1. Childcare sufficiency and sustainability Disadvantaged areas 19 th March 2013

2. 1 Contents The study Models of childcare markets in our ‘disadvantaged’ areas Financial sustainability of provision Evidence of parental demand and ‘sufficiency’ Implications of the 2YO entitlement Discussion

3. The research 1.

4. 3 Background State of childcare markets in disadvantaged areas  will ‘bear the brunt’ in delivering free places for two-year- olds Research:  Baseline  Factors associated with/explaining the baseline  Going forward

5. 4 Research methodology Qualitative study  Documentary analysis of Childcare Sufficiency Assessments  Literature review – parental perspective Depth interviews in each of 10 selected LAs with  LA strategists  5 group-based providers  2 childminders “Case study” approach

6. 5 The ten local authority areas

7. Models of childcare provision in our local markets 2.

8. Funding – PVI sector providers (Two year-old funding) Three and four year-old funding Past funding streams: - NNI - Sure Start/Children’s Centre - Childcare Quality and Access Grant Childcare provider (Occasional sustainability grants)

9. Funding – LA-funded providers Two year-old funding Three and four year-old funding Past funding streams: - social services - NNI - Sure Start/Children’s Centre - Childcare Quality and Access Grant Subsidies for daycare places - i.e. sliding scale Childcare provider Subsidies for free places for children in need (over and above two year-old offer)

10. 9 Model 1 PVI sector, no providers receiving ongoing LA funding + maintained sector Daycare vacancies Sustainability concerns common Three and four year-old/two year-old funding vital Quality variable Capacity for two-year olds

11. 10 Model 2 LA-funded providers + PVI and maintained sector LA funded providers dominate daycare/wraparound Free/subsidised places Children’s Centres key providers Quality high PVI sector weaker Little capacity for two year-olds in LA-funded provision

12. How financially sustainable were our providers? 3.

13. 12 What does ‘financially sustainable’ mean? Definitions differ… Making a profit Achieving necessary surplus to be able to re- invest in setting, or to have emergency funds Breaking even Many PVI providers in our sample struggling to do the above

14. Sustainability challenges – PVI sector Low demand for daycare Role of childcare element of WTC variable Increases in core costs Low pay levels = low morale, high staff turnover Cost of complying with quality standards Competition from LA-funded/maintained sector

15. 14 Sustainability checklist – PVI sector (1) Able to attract steady fee-paying parents? Local geography Deprivation ‘hot spots’ IF SO, permits operation of ‘mixed economy’ models

16. Sustainability checklist – PVI sector (2) If heavily reliant on three and four year-old and two year-old funded places for income… Degree/nature of local competition Living costs Nature of local demand + ease of access Financial support LA Chain nursery Other local donor Type and capabilities of provider

17. 16 Case examples – PVI sector Footnote: Highlighting ways to pull out information you feel passionate about. Little Angels day nursery is a not-for-profit organisation situated on a housing estate which is a mix of LA and privately owned housing. This nursery uses the income from its paid-for daycare places to subsidise the cost of its sessional funded places. It is financially secure. Acorns is a private nursery operating on the edge of a deprived estate. It is unable to attract more affluent families because of its location. Its fees for daycare are very low, but the manager does not think that raising them is feasible. She trialed offering after-school care as well as daycare as a means of filling places and increasing income, but demand for this service was low. The nursery is struggling financially.

18. 17 Sustainability challenges – LA- funded providers Cuts to Local Authority ongoing funding? IF SO… Innovative ways to sell places for what they cost to provide? Convert paid-for places to two year-old places?

19. 18 Case examples – LA-funded providers Footnote: Highlighting ways to pull out information you feel passionate about. Footsteps Children’s Centre is funded by the LA to offer graded fee levels for additional hours on top of funded ones, based on parental income. This ensures that lower income parent are not priced out of existing provision, and that Footsteps are able to sell places and remain financially sustainable. This funding is due to continue. Little Tots Children’s Centre is in the middle of a deprived estate. It offers free wraparound and daycare places to children in need, and also has a number of subsidised daycare places, open to anyone. Cuts to Children’s Centre funding will mean the end to subsidised places. The choice will be to offer them at cost – which will make them inaccessible to local low income parents – or move to being solely a provider of funded places.

20. Was childcare in disadvantaged areas sufficient to meet parental demand? 4.

21. 20 Sufficiency (1) Sufficiency difficult to measure Parental perceptions of sufficiency affected by Actual availability, cost and suitability Perceptions of availability cost, suitability

22. 21 Sufficiency (2) LA focus for daycare = sustainability and quality, not pump priming Parental choice in all areas for three to four year-old provision NNI history in our areas indicates low demand BUT pockets of unmet demand in both models Childminders flexible, low cost solution but note attitudinal barriers

23. Rolling out free early education to two-year-olds 5.

24. 23 Overall views on the policy Strong support and enthusiasm in principle But also…many caveats and concerns…. …many of which linked to the time scales involved and lack of certainty of the specifics of the roll-out at the time of fieldwork…. …but also to real barriers and facilitators to successfully achieving realisation of the policy… …resulting in an overall picture of uncertainty about the likely success and the likely implications of the roll-out for these childcare markets and the parents within

25. 24 Opportunities Meeting unmet parental demand/stimulating demand Continuity and reliability of income Positive stimulus in difficult economic climate Help establish ‘early years culture’

26. 25 Challenges The level of funding for 2yos places Unequal opportunities for different types of providers Quality standards required

27. 26 Capacity for the roll-out Model 1 – some capacity Model 2 – less capacity Overall: willingness, pockets of ‘ready to go’ capacity, lots of preparation, but unlikely to meet the numbers required without funding

28. 27 Capacity challenges Numbers of eligible children Quality standards required Involving a range of providers to ensure parental choice

29. 28 Financial support needs Capital funding – adapt/expand premises Revenue funding Funding for training Adequate funding level for 2yos places

30. To the childcare providers and LA strategists who took time out of their busy days to talk to us! To the DfE for giving us the opportunity to carry out this interesting research Full report downloadable at: https://www.education.gov.uk/publications/eOrderingDownload/DFE-RR246.pdf Ivonne Wollny ivonne.wollny@natcen.ac.ukivonne.wollny@natcen.ac.uk Sarah Dickens sarah.dickens.freelancer@natcen.ac.uksarah.dickens.freelancer@natcen.ac.uk Thank you

31. Discussion 6.