Mothers most often suffer from the consequences of the horrendous costs because, according to official figures, women do on average 60 percent more unpaid work than men.
The Office for Budget Responsibility, the government’s official forecaster, said providing 30 hours of free childcare per week for children aged nine months to two years would “gradually increase” the employment of parents with young families. It is estimated that around 60,000 parents from this demographic will enter the labor market by 2027-28.
Of all the measures announced in the budget, expanding free childcare will have by far the biggest impact on labor supply, according to OBR.
But the current free childcare scheme is already underfunded and experts have warned that funds allocated to the childcare sector in this week’s budget were below what was needed to keep struggling nurseries afloat.
Last month the Confederation of British Industry recommended the government invest £8.9bn in the early years sector – almost double the £4.6bn in the budget.
Currently, daycare centers subsidize free hourly rates offered to parents of three- and four-year-olds by charging those of one- and two-year-olds more. But once the free allowance is expanded to both age groups, experts warn the funding gap will escalate.
Ms Brearley said: “We are concerned that the money pledged will not be enough to bring the cost to parents down on a sustainable basis.
“Free childcare from nine months is awesome, but only if there are childcare facilities that provide the care, and without the right funding it won’t exist.”
A part-time childcare place, equivalent to 25 hours a week, for a child under the age of two costs an average of £148 a week, which has increased by 5.6 per cent over the past year, according to Coram Family and Childcare.
In the most expensive areas of the country, the typical cost is a third higher – the average weekly cost of a part-time place for a child under two in central London is £199.
Childcare places are also chronically scarce. Just half of local areas reported adequate childcare for children under the age of two earlier this year, down 7 percent from 2022, Coram Family and Childcare said. For full-time working parents, that number dropped to less than half.
Stella Creasy, the Labor MP for Walthamstow, said the reforms for one- and two-year-olds were poorly planned and called for action to increase the supply of nursery places.
“This will be like the ‘Help Buy Homes’ program – it increases demand but doesn’t do enough for supply,” she said.
“At the moment the day care centers are staying open by cross-subsidizing the places for three to four year olds with what you charge for a one to two year old. If you already have seats that are underfunded and you are now increasing the rights to even more seats, it won’t work.
Ms Creasy added: “Like Help to Buy, it only makes the problem more expensive. They may be entitled to 30 hours of free childcare but the rates above that would be so expensive and unavailable.”
Kindergartens, preschools and childminders are struggling to absorb inflated energy and food prices, and a third face closure in the next 12 months, according to the Early Years Alliance, a charity. Those that remain open must pass higher costs on to parents to survive.
Early Years Alliance’s Neil Leitch warned that the sector is in the midst of a crisis, struggling with the aftermath of years of “severe underfunding alongside the worst workforce crisis in years”.
Mr Leitch said: “It is very unlikely that the funding announced today will be what is needed to put providers on a stable footing.
“We know from bitter experience that expanding so-called ‘free childcare’ without proper investment is a recipe for complete disaster. Given that many providers rely on fees from younger children to fill current funding gaps, the impact on the sector if the government gets this wrong cannot be underestimated.”
Loose care keys
Mr Hunt also relaxed the staff-to-child ratio for two-year-olds in childcare from four to five per staff member – bringing the rules in line with other countries such as Scotland. The new quotas will be optional, with the Chancellor saying it would increase “flexibility for providers and the availability of childcare” for parents.
But the industry thinks differently. Mr Leitch called the decision “absolutely appalling”.
He said: “Yes, parents want affordable care and education, but they also want to make sure their children are in a safe environment and are receiving quality care and education. This policy completely contradicts that.”
Coram Family and Childcare’s Megan Jarvie said relaxing the staff-child ratio was a “step in the wrong direction”.
Ms Jarvie said: “It doesn’t prioritize quality of care and it will also reduce costs for parents. Providers are under so much pressure that they would use any savings from the relaxed conditions to balance the books instead of passing them on to parents.
“Also, because the decision to relax quotas will be voluntary, many parents will simply choose not to use daycare, where there are more children per employee.”
Universal Credit Payout
The government also pays the childcare costs of Universal Credit parents who take up work or increase their hours in advance.
This removes a major barrier to gainful employment for welfare recipients, who often cannot find the funds to pay for childcare. Under the current system, they can claim back 85 per cent of their childcare costs after prepaying them when they start work.
Currently, just 13 per cent of Universal Credit parents who are eligible for this assistance are claiming this, but this could be increasing now. More than 2.2 million households with children receive Universal Credit.
The government is also increasing assistance to Universal Credit parents who face the highest childcare costs, typically because they work longer hours. The maximum childcare costs claimed increase by 50 per cent to £951 for one child and £1,630 for two children.
Ms Jarvie said: “The changes to Universal Credit will make a real difference in helping middle- and low-income families get into and stay in work.
“Childcare is a great investment. It empowers parents to work and improves outcomes for young children, especially the most disadvantaged.”
Additional reporting by Alexa Phillips and Tom Haynes.
“People need to intervene now”
By Alexa Phillips
Maxine Bell, 36, said she wished the childcare support had come sooner.
“It’s far too little, too late,” she said. “The problem is now. So many providers have either had to close or lay off staff. The fight for places is such a scramble. But actually, people need intervention now, they need support now. Normal families like ours cannot afford these exorbitant prices.”
Ms Bell, who works for a wildlife conservation charity, has been working full-time while her husband works part-time and looks after their children two days a week. Her mum has been looking after her 18-month-old three days a week to help them save on nursery costs, which are around £60 a day in their area.
Ms Bell, from Colchester, will have to wait until next April to get 15 hours of childcare for her youngest Olive, who will be two in October. When the full 30 hours roll out, Olive will be at school. She has two other children, ages four and six.
Cheri Chadwick, 36, said the new childcare support will allow her to have more children.
“This is fantastic news,” she said. “We weren’t sure if we could afford to have another child.”
Ms Chadwick, a teacher from Derby, has had to reduce her working hours because she cannot pay the fees for her two-year-old son Bramwell.
She and her partner can only afford to pay for kindergarten two days a week. Their mother, Maria Holt, took early retirement at the age of 62 to help them out two days a week. Two days a week, Mrs Chadwick’s nursery now costs around £450 a month. If she had had to pay daycare costs all day, they would have eaten up two-thirds of her salary.