Phase 1 is all about listening to sounds and learning to discriminate between different sounds. This is about sounds in everyday life, not just about sounds in speech. Phase 1 lays the essential foundations for all the teaching that follows. If children can't hear sounds and differentiate between them then they will struggle to understand that words are 'built up' of different sounds and that each sound is represented by a different letter or group of letters (a grapheme).
Singing and saying nursery rhymes will really help children working at phase 1.