From April this year, eligible working parents of two year olds will be able to claim 15 hours a week of free childcare, but there is growing concern that the sector will not consistently have the resource to provide the places. Centre-right think tank Onward, which has been instrumental in campaigning for improved availability of pre-school childcare in the UK, said the government “definitely could be doing more” to bring down the costs.
The scheme is the first part of the expansion of childcare provision announced by Chancellor Jeremy Hunt at last year’s Budget, and will eventually extend so that children from 9 months old will get up to 30 hours a week of childcare from September 2025.
Providers will therefore be faced with greater demand for places as the government’s free hours entitlement expands. But a workforce crisis and funding shortfalls are among the main issues that could inhibit the early years sector’s ability to deliver on the policy, according to Purnima Tanuku, the chief executive of the National Day Nurseries Association.
Tanuku told PoliticsHome that “any support for parents with the cost of childcare is always welcome” but that “any time politicians talk about expansion of existing childcare we always come out with a cautionary approach”.
She added: “The system is not working at the moment and anything that we build on that is not going to work.”
Research by Early Education and Childcare Coalition and the University of Leeds, published in November last year found that 57 per cent of nursery staff are considering quitting the sector within the next year, in what Tanuku said at the time should have been a “wake up call” for ministers.
PoliticsHome has previously reported that childcare sector leaders are seeing early years staff leave to work in other industries such as retail or hospitality for better pay and conditions.
“We’ve been warning about the need to get people into early years and making it a worthwhile profession for them to come into,” Tanuku added.
The amount of money a childcare provider gets for the free hours is set by the early years national funding formula, which sets the hourly rates that each local authority is paid to deliver these hours, cash which is then passed on to providers.
According to information on gov.uk from June 2023, when it comes to funding for existing hours for 3 and 4 year olds, “local authorities are required to pass-through at least 95 per cent” of their funding from government to providers.
However, Tanuku felt that there is still a lack of certainty about what different settings will be able to offer.
“It’s going to be a postcode lottery. In some areas [providers have told us since the announcement] they have capacity and are able to take on more children, but unless they know how much they’re going to get paid for it they won’t be able to make that decision,” she said.
“In some areas yes parents may be able to find their choice of a place, but that’s not going to be the case in all areas.”
Adam Hawksbee, deputy director at Onward, believes that the policy will see more people taking up childcare places and returning to work, but thinks there is more work that the government could do to help bring overall costs down.
“What you want to do is minimise the amount of government subsidy by doing as much as you can to reduce both the cost and the price of childcare, and that’s where they definitely could be doing more,” he told PoliticsHome.
“So will the policy have a positive impact? Yes, it will have the impact they intended. But there are definitely ways the government could reduce burdens.”
In 2022, Onward published their First Steps report, which said childcare is “too expensive, inflexible and complex” with half of the parents they surveyed saying at theat time that their childcare costs had risen in the last year.
Hawksbee said Government could help support the sector with reforms to childminding agencies and how they are regulated by Ofsted, as well as developing an early career pathway for people who work in early years, like those available for teaching. He also believed there should be further development of more apprenticeship routes for childcare.
“One of the problems with apprenticeships in childcare is that lots of these providers are really small,” he explained.
“If you employ four or five staff, how on earth do you support an apprentice? The flexi-apprenticeship model is specifically designed for these sorts of businesses, but there’s not currently enough support to make that happen.”
This week, the Department for Education opened the applications process for the first stage of the free hours expansion due this April.
From 2 January, eligible working parents of two year olds were able to apply for the 15 hours a week free childcare that will be available from April 1. Working parents who are eligible must earn more than £8,670, but less than £100,000.
A Department for Education spokesperson said: “We are confident in the strength of our childcare market to deliver the largest ever expansion in childcare in England’s history, set to save working parents using 30 hours a week an average of £6,500 per year.
“Our data shows the number of early years staff and places increased in 2023 – but we know there is more to be done. That is why we are investing hundreds of millions of pounds to increase hourly funding rates and have allocated £100 million in capital funding for more early years and wraparound places and spaces.
“We published our 2024-25 hourly funding rates in November and are working closely with local authorities to make sure they have what they need to deliver the first phase of the rollout in April.”
