Statement on childcare budget

From April 2024, all employed parents living in England with a two-year old will also be eligible for 15 hours of free childcare. From September 2004 all children from nine months upwards with employed parents will be entitled to 15 free hours and in 2025, this will increase to 30 hours for any child aged nine months to school age with both parents employed for at least 16 hours weekly at the minimum wage.
 
From this summer, those claiming universal credit in England, Scotland and Wales will be given help with childcare costs upfront. Currently, parents on UC have to pay childcare costs upfront then claim back up to 85% of the cost. 
 
Professor of early childhood, Eva Lloyd OBE, comments on the implications of the Budget announcements, and says how such measures will be implemented is crucial to their success.  
 
1.    Extending 30 'funded' hours of childcare to 1 and 2-year-olds and ultimately all 9 month old to 5 year olds. 
 
Given the current childcare workforce recruitment and retention crisis, this will prove difficult to implement. Unless the Government ensures the increased funding is used in part to improve pay and conditions for early years practitioners, providers will not manage to extend their services. There needs to be a proposal to pay staff better as this won’t save the sector and the situation will only further deteriorate. Ireland in 2022 introduced core funding for providers with conditions attached relating to childcare workforce salary levels 
 
2.    Increasing funding levels for the funded childcare hours for all age groups. 
 
Unless this increase is 'at cost' it will not remedy the unsustainable financial situation many nursery providers now find themselves in, where they are merely breaking even or operating at a loss. This particularly affects small chains or sole trader businesses in disadvantaged areas. The Confederation of British Industry (CBI) has calculated that extending 30 hours to one- and two-year-olds alone, at real cost, will cost £8.9 billion. This puts into perspective the £4 billion the government promises to spend on all its childcare related announcements between 2024 and 2029.
 
As new public money becomes available for the childcare sector, there may well be a feeding frenzy among large private equity supported chains. New predatory childcare chains are also likely to emerge. Unless the government enforces regulations concerning how public funding is spent within the sector, no significant expansion of childcare will result and the social segregation increasingly characterising childcare provision will worsen. 
 
3.    Upfront payment of childcare costs under Universal Credit.
 
I have argued for this measure for years. However, it may be necessary to pay such costs direct to providers to avoid the risk to parents of being accused of childcare benefit fraud. Childcare benefits policy in the Netherlands generated a huge scandal, with parents being unfairly accused of fraud.

4.    Adult child ratio optional change for 2-year-olds onwards 
This is a disastrous plan and utterly desperate. This will make no difference to parental costs, but it will discourage nursery and childminder practitioners even more as there are safety and quality concerns with nursery workers looking after more two-year-olds (currently, it is 4:1 but moving to 5:1 will be an option for nurseries). The situation in Scotland is very different. The sector was overwhelmingly against it during the consultation phase, yet the government has not published the consultation report or the government's response to it. So, it is not surprising that relaxing this ratio remains optional, according to the spring Budget.

5.    Incentivising childminders to come back into the sector with a £600 payment or £1200 for those signing up to an agency

I believe the childminder population is ageing and the job is hard work which will not help incentivise people to return to the job. In order to operate in safe home environments, childminders must often find funds to change their home, such as improving gardens or kitchen areas, so £600 will not go far. The rationale for the extra money for signing up to a childminding agency is entirely unclear.