Jeremy Hunt‘s plans to expand free childcare for one and two-year-olds will be an ‘utter disaster’ without more cash for nurseries, experts warned today.
It comes as parents welcomed the proposal in the Budget but wished it would come earlier than 2025.
However, the Chancellor has defended not rolling the full scheme until September 2025, describing it as the ‘biggest transformation in childcare in my lifetime’.
He announced yesterday that 30 hours a week of paid-for care will be extended to children of working parents aged from nine months to four years – but the massive expansion of free childcare is not immediate.
It’s feared that parents who expect funded childcare places to be available could be left ‘disappointed’ unless proper infrastructure is put in place.
And many mothers and fathers with young children now will miss out due to the near three-year timescale.
Neil Leitch, chief executive of the Early Years Alliance which represents around 14,000 childcare providers, said: ‘We know from bitter experience that expansions of so-called “free childcare” without adequate investment are a recipe for utter disaster – and given that many providers rely on fees from younger children to make up for current funding shortfalls, the impact on the sector if the Government gets this wrong cannot be underestimated.
Jeremy Hunt has defended the speed of the rollout of his free childcare offer for working parents with children under the age of five
‘At a time when settings are closing at record levels and early educators are leaving the sector in their droves, unless the proper infrastructure is put in place by the time the extended offers are rolled out, many parents of younger children expecting funded places to be readily available to them are likely to be left sorely disappointed.’
Megan Jarvie, head of Coram Family and Childcare charity, said it was ‘crucial’ that there is enough funding for the expansion of free childcare places.
‘If it is not right then we are at risk of seeing big childcare shortages because they are already growing,’ she told the PA news agency.
Ms Jarvie added: ‘The sector needs to be on board. The funding rate needs to be right. And there needs to be a lot of work done between now and April to be ready to start delivering.
‘Shortages of childcare are already growing and we’re now looking to expand the number of children in childcare.
‘There’s a lot of work that needs to be done to make that possible. We don’t have enough for the current demand and potentially demand is going to grow.’
Early years leaders have warned that nurseries and childminders could struggle to deliver additional places for younger children from next year if the funding provided by the Government does not meet rising costs.
Sam Freedman, a former government education adviser, said today that the Government faces ‘big challenges’ to get it right.
He said that ministers must increase the hourly pay currently given to nurseries to subsidise free hours.
He said: ‘At the moment, nurseries subsidise the too-low free hourly rate by charging more for one and two-year-olds, [hence] such high prices. If one- and two-year-olds also get free hours then they cannot cross-subsidise. You risk a major supply problem.’
But the Chancellor told Sky News: ‘This is the biggest transformation in childcare in my lifetime.
‘It is a huge change and we are going to need thousands more nurseries, thousands more schools offering provision they don’t currently offer, thousands more childminders.
‘We are going as fast as we can to get the supply in the market to expand.
‘But it is the right thing to do because we have one of the most expensive childcare systems in the world and we know it is something that is a huge worry, for women in particular, that they have this cliff-edge when maternity leave ends after nine months, no help until the child turns three and that can often be career ending.
‘So I think it is the right thing to do for many women, to introduce these reforms and we are introducing them as quickly as we can because we want to remove those barriers to work.’
Mr Hunt claims it will save the average family with a toddler in nursery more than £80 a week – but parents with multiple young children or who live in the more expensive South East will benefit even more.
Forecasts suggest the multi-billion-pound policy will bring another 60,000 parents into work by 2027/28, and Mr Hunt hopes parents already in work will increase their hours. The Chancellor told MPs: ‘We have one of the most expensive systems in the world.
‘Almost half of non-working mothers said they would prefer to work if they could arrange suitable childcare.
‘For many women, a career break becomes a career end. Our female participation rate is higher than average for OECD economies, but we trail top performers like Denmark and the Netherlands.
‘If we matched Dutch levels of participation, there would be more than one million more women who want to work in the labour force. And we can.’
The Government estimates around 435,000 people in England with a child under three do not work due to caring responsibilities.
Mr Hunt said the extension of the 30 hours offer would be worth an average of £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week, reducing their childcare costs by nearly 60 per cent.
Currently, working parents of three and four-year-olds are eligible for 30 free hours a week unless one parent earns more than £100,000 a year.
But two-year-olds are only entitled to 15 free hours a week if their parents claim certain benefits.
The policy will be rolled out in stages, with working parents of two-year-olds able to access 15 hours per week from April next year. From September 2024, all working parents of children aged nine months to three years can access 15 hours per week. From September 2025, eligible parents of under-fives will be given 30 hours free per week.
Shadow Chancellor Rachel Reeves said the Government is ‘a bit late to the party’ when it comes to childcare.
Speaking about the childcare plans announced in the Budget, she told BBC Radio 4’s Today programme: ‘We back these plans. We wouldn’t have got into this mess in the first place because we wouldn’t have scrapped the infrastructure that the last Labour government created.
‘And I think a lot of people who, like me, people who’ve got kids who are already in primary school will be saying, well, you know, it’s great that the Government have got to this point, but they’re a bit late to the party, frankly, because many mums and dads have struggled on their own for the last few years, the last decade, when support for working parents has been taken away.
‘And now they’re saying after the next election there’s going to be more support for childcare.
‘Well, absolutely, because we hope there’s a Labour government after the next election, and we will make childcare and working parents a priority.’
In his Budget speech, Mr Hunt said the Government will increase funding paid to nurseries providing free childcare by £204 million from this September and rising to £288 million next year.
Joeli Brearley, chief executive and founder of Pregnant Then Screwed charity, said: ‘We need to see the detail as to how this money is being distributed and we need to know that the Government is investing in these new schemes based on the actual cost to deliver them.
‘Free childcare from nine months is brilliant, but only if there are childcare settings to be able to access this care. Without the correct funding there won’t be.’
On Wednesday, the Chancellor said the Government will change minimum staff-to-child ratios in England from 1:4 to 1:5 for two-year-olds in England, but the change will ‘remain optional’.
He announced that the Government would pilot incentive payments of £600 for childminders joining the profession – £1,200 if they join through an agency.
Nurseries are concerned about how it will be funded and if they have the capacity for many more children
Ms Brearley added: ‘Without a workforce plan, providers will continue to be forced to close, and increasing ratios will be detrimental to staff retention, what they need is better pay which will come from significant investment into the sector and into the roll-out of the free hours scheme.’
Announcing his reforms to childcare on Wednesday, the Chancellor said: ‘We have one of the most expensive systems in the world.
‘Almost half of non-working mothers said they would prefer to work if they could arrange suitable childcare.’
In his Budget speech, Mr Hunt also said he wants all schools to be able to offer wraparound care either side of the school day by September 2026.
He added: ‘One-third of primary schools do not offer childcare at both ends of the school day, even though for many people a job requires availability throughout the working day.
‘To address this we will fund schools and local authorities to increase supply of wraparound care so all school-age parents can drop their children off between 8am and 6pm.’
Christine Farquharson, senior research economist at the Institute for Fiscal Studies (IFS), said: ‘For such a huge reform to the early years system in England, today’s Budget gave us remarkably little detail about the one thing that will really matter: the funding rate that providers will receive.
‘Even under current patterns of childcare use, expanding the 30-hour offer to almost all pre-schoolers in working families will put Whitehall in charge of the price of 80% of childcare hours delivered in England.
‘That raises the stakes for getting the funding rate right, with the potential for huge damage to the quality and availability of childcare if the Government gets it wrong.’
Conservative MP Robin Walker, chairman of the education committee, said: ‘There will be questions about how the sector will scale up in time to meet the increase in demand for childcare that will follow.
‘The Department for Education has been handed billions, and it will now need to deliver.’
Mr Hunt also announced an expansion in care at the start and finish of the school day for parents with older children from September 2024.
But the Institute for Fiscal Studies last night warned the extension of free childcare would exacerbate ‘one of the most severe distortions’ in the tax and benefit system.
This is because the generous provision of free hours ends abruptly once one parent earns more than £100,000. The IFS said: ‘A parent with a one-year-old and a three-year-old whose childcare provider charges England’s average hourly rate for 40 hours per week would, after these reforms, find that their disposable income falls by £14,500 if their pre-tax pay crosses £100,000.
‘Disposable income would not recover its previous level until pre-tax pay reached £134,500. A parent earning £130,000 would be worse off than one earning £99,000.’
Ms Brearley, of campaign group Pregnant Then Screwed, said: ‘Parents of young children felt ignored, but this will restore their faith in democracy, so we thank ministers for hearing our cry.’
But she stressed that attracting more childcare workers was critical.