Do the new childcare proposals have what it takes to solve the childcare crisis?

Published: 20 Mar 2023

By Simon Kelleher, Head of Policy & Influencing

On the surface the recent budget should be heralded as a win for families. It delivered what parents and childcare providers have been crying out for for years – extending subsidised childcare. But whilst the announcement moved the dial in establishing a crucial political precedent that commits the Government to the principle of a subsidised early years education and childcare system, the reality of the figures backing it up leaves those same parents and childcare providers worried it may be a promise that can’t deliver.

We welcome the acknowledgement by the Government that families are struggling and the current system is failing parents and carers who find themselves unable to make work, work. But, as with all policy announcements, the devil is in the detail. The accompanying funding package, it seems, is unable to realise the scope of the proposals. Notably, it is unlikely to address the existing problems that parents of three- and four-year-olds face when it comes to accessing their entitlements, and may simply replicate the same issues for parents of younger children when they come to using the scheme.

Our helpline hears regularly hears from parents who can’t find funded places for their children. Others struggle to afford the additional hours and high top-up fees. Recent analysis from Coram suggests that this is getting worse, with 43% of local authorities across Great Britain reporting that some or many providers in their locality have reduced their offer of funded hours.

To remedy this, any proposal must treat the root cause of chronic underfunding. Providers are simply unable to afford to top-up the estimated shortfall of £1.8bn for entitlements for two- to four-year-olds. Last week’s budget increased the funding rate for three and four year-olds by around 5%, which is unlikely to make a dent in the rising overheads for providers. Without proper funding the policy is in danger of being hollow, and the struggle for many parents to secure funded places will remain.

Likewise the raising of the Universal Credit (UC) childcare element cap, and the proposals to pay this in advance rather than in arrears, will hopefully boost the proportion of parents that take up this support to access work, as currently only 13% of eligible parents use this. However, even with an increased cap, many parents may still struggle to find affordable childcare or available places and they should not be punished with sanctions or skills ‘boot camps’ for the failures of a dysfunctional market. Similarly, taper rates should be continually reviewed so no working parent on Universal Credit is left worse off after increasing their working hours and paying for childcare.

Undoubtedly the step forward should be celebrated by those who have campaigned for a better childcare system. But without addressing the issues of availability of places, SEND provision, quality, funding levels, timetables, market volatility, and the eligibility criteria, we could be faced with a situation of two steps forward, three steps back.

Working Families looks forward to working members of our Families and Work Group and the UK Women’s Budget Group childcare coalition to make sure the vision of early years education and childcare system that supports families from parental leave to school can be realised.