On 30 November 2023, the House of Lords is due to debate the following motion from Baroness Andrews (Labour) that “this House takes note of the importance of good quality early years education provision and environments, particularly since the Covid-19 pandemic”.

Education policy is devolved. Therefore, this article focuses on the situation in England.

1. What is early years education?

Early years is the learning and care a child receives up to age five.[1] Early years education settings include nurseries, preschools, childminders and school reception classes. Formal early years providers must be registered with the Office for Standards in Education (Ofsted), which regulates and inspects the sector. All schools and Ofsted-registered providers must follow the early years foundation stage (EYFS) standards for the quality of a child’s care, learning and development.[2]

The EYFS areas of learning are:

  • communication and language
  • personal, social and emotional development
  • physical development
  • literacy
  • mathematics
  • understanding the world
  • expressive arts and design

2. Why is early years education important?

The United Nations children’s agency, UNICEF, has said that international evidence showed that children who receive quality early years education “reach higher levels of education” in later life.[3] They are also more likely to develop the “skills that the modern job market demands, including critical thinking, collaboration, resilience and creativity”. Research showed that early years education can enhance labour force productivity, economic growth and reduce the “social costs of crime and health care”. UNICEF has also said that “pre-primary education provides the highest return on investment of all education sub-sectors”.[4]

In June 2023, Ofsted published a report of the international evidence on early years education.[5] It showed that quality early years provision provided “long-term benefits for both cognitive and social and emotional skills”. Children who spend longer in early years provision have better educational outcomes, particularly “children from low-income backgrounds”.

Specifically in England, Ofsted stated that early years provision prepared children for success in later education “by giving them the building blocks for future learning”. Ofsted said that children who attended early years provision of any kind “achieved better GCSE results than those who did not”. In addition, children who attended “higher quality provision were more likely to achieve better GCSE results”.

However, a 2021 report on early childhood education by the Parliamentary Office for Science and Technology (POST) argued that the evidence in the UK was more mixed.[6] It said that the best available evidence showed that some use of high-quality provision was “beneficial from age three for all children and from age two for disadvantaged children”. There was limited data on children aged zero to two. The report found that positive outcomes were “strongly associated” with the quality of the provision and the “child’s home learning environment”.

3. What issues are affecting early years provision?

Most childcare providers in England were rated by Ofsted as good or outstanding in the year to March 2023, but Ofsted reports that the number of providers has been steadily declining since 2015. The sector is also characterised by high childcare costs for families, a challenging financial environment for providers and issues recruiting and retaining high quality staff.[7]

3.1 Market trends in early years provision

Figures from Ofsted showed that in March 2023 there were 63,200 registered childcare providers in England, a reduction of 4,800 (7%) compared to March 2022.[8] Most of the providers were childminders (27,900), followed by childcare providers on non-domestic premises, such as nurseries (26,900). Of the total that were on the early years register, 96% were rated by Ofsted as either good or outstanding.

Most of the reduction in childcare providers between 2022 and 2023 was attributable to a significant decline in childminders (3,500). Childcare providers on non-domestic premises reduced by 400 over the same period. Since 2015, there has been a steady decline in the number of childcare providers in England, as shown in the Ofsted data in figure 1.

Figure 1. Total childcare providers in England, 2015/16 to 2022/23

Graph showing a decline in the total number of childcare providers in England from 85,000 in 2015/16 to 63,200 in 2022/23.
(Source: Ofsted, ‘Main findings: Childcare providers and inspections as at 31 March 2023’, 29 June 2023)

However, the number of childcare places has not declined at the same rate as the number of providers. While the number of providers fell by 7% between 2022 and 2023, the number of places only decreased by 2%. Ofsted said this was “mainly driven by an increase in the number of places offered by providers of childcare on non-domestic premises”.

Ofsted’s 2021/22 annual report said that the decline in the number of childcare providers may “in part be caused by the considerable decrease in the birth rate”.[9] It also said that an increase in working from home “may reduce demand for childcare places”.

3.2 Findings of the House of Commons Education Committee inquiry on early years education, July 2023

In July 2023, the House of Commons Education Committee published its report, ‘Support for childcare and the early years’.[10] It concluded that, despite increasing government investment over recent decades, the sector faced challenges of “both affordability and availability”. It said:

Early years providers are closing, unable to make ends meet against a background of rising costs and stagnant funding rates. Providers that remain face severe recruitment challenges and childminders have been leaving the profession at an alarming rate. Parents are struggling to meet rising childcare costs which make up an ever-increasing proportion of families’ net income.

Whilst the committee acknowledged that most providers were good or outstanding, it said that “high staff turnover rates” affect young children who “benefit from consistent relationships”.

The committee welcomed the additional investment in the March 2023 budget to extend the subsidised entitlement for 30 free hours from three-and four-year olds down to nine-month-olds (see section 5 of this briefing for further information). However, the committee said that it was important that the government “get the rate right” for the funding if the entitlements are to be sustainable. It also recommended that nurseries “should be exempted for business rates and zero-rated for VAT” in recognition of delivering a “public good and a key government priority”.

On staffing, the committee recommended that the government should explore ways in which early years staff can be given “greater parity” with other educational providers, such as primary schools, in terms of “pay, career development and recognition”.

The committee said that childminders were a “vital part” of the early years sector and it was “concerning” that so many were exiting the market. The committee heard evidence that childminders were “struggling […] from administrative burdens, low pay and often loneliness”. The report made several recommendations to give childminders “more flexibility to set up as a business, either individually or in collaboration with others”. These included abolishing restrictions in the tenancies of childminders who are social renters, which prevent them from looking after children in their own home.

The government published a response to the report in October 2023. For a summary of the response see section 5.2 below.

4. How did the Covid pandemic impact early years education?

In the first national Covid-19 lockdown in March 2020, nurseries and other early years settings were closed, except to children of key workers and vulnerable children.[11] Settings were allowed to re-open to all children in June 2020, with safety measures in place.

A 2021 report by POST summarised the evidence on the impact of Covid-19 on early years education.[12] It said that the pandemic had impacted children in several ways, including their “social, emotional and behavioural development and mental health, physical development and school readiness”. It found that negative impacts were more likely for disadvantaged children and children with special educational needs.

The report stated that the finances of childcare providers were “already weak in several parts of the sector before the pandemic”. Covid-19 had “increased financial pressures” on providers and raised concerns about the pandemic’s “long-term impact on financial sustainability” in the sector. The report also found that the pandemic had exacerbated “long-term issues recruiting and retaining staff, especially highly qualified staff”.

Ofsted has published a series of briefings on the continued effects of the Covid-19 pandemic and educational recovery in early years providers.[13] These were published in December 2021, April 2022 and July 2022. The July 2022 edition stated that the “continued effects of the pandemic on children were evident”.[14] It documented a range of impacts on children’s communication, social and physical development caused by the pandemic:

Children’s communication and language development continued to be affected. An increased number of children have been referred for additional support, although children are having to wait months for this specialist help.

It continued:

Many children were still lacking confidence in social settings, with some taking longer to settle into nursery or with a childminder than would have been expected before the pandemic. Providers continued to focus on supporting children to work together and develop their sharing, turn-taking and listening skills.

There were also concerns about children’s physical development. The report stated that “the lack of physical activity, including access to large-scale play equipment, during the pandemic has meant that some children have not developed the gross motor skills they need”.

On staffing pressures, the report stated:

Most providers have continued to struggle to recruit high-quality qualified staff. Since the start of the pandemic, they have also reported increased difficulties in retaining staff.

Ofsted’s 2021/22 annual report, published in December 2022, summarised the impact of the pandemic on early years settings:

During the pandemic, children’s absence from early years settings and delays in routine health checks meant that early speech and language problems were not picked up as they might have been previously. Young children’s communication and language development is still affected. Many providers have noticed delays in some children’s speech and language development and they are making more referrals for specialist help with speech and language than previously.

The pandemic has also had a negative impact on children’s personal, social and emotional development. Some children’s social skills are less advanced than they might otherwise have been at their age. These include the skills needed to make friends, to become more confident and to communicate with adults. They have missed out on socialising with other children and adults, and lack confidence during social interactions.[15]

5. What is the government’s policy on early years education?

5.1 Overview

In addition to the Ofsted regulatory and inspection regime, the government provides a range of tax credits and subsidies to help families with childcare costs.

At present, childcare in England is free for two-year-olds if their parents receive certain welfare benefits.[16] All three to four-year-olds are entitled to 15 hours of free childcare, and many three to four-year-olds can receive 30 hours of free childcare, if their parents are in work and each earns less than £100,000 a year.

In the March 2023 budget, the chancellor, Jeremy Hunt, announced reforms to the package of government support for childcare costs. He announced that the current entitlement of up to 30 free hours for eligible parents would be extended to children from nine months old.[17] This will be rolled out in phases from April 2024:

  • From April 2024 eligible two-year-olds will receive 15 free hours.
  • From September 2024 eligible nine-month- to two-year-olds will receive 15 free hours.
  • From September 2025 eligible nine-month- to two-year-olds will receive 30 free hours.

It will not be universal: the criteria for eligibility will be the same as for the current 30 hours offer for three- and four-year-olds. There will not be a universal 15 hours element to the 30 free hours for nine-month-olds to three-year-olds, as there is for three- and four-year olds.

The government also introduced measures to increase funding and reduce costs for providers. It said it would provide more money in 2023/24, increasing again in 2024/25, to “substantially uplift” the funding rate paid to providers to deliver the existing free hours offers. The government said it would also change the minimum ratio of staff to children for two-year-olds from 1:4 to 1:5 and provide start-up grants for new childminders.

5.2 Government response to the House of Commons Education Committee report 2023

In October 2023, the government published its response to the House of Commons Education Committee’s report of June 2023.[18]

On the rate of funding that would be paid to providers for the new entitlements announced in the March 2023 budget, the government said that it was in regular dialogue with providers and local authorities on this issue. It reiterated that the funding rate had been increased for 2023/24 and that this would continue for 2024/25. The government said it expected to be spending £4.1bn a year by 2027/28 to fund the expansion of the new early years entitlements.

The government rejected the committee’s recommendation to exempt childcare providers from business rates and to zero-rate them for VAT. The government said business rates had already been frozen for five years and relief schemes already provided discounts to some childcare providers.

On staffing, the government did not fully accept the recommendation to give greater pay and recognition to childcare workers. The government said it was developing a “national campaign to boost interest” in the sector. It also said it was considering ways to “remove barriers to entering the sector” and to ensure that qualifications were “suitable and easy to understand”.

On allowing childminders to operate from their own homes in socially rented accommodation, the government said it was engaging with the Department for Levelling Up, Housing and Communities and other stakeholders to “identify and reduce property related barriers to childminding”.

The House of Commons Education Committee summarised the response by stating that the government had fully accepted four of its recommendations, and had “accepted a further 11 in part and rejected or failed to respond to eight”.[19]

The committee’s chair, Robin Walker (Conservative MP for Worcester), said that although the committee accepted that not all its recommendations were “in the gift of ministers at the Department for Education”, it maintained that there was a “powerful case” for reviewing the funding levels paid to providers and other financial pressures in the sector. Mr Walker said that the committee would “continue to press for action across government to support this vital sector”.

6. What is Labour’s policy for the early years?

The Labour Party has announced that if it forms a future government, it will be driven by “five missions”.[20] The fifth mission would be to “break down barriers to opportunity”, which would include a commitment to raise educational standards.

In July 2023, the Labour Party published a policy document which provided more detail on the mission to break down barriers to opportunity.[21] It stated:

Children’s earliest years are crucial to their development and their life chances. By the time they start school, children eligible for free school meals are already five months behind their peers. By ensuring families have the early support they need, we can provide every child a firm foundation that sets them up for life.

The document’s policy proposals related to early years education included:

  • A commitment for “half a million more children hitting the early learning goals [EYFS standards] by 2030”.
  • New childcare places: The document said that in some parts of the country there were “childcare deserts” where families could not find the provision they need. Labour said they would work with the sector to build capacity and as a first step would “remove legislative barriers to local authorities opening new childcare provision”.
  • Workforce reform: Labour said that the government had announced new entitlements for parents, but it had no plan to build the workforce to deliver it. The document said Labour would work with the sector to ensure staff are “provided with opportunities for high quality training and recognised for the skilled work they are doing”.
  • Reforming Ofsted: The document said early years provision would be included in Labour’s overall policy of reforming Ofsted to replace headline grades with “report cards”, which would give parents more information about how the provider is performing across a range of metrics.

In October 2023, shadow education minister Bridget Phillipson delivered a speech to the Labour Party annual conference.[22] Ms Phillipson reiterated that Labour would “end restrictions on councils delivering childcare”. She also announced that the former chief inspector of schools, Sir David Bell, would lead an early years review for the Labour Party, to develop an ‘early years plan’. Ms Phillipson said the plan would deliver a “modernised childcare system, supporting families from the end of parental leave to the end of primary school”.

7. Read more

Cover image by rawpixel on Freepik.


  1. Department for Education, ‘Early years foundation stage’, accessed 20 November 2023. Return to text
  2. Department for Education, ‘Early years foundation stage (EYFS) statutory framework’, 4 September 2023. Return to text
  3. UNICEF, ‘A world ready to learn: Prioritizing quality early childhood education’, 2019, p 11. Return to text
  4. UNICEF, ‘Early childhood education’, accessed 20 November 2023. Return to text
  5. Ofsted, ‘International perspectives on early years’, 20 June 2023. Return to text
  6. POST, ‘Early childhood education and care’, 26 August 2021. Return to text
  7. House of Commons Education Committee, ‘Government ‘has more work to do’ on landmark childcare reforms, Education Committee report says’, 26 July 2023. Return to text
  8. Ofsted, ‘Main findings: Childcare providers and inspections as at 31 March 2023’, 29 June 2023. Return to text
  9. Ofsted, ‘The annual report of His Majesty’s Chief Inspector of Education, Children’s Services and Skills 2021/22’, 13 December 2022, HC 894 of session 2022–23, p 26. Return to text
  10. House of Commons Education Committee, ‘Support for childcare and the early years’, 26 July 2023, HC 969 of session 2022–23. Return to text
  11. Parliamentary Office for Science and Technology, ‘Impact of Covid-19 on early childhood education and care’, 27 October 2021. Return to text
  12. As above. Return to text
  13. Ofsted, ‘Ofsted: Education recovery series’, 20 July 2022. Return to text
  14. Ofsted, ‘Education recovery in early years providers: Summer 2022’, 20 July 2022. Return to text
  15. Ofsted, ‘The annual report of His Majesty’s Chief Inspector of Education, Children’s Services and Skills 2021/22’, 13 December 2022, HC 894 of session 2022–23, p 20. Return to text
  16. HM Government, ‘Get childcare: Step by step’, accessed 20 November 2023. Return to text
  17. HM Treasury, ‘Spring budget 2023’, 15 March 2023, HC 1183 of session 2022–23, p 3. Return to text
  18. House of Commons Education Committee, ‘Support for childcare and the early years: Government response to the committee’s fifth report’, 17 October 2023, HC 1902 of session 2022–23. Return to text
  19. House of Commons Education Committee, ‘Education Committee publishes government response to landmark childcare report’, 18 October 2023. Return to text
  20. Labour Party, ‘Labour’s missions for Britain’, accessed 20 November 2023. Return to text
  21. Labour Party, ‘Five missions for a better Britain: Breaking down barriers to opportunity’, July 2023. Return to text
  22. Labour Party, ‘Bridget Phillipson’s speech at Labour Conference’, 11 October 2023. Return to text