Sam Gyimah at a National Day Nurseries Association conference

Childcare and Education Minister Sam Gyimah speaks about financial support for private nursery owners.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Sam Gyimah

Thank you, Purnima, for that very kind introduction.

January can be the bleakest of months - it’s cold, it’s dark, all traces of Christmas and New Year celebrations have been left far behind, and resolutions for new exercise regimes and healthier diets are strictly underway!

So I’m glad to be brightening up one of the dark evenings by celebrating the childcare sector.

Because make no mistake, the sector, by and large, is thriving:

  • this year’s LaingBuisson nursery market report estimates that the UK children’s daycare market was worth £4.9 billion in the 2013 to 2014 financial year - a real-term increase of 4.1%, year on year
  • that means that the market is now almost one-third larger than it was a decade ago
  • almost half of nurseries expect business conditions to improve by mid-2015
  • in fact, demand may increase by as much as 15% by 2015 to 2016
  • there are more registered places in full daycare settings, and more places in the most deprived areas
  • there aren’t many countries in which over 90% of 3- and 4-year-olds are enrolled in early education

Good news.

For nurseries, for families, and most of all, for children.

Evidence shows that early education enhances children’s development, especially for children from more disadvantaged backgrounds.

And the positives are long-lasting. Children who go to pre-school are projected to earn an impressive £27,000 more during their career than those who don’t.

And they’re more likely to get better GCSE results - the equivalent of getting 7 Bs instead of 7 Cs. That’s the kind of difference that can change a young person’s whole future for the better.

And early education also helps parents - mothers, in particular, who choose to get on and work.

By giving parents the choice to go back to work, and the confidence to know that their children are in a safe pair of hands, you’re providing a real boost to society and our economy.

So I don’t think any of us here would ever try and deny the benefits of high-quality early education!

But I do know that for some nurseries, increased demand can mean ever-increasing hurdles to jump - for some of you, it might not always feel like the sector is thriving.

But we do value your businesses - and, of course, we value what you do.

As the people in charge of educating the next generation and supporting families, it can be easy to forget you’re also business owners and entrepreneurs.

Many NDNA (National Day Nurseries Association) nurseries are single- or small-site chains, and that means money is always going to be top of your mind.

Believe me, I have a background in business, and I know how it can feel!

I’ve read the NDNA’s annual nursery survey - and I was concerned by some of the findings.

In particular, you’ve said that local authorities are slow in paying you for your free entitlements, which impacts on your cash flow, particularly for smaller nurseries.

In fact, almost 40% of local authorities pay over a month after term has started, when you know as well as I do that the law requires them to pay within 30 days.

And there’s one particular example that I know concerns a lot of you, and it’s something Purnima has rightly raised with me ever since the first time we met: business rates.

Nurseries need large buildings, even though in relative terms the value of your business may be low.

I’ve been considering what I can do to help.

So I’m pleased to be able to say that the government is, quite rightly, toughening up on local authorities.

Today, at my request, DCLG will be writing to all councils reminding them of the importance of prompt payment to you and your businesses. I’ll also be urging them to work closely with you - to understand your business models and how they could provide further support.

The letter will also remind your local authorities how valuable it is to apply business rates relief to nurseries - to help you out and encourage our growing and thriving sector. For councils that give this discount, central government will meet 50% of the costs involved.

And I’ll also be writing personally to our early years contacts in councils - I want them to get talking to their finance colleagues, working together to deliver the best service to nurseries in their area.

And I urge you to get talking to your local authorities too. Write to them yourselves, as I’ll be doing, and explain why business rates relief would make such a difference to your businesses.

We’ve also recently published a benchmarking tool allowing providers like you to see how early years funding works in your area: how much money your councils keep, and how much makes its way to the front line. To nurseries, schools and, ultimately, to children.

During a tough time of austerity, we’ve frozen funding rates for the early years sector - and I want to see that money continuing to reach the front line. I know that different local authorities treat money differently - with some giving considerably less to private practices.

That’s why I’m serious about finding out where money goes, and how it’s being used.

Now I know many of your concerns, detailed in this year’s survey, were about funding, budgets, pay, and the burden these can be on your businesses.

Your staff costs can be considerable - frequently, the biggest cost to your business.

Of course, it’s right that you spend a lot on staff, because without the right people you wouldn’t be able to provide the excellent care that so many of you do.

And we know that businesses that reward staff well are the ones that retain the best people.

That’s why the government supports businesses that choose to pay the living wage where it is affordable for them to do so and doesn’t come at the expense of jobs.

But, fundamentally, you know your businesses best, and that’s why we’re leaving it up to you to decide how to attract and retain the best talent.

As part of the government’s wider commitment to reduce the burden of regulation on all businesses, we’ve taken specific measures to reduce bureaucratic red tape around the planning and registration processes for nurseries, helping to support NDNA members to expand.

And, of course, this government is spending £5 billion - rising to £6 billion - a year, on childcare, over the course of this Parliament.

We’re working hard to make the current system simpler, and maximising the amount of money that actually reaches the front line.

We’ve protected the amount of funding local authorities receive for 2-, 3- and 4-year-olds in their area for the next financial year.

And tax-free childcare will see extra money going straight into the pockets of parents, increasing their purchasing power and boosting the finances of the childcare sector. Tax-free childcare expenditure is forecast to rise to £990 million per year by 2018 to 2019.

All to ease the burdens on nurseries like yours.

I also know that the NDNA is passionate about pedagogy.

About learning from others. Doing things better and doing things differently.

The government’s doing what it can to ease some of the financial pressures you experience, as small business owners, and we’re toughening up on local authorities, reiterating the support we expect them to provide.

The majority of you say you’re planning to expand, and almost 50% report that you’re working in partnership with nearby schools.

I’m delighted to hear that, because joined-up school and nursery provision can have so many benefits. It makes life easier for working parents, means children can access the help they need earlier on in life and helps to put education at the heart of the communities you serve.

At the beginning of a new year, now’s the time to think differently, to think innovatively, about the care and education you provide your children, as you expand and increase your childcare offer, and continue to build relationships with schools.

Like the 40 2-year-olds in Skelmersdale, Lancashire, who are receiving a great education due to a partnership between a local school and a private provider.

And the nurseries around the country that are offering parents flexibility and increasing occupancy during holiday periods by delivering the 2-year-old entitlement across 50 or 51 weeks, rather than the more usual 38.

And these are just a couple of examples of innovation making life easier for families, and helping you and your businesses to prosper.

Thank you for all that you do. I hope you’re as optimistic about 2015 as I am.

Published 14 January 2015