The Lead Untangles: The rising cost of childcare
Scarlet Hannington unpicks the need for Labour to listen when it comes to caring for our youngest and most vulnerable members of society.
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At a glance facts
The UK is one of the most expensive countries in the world for childcare, and for the tenth year in a row, costs have risen faster than inflation.
In an attempt to address a broken system, the government has expanded support, offering working parents access to 30 hours of free childcare per week for children between the ages of nine months old and four years old, across 38 weeks of the year. This builds on childcare support implemented by the Labour Government in April 2024, offering all three-and-four year olds 15 hours of government-funded childcare, regardless of their parents' working status (which is still accessible), and the initial 30 free hours for working parents of three to four year olds introduced in by the Conservative Government in 2017.
Keir Starmer has heralded the new 30 hours rollout as proof of fulfilled promises and that Labour’s Plan for Change is being actioned. But there are numerous and growing concerns about the design of the extended hours scheme. To qualify, most parents have to earn more than £9,518 but less than £100,000 per year, locking low-income families out of high quality and much-needed care and forcing many who are already struggling into debt and financial sinkholes. Support is also term based, and so won’t begin until the term after a child reaches the eligible age range. For example, if a child turns nine months old on 1 September, free childcare hours won’t start until the next nursery term in January, catapulting families into a scramble to make ends meet.
Maternity campaigning groups and early years education organisations are raising the alarm on patchwork policies that are pushing parents into stunting career progression, taking maternity leave cuts, and going to lengths to change their delivery date, in order to remain eligible for vital financial aid in the midst of a cost of living crisis.
There also aren’t enough nursery places to meet demand, and the early years sector isn’t receiving enough or timely funding to keep up with the government’s childcare scheme. There’s a risk that families relying on the support with childcare that the extended hours promise won’t actually materialise. Essentially, it seems like a nice idea in theory, but practice looks very different.
Context
The Department for Education has said this expansion of childcare hours will save parents £7,500 per year per child, supporting more than half a million children in the process.
However, around 85,000 pre-school and nursery places are needed from the start of the academic year starting this month to meet demand. This comes in the face of nursery and pre-school closures up and down the country, in part because of the industry costs to provide free childcare hours.
In December, the Early Years Expansion Grant of more than £75 million was announced to help the early years sector cope with the demand for childcare expansion, yet less than a third has reached providers. Even if funding does make it easier for nurseries to offer extended hours, it’s not the perfect solution.
As it stands, many early years providers charge extra for nappies, wipes and lunches, which government support doesn’t, and is unlikely to, cover even with the grant. This means that families who are eligible for 30 hours of free childcare still have to stump up additional costs. Disparities are driven further by regional differences in nursery costs, particularly when comparing London to the northeast of England – 25 hours of childcare at a nursery for a child aged under two in inner London is £92, while costs hang around the £60 mark across East Midlands and Yorkshire and Humber.
When 15 hours of free childcare for all children aged three to four years old was rolled out in England last year, the uptake increased by 33 per cent to a record high of 1.7 million. But not all families benefit. Those who aren’t in work or don’t earn enough to be eligible for the new 30 hours scheme will pay around £205 per week to give a child under the age of two the same amount of early education in a nursery, nearly double that of a parent who is eligible.
Why is support with childcare costs needed?
The average cost of full-time nursery (50 hours a week) for a child under two in England is £12,425, and is at its most expensive in Wales at £15,038, due to varying government support schemes.
Even with financial help, nearly half of families surveyed by Pregnant Then Screwed are reported to be spending as much, and sometimes more, than their rent or mortgage on childcare.
Falling birth rates impact economic and social care systems – and currently, the UK’s is falling faster than any other G7 nation. Without sufficient support, people will continue to be priced out of having children. The current economic climate coupled with extortionate childcare costs (one in four families are paying more than £1,000 a month) and poor statutory maternity leave at a mere 43 per cent of the national living wage, make choices around childcare impossible. And a solution that doesn’t create more inequalities and compound existing ones hasn’t been reached yet.
What people are saying
“It was never going to be easy, but against all odds we’ve delivered through our Plan for Change - and this is just the beginning. My vision for early years goes beyond this milestone. I want access to high-quality early years for every single family that needs it, without strings and without unfair charges.” Bridget Phillipson, Education Secretary.
“It’s a landmark moment for working families across the country, and a clear sign that our Plan for Change is not just words – it’s action. We said we’d put money back in working parents’ pockets and give children the best start in life, and today we’re doing just that.” Keir Starmer, Prime Minister.
“As part of its Best Start in Life strategy, the Government has rightly recognised the importance of affordable, accessible early education, especially for children from low-income backgrounds and is aiming for more children to be ‘school ready’ over the coming years. However, continuing with the policy they inherited from the previous government, without taking steps to address the inequality it has created for children, works against this mission, and the gap between entitlements for disadvantaged children and those with working parents is wider than ever before.” Lydia Hodges, Head of Coram Family and Childcare.
“It is critical that workforce challenges in the sector are addressed, so that it can be both attractive enough to recruit new staff and also retain a higher level of staff, to ensure it can meet the demands of the expanded free childcare entitlement.” Jack Worth, NFER Education Workforce Lead.
“The harsh reality is that under current levels of funding – particularly given the huge impact of national insurance increases – many providers will struggle to keep their doors open in the coming year, while those that do are likely to struggle to deliver the affordable, flexible service that families need.” Neil Leitch, CEO of Early Years Alliance.
What happens next
From this month, working parents can apply for a code up to 16 weeks before their baby turns nine months old to receive the 30 hours of free childcare. The deadline is the day before the new term begins, and when support starts will depend on when the child was born.
In July, the government published a Best Start to Life Strategy, laying out a series of commitments to improve the quality of early years education and ensure “75 per cent of 5 year olds in England have a good level of development by 2028”.
With a cash injection of £1.5 billion, the proposed reforms include setting up Family Hubs in every local authority by April 2026, rising to up to 1,000 by 2028, to reinforce joined up family support and care, similar to the Sure Start initiative announced in 1998 by the then Chancellor of the Exchequer, Gordon Brown.
The strategy also aims to fund tax-free payment of £4,500 to boost recruitment and retention of early years teachers in nurseries serving the 20 most disadvantaged communities in the country.
However, campaigners aren’t convinced the follow through will be as seamless as it’s being made to sound. Following the snail pace distribution of vital funding to early year providers which saw misplaced distribution to school based providers and wraparound services like afterschool clubs (who had already been allocated a separate funding stream), rather than private, voluntary and independent nurseries who deliver the majority of care to under two year olds by local councils, the government is being urged by frontline services to simplify the system when reviewing Early Years funding to avoid future underspends.
The blueprint for an ambitious overhaul which intersects maternity provisions that support rather than penalise mothers, while prioritising the accessibility of childcare for children with special educational needs and low-income families is there. But the government has to listen to expertise from frontline services to make it a success.■
About The Lead Untangles: In an era where misinformation is actively and deliberately used by elected politicians and where advocates and opposers of beliefs state their point of view as fact, sometimes the most useful tool reporters have is to help readers make sense of the world.
The Lead Untangles is delivered each Friday by The Lead and focuses on a different complex, divisive issue with each edition. Is there something you’d like us to untangle, email ed@thelead.uk
About the author: Scarlet Hannington is a writer specialising in gender-based violence, sociocultural inequalities and the politics of sex and relationships.