Report on the Early Years Breakfast Summit, Hosted by Christie & Co at the Childcare & Education Expo Midlands 2023
16th November 2023
Dan Weir, Research Analyst at Morton Michel, presents a comprehensive report on the insightful discussions and critical observations made during Christie & Co’s Breakfast Summit at the Childcare and Education Expo Midlands.
Christie & Co’s Breakfast Summit took place at the Childcare and Education Expo Midlands on 22nd September 2023, bringing together childcare providers, trade associations and other professionals to discuss the state of the industry. In changing times for the childcare sector, and with a general election looming, it was an invaluable opportunity to gain insights and perspectives from experts in the industry.
Click on the sections below to read more of this report.
Background
Since 2015, early years education has never been far from the political centre stage. On the face of it, this may be a gratifying reflection of the sector’s vital importance to children’s lives, shaping the future of the nation through giving its youngest citizens the best possible start in life. However, for policy makers, the electoral and economic benefits of increasing access to childcare also play a significant role and sector professionals have to work hard to ensure that these considerations do not undermine their true purpose.
There are three widely recognised challenges for policy makers to resolve.
- The first is funding. The UK has one of the most expensive childcare regimes in the world and the current environment of high inflation is increasing the pressure. Parents need support in order to afford high quality childcare for their children, but that support must be sufficient for providers to run sustainable, profitable settings.
- The second is staffing. Every provider acknowledges that their staff are at the heart of what they do, but the sector is in the midst of a long-running recruitment crisis. A solution needs to be found to bring high quality professionals into the sector.
- Finally, but by no means least, is regulation and inspections. The need for a regulatory regime and inspections is widely accepted, but it must be implemented in a way that is in synch with the realities of running a childcare business.
In March 2023, the government announced that it intends to extend the funded hours entitlement of 30 hours a week, 38 weeks a year from just 3 and 4 year olds and disadvantaged 2 year olds to all children aged between 9 months and 5 years old. This is a dramatic expansion that will further increase the pressures caused by the challenges already identified. It is certainly the case however that the demand for this change is present, and even without it, providers are seeing an increase in the number of very young children taking up places as their parents or grandparents find they need to go back to work.
While there are many pressures, challenges and headwinds, historically the sector has, to date proven to be resilient. The post-lockdown investment market was hot, with purchasing a childcare business being seen as an attractive prospect for seasoned acquirers, including small, regional and nation groups seeking to expand their services, while renewed interest was also evidenced by first time buyers, and private equity and venture capital. Although Christe & Co’s analysis shows this market has cooled somewhat in the last quarter, as economic factors have driven caution from banks and business owners have been forced to focus on the day to day, there are still many buyers in the market for high performing, high quality settings. However, it should be acknowledged that there are instances of distress at the more vulnerable end of the market, with sessional preschools, nurseries with smaller operational capacities and and settings in areas of economic deprivation finding sustainability harder to achieve.
Funding
Discussions of funding are always lively. Although the government has promised to raise funding levels for the early years sector, there was palpable scepticism in the room as to whether this would be sufficient to meet the sector’s needs.
Funding is allocated by central government to local authorities, who are then responsible for its distribution. However, a common complaint is that providers often do not know how much they are going to get until the last moment, which makes forward looking budgeting all but impossible. This means that even though there was cautious agreement that the new two-year old funding rates, for some, go further to meeting the actual cost of delivery, the uncertainty around forward looking rates, and the absence of rates being linked to either actual delivery costs or inflation still makes business planning very challenging.
One provider gave an example of a local authority who had raised their rate for funded two year olds to an amount higher than the nursery would charge parents. Although welcomed in principle, they felt they had to ask whether they should be keeping and investing the difference. They were advised that they should, because once the entitlement expansion is implemented, the rate may need to be reduced.
Another question was whether funding rates could be expected to increase with inflation, or whether they are being front-loaded with the expectation that they will decrease in real terms. This provoked a discussion on mitigation strategies, such as charging parents for optional extras, which is permitted in principle, but is something that local authorities may take differing approaches to. The consensus was that even with increased funding rates, it would not be safe to abandon additional fees as they may well need to be reintroduced.
Smaller settings and sessional providers already face significant challenges building sustainable services on the current funding model as they are less able to make up for shortfalls through private charging. There are concerns that this could lead to some settings further restricting the number of funded places they provide or refusing to offer funded places, leading to a two-tier system, as happened in the adult care sector. In areas of economic deprivation, this could eventually lead to a a significant loss in provision.
Discussing potential solutions to these problems, there was considerable support in the room for moving away from the local authorities-led model to one in which parents are given support directly, perhaps through the existing Tax Free Childcare infrastructure. This would mean parents themselves could decide how to use the funds, and providers could set their fees according to local requirements. There was scepticism however as to whether such a wholesale change would be politically viable.
Abolishing business rates for early years provision in England received almost universal support from providers in attendance. Significant frustration was again expressed with the inconsistent approach taken by different local authorities to setting rates, once again heavily impacting the ability for businesses to plan for the future, and creating a significant administrative burden for those operating in multiple locales.
Staffing
The issue of staffing is intrinsically linked to funding. It was almost universally agreed that in an environment where staff can earn more working in retail or hospitality, recruitment into childcare can be almost impossible. This is exacerbated by the prevailing economic conditions. With the rising cost of living, even those who desperately want to work with children may be forced to sacrifice a job they love that doesn’t pay for one they hate but that allows them to make ends meet.
One challenge is that traditional tracks into the sector has become neglected or denigrated. Historically there was a perception that young women without academic inclinations should consider childcare as their best career option. While these old-fashioned and somewhat patronising attitudes towards young women are less commonplace, the perception of early years education as a low-skill career still unfairly persists. An example was given of a school setting pupils who did express an interest in childcare the task of keeping an egg or a bag of flour safe for a week. Needless to say, the room did not consider this to be good preparation for a career in their sector!
With a reduced domestic pool for recruitment, some settings are looking abroad for staff. Historically, recruiting from the EU was relatively easy, but Brexit has created significant barriers. Nonetheless, larger providers who can afford the relevant fees are still finding success recruiting from abroad and have received support from the DfE for recognising foreign qualifications. An advantage of recruiting from abroad is that staff retention is likely to be higher due to visa restrictions, increasing the certainty for businesses who are able to do so.
Frustrations were also expressed with qualification requirements, as the ‘full and relevant’ list has been reduced, meaning staff may find their existing training is no longer sufficient to meet regulatory requirements. The suggestion of the creation of short bridging qualifications was broadly supported, and it was noted that the DfE are generally keen to be flexible within the existing framework.
Ratios were also discussed. Against significant opposition from the sector, a relaxation from 1:4 to 1:5 for 2 year olds has now been introduced, with the aim of allowing settings to reduce staffing numbers. The room was somewhat divided as to whether this might be an effective approach, with several heads shaking when asked if they intended to implement it. Despite this, some providers did report a positive experience, especially in larger settings that can host mixed age groups in the same room. However, for smaller settings or those with different operating models it would not be a practical change and increasing occupancy also creates challenges with local planning rules. Moreover, it was pointed out that as an approach, making changes to safety regulations to solve economic problems is ethically questionable when children’s welfare should always be paramount.
Regulations and Inspections
When an early years setting is inspected by a regulator, they should be able to rely upon the inspector having an in depth understanding of the provision being offered. Providers are actually quick to praise supportive inspectors who conduct themselves well, and who offer thoughtful feedback that improves provision. Unfortunately, based on the testimony of those at the summit, this does not always happen. Even if genuinely incompetent inspections are a rarity, they are frequent enough that there is a lack of trust in the sector that they will be dealt with fairly, and this is resulting in considerable undue stress.
Providers gave several examples of poor experiences with Ofsted. These included an example of an inspector who on arrival admitted to having no experience with under twos, and even said she didn’t believe they should be in a childcare setting. Another downgraded a nursery due to the two-year-olds not sitting in a circle or pouring their own drinks like older children, despite these being unrealistic requirements for that age group. Unfortunately these were milder examples, and some providers related cases of inspectors’ behaviour being so poor, such as becoming rude or aggressive towards staff in front of children, that they had to be asked to leave. One provider even suggested only half in jest, that staff should wear body-cams. A further issue was an unrealistic requirement for perfection, with inspectors incorrectly believing that an Outstanding grade requires everything to be 100% correct, the impossibility of which severely demotivates staff.
Not all the commentary was negative, however. Some providers praised inspectors for their understanding of the challenges settings face, for example, taking account of cover staff having less knowledge of the children they are working with, and praising strong handover practices. There was also an example of Ofsted pro-actively withdrawing an Inadequate grade having reviewed the evidence. The consensus was that the whole situation could be improved by Ofsted having a better process for dealing with substandard inspectors, rather than the current situation where good inspectors are demotivated.
Conclusions
The common underlying issue within the discussion was that the sector feels it is being left out of key decisions. This as typified by the announcement of the entitlement expansion, which came as a surprise and without consultation. There was support for the overall intention of increasing access, but scepticism about how it can be successfully implemented.
In a similar vein, consistency and predictability were important themes. From funding differing between local authorities, to changing qualification requirements, to Ofsted inspections, providers felt they were being forced to make business decisions will not in possession of all the facts. Regardless of the policy approach chosen by this or future governments, consulting the sector, making long term plans and sticking with them seems like an easy win.
Finally this is a very independent sector. Every provider is different and faces different challenges. This is a valuable, critical characteristic of the early education sector that allows it to serve the needs of each individual child. There was a clear feeling that providers should be given the autonomy to make their own decisions, whether in respect to pricing, provision or pedagogy. Guidance is appreciated, as are sensible regulations to ensure the welfare of children and a high quality service, but providers do not want to be second guessing their own decisions in order to fit into bureaucratic processes.
Despite the challenges however, there was overall a sense of cautious optimism. This is a sector that has matured significantly, gained real confidence and is now justifiably looking for recognition.
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