16th March 2023 All Posts

Connect Commentary: Spring Budget 2023

Over the last week, there has been lots of debate around a key, and not unfamiliar, topic within the early years sector – childcare funding.

The fact that the long-standing challenges faced by the UK Childcare sector have now been elevated to the centre of political debate, both now and for years to come, should be seen as a huge step forward for both the industry and for parents alike – a situation that has been entirely neglected for way too long. 

That said, yesterday’s budget announcement appears to be more of a ‘statement of intent’ than an actuality and it’s clear that not all the details have yet been filled out – to paraphrase Neil Leitch from the Early Years Alliance “the devil is clearly in the detail”.

The sector has seen record numbers of closures over recent years so a commitment from both of the leading political parties to expand provision through the targeted increase of 65,000 places by 2027 will require a significant expansion in both the number of settings and staff needed in order to deliver it. The main question is whether either of these objectives can be met with the current and future funding levels and the existential recruitment crisis the sector faces.

The proposed changes are the first step on a very long journey and the sector needs to be at the centre of discussions moving forward to ensure that the current pledges can become a reality.


Claims from the Chancellor that he has now pledged the increases (30%) in funding requested by the sector itself appear to be wide of the mark. Whilst I’m sure that any increases will be welcomed, given how low they have been for so long, the additional funding pledge of £204m from September 2023 remains significantly lower than the Department for Education’s own estimates in 2021 of a £1.8bn shortfall.

Furthermore, the structure of the proposed funding increases raises additional concerns for the sector – which I’m sure will be keeping nursery owners and finance teams awake at night.

Firstly, the sector is nervously preparing for a 14% increase that comes into effect from April 2023 to match the minimum wage. Given that the first wave of 30% funding increases comes into effect from September 2023, this does nothing to help the providers that are already struggling to make ends meet.

Secondly, the sector generally makes up the current funding shortfall for 3 and 4 years by increasing rates for the under 2’s. This will no longer be possible once the proposed offer of 15 hours of ‘free’ childcare comes into place for under 2’s throughout 2024 and is extended to 30 hours in 2025. As it stands, the focal point of the additional hours is on working families alone, this could have a negative impact on the disadvantaged children and families who most need the support.

Once again, I’m sure the sector will welcome any increases in funding rates that put children and parents at the forefront of the political agenda – my concern is whether this is actually enough and is structured in such a way that actually enables these pledges to be delivered.


The proposed reduction (although not mandated) in child-to-staff ratios has been vehemently opposed by the sector since the original topic was suggested by Liz Truss (the then Education Secretary) many years ago. The logic behind the proposal is that a smaller staffing requirement represents lower costs for the nursery that could ultimately be used to support lower fees for parents.

Whilst the logic makes sense in principle, it fails to recognise a number of key issues:

  • A reduction of practitioners represents a potential decrease in the quality of care and attention delivered to the children in the care.
  • Staff are already under pressure and this proposed change would only serve to increase already high stress levels to what is already an underpaid workforce – the likelihood is that this would drive more staff out of the sector at a time when staff are increasingly fundamental to the delivery of the Government’s childcare strategy.
  • The assumption is that these ‘cost savings’ would be passed onto parents in order to lower their childcare costs. Given the continued pressure on nursery owners to remain sustainable in the light of a serial underfunding of the sector – it’s likely that any provider that chose to reduce their staffing in line with the revised ratios (of which the vast majority are fundamentally against) would utilise these savings to remain in business rather than offset against a parent’s fees.

It is refreshing to see the Government taking action to support the Early Years sector whilst bridging the gap for mums from the end of maternity leave to enable them to go back to work. Unfortunately, as it stands the extra funding of £200m for childcare providers only covers approximately 10% of the £2 billion shortfall. Free childcare from 9 months sounds great but only if there are childcare settings to be able to offer this and without the correct funding there won’t be.

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About the Author

Content Marketing Executive at Connect Childcare