Parents of young children should be happy: since September 2024, those with an income of less than £100,000 a year have been eligible for 15 hours of free childcare a week once their child is nine months old. From September this year, that will increase to 30 hours a week.
However, once again, it seems that the government has promised the moon but in realiy only paid for a small asteroid. Nurseries claim that the scheme is financially unsustainable because the funding was set before significant rises in their costs as a result of Rachel Reeves’ budget. Increases to national insurance payments and the minimum wage mean that the sector will now be paying 11 per cent more in wages and staffing costs from April, or about £2,000-2,500 per staff member.
Given the falling birth rate, this is a missed opportunity to finally deliver on a family-friendly policy
To provide safe, quality care, nurseries need a high ratio of staff to children, but this funding shortfall means that 60 per cent of nurseries now plan to limit the number of places they will offer under the government scheme. To make matters worse, only a third of providers plan to extend funded places to 30 hours from September.
Supply simply won’t be able to keep up with demand. Around 70,000 additional places and 35,000 early years staff will be needed for the planned expansion in September, and yet more than three-quarters of early years settings struggled to recruit normal levels of staff in the last year alone.
For parents, competition for places is now so intense that you practically have to put your child on a waiting list at the moment of conception. I registered my five-month-old son at a local nursery three months before he was born, and was told in all likelihood a place wouldn’t be available until October 2026, when he is two years old. I enquired at another nursery in January (for a September start date) and was told they had 95 requests for start dates to work through before mine. I enquired at two more nurseries, who both told me that they are not offering the 30 hours of free childcare from September. Without that subsidy, it would not make any economic sense for me to return to work, given that in my area, nursery costs around £100 a day (around the same as sending your child to private school).
One of the ways in which nurseries are compensating for this shortfall is by charging parents for ‘extras’ such as meals, snacks, milk, nappies and suncream. Guidance says that parents must be able to opt out of this, but given it is hardly a buyer’s market, parents may not have as much choice in the matter as they think, as they don’t want to risk losing out on a place. There is also often little clarity or transparency around these extra charges, and sometimes they are simply extortionate. One nursery I spoke to charges almost £15 a day extra for ‘consumables’, which is more than a grown adult would need for a working lunch in central London.
Nurseries are also charging top-up fees for those who go over their funded allocation. While the scheme is advertised as 15 or 30 hours a week in theory, in practice this actually only applies for 38 weeks for the year. Given that most parents do not have 60 days of annual leave a year, nurseries spread those hours out across the whole year, meaning parents actually only have closer to 11 or 22 free hours of childcare a week.
Some nurseries will also only apply a maximum of 7.45 hours of free funding per day over three days, meaning that parents have to pay top-up fees regardless of how many hours or days they actually use. This means that even with the funding, three days of nursery in my area would still cost upwards of £160 a week. Given the salary sacrifice of being part-time, for most people this is a significant financial burden.
It’s easy to say that there’s no such thing as a free lunch, and parents shouldn’t rely on government handouts. Yet given the falling birth rate, this seems like a missed opportunity to finally deliver on a family-friendly policy. It is even more bittersweet because, for so many parents, returning to work after having a child is not so much a choice but a financial necessity. The think tank Civitas estimates that there are 2 million mothers of pre-school children who would like to reduce their hours, but can’t afford to do so. Meanwhile, another survey found that 77 per cent of first-time mothers said that household cost was their main reason for returning to work. Soaring rents and increased mortgage rates have only made these pressures worse.
For the vast majority of families, then, finding childcare has become an ‘if’ rather than a ‘when’. Wanting childcare, on the other hand, has become a ‘when’ rather than an ‘if’.
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