy is needed to:
- urgently address pay and conditions across the sector, including in private nurseries and large chains, which are experiencing the most severe staffing shortages
- develop a plan for investment in continuing professional development for early years staff
- develop new career frameworks that demonstrate clear paths for progression
- implement a national pay scale for early educators that addresses ‘poverty pay’ and ensures pay progression in line with professional development and career frameworks.
To address recruitment, a national early year's recruitment campaign is needed to:
- support and promote early years education and care as offering rewarding careers in a respected profession with clear opportunities for advancement
- convey the critical importance of early education on child development and life chances and the crucial role of early years professionals in delivering early education
- incentivise apprenticeships and develop a targeted programme for the recruitment and support of apprentices.
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