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More funded childcare. It’s a game changer but not ‘free’

When the Chancellor Jeremy Hunt announced his plan in March 2023 for expanding the childcare support for parents with young children across England, families across the country were jumping for joy. 

Some of these children who will be benefiting from the new places for nine month olds in September had not even been born then.

It’s true that early education and childcare is very expensive for families, especially for our youngest children. However, this is because, historically, the state in the UK has made a much lower contribution to meeting the cost of childcare than in countries like France and Germany. At a time when parents are thinking about going back to work after parental leave, they are faced with the highest cost barriers.

So the offer of more “free” hours for their child is a game changer. Unfortunately, we know that it’s not all ‘free’. It will make a big difference to family finances, but there will still be costs. It’s so important to get this message across to parents who arrive at nursery with expectations which don’t include paying anything towards their entitlement. 

As well as lobbying government and policy makers, NDNA which represents nurseries across England, Scotland and Wales has been working hard to help providers talk to parents and the wider public about the reality of the situation which we hope will in turn help nurseries and other providers on the frontline. See our template letters to parents here.

The General Election is an opportunity for parents to have their say about this country’s priorities. The next government will shape early years policy in England and although education is devolved in Scotland and Wales, MPs do have influence to support policies that can make life easier or harder for those who are educating our youngest children. Since the announcement in England, parents in Wales have been pushing hard for similar benefits for their children. The expansion in Scotland is currently being piloted but with no dates set for national roll-out.

As we have seen, government spending is a key battleground for the parties and one causing many headlines. Childcare spending has been hugely increased in England in particular but has also been rising in Wales and Scotland which are both at different stages of expanding provision for children under three.

Unfortunately, although governments offer parents funded hours, the money they pay for these has never covered the actual costs of delivering high quality early education and care. In a recent survey earlier this year, 83% of nurseries in England said that their funding rates did not cover their costs. This situation is worse for nurseries in Wales where 97% say the Childcare Offer for Wales national rate, which has not increased in three years, leaves them with a shortfall. In Scotland, one in seven say their ‘sustainable’ rate is not sufficient.

This means that settings are making a loss on each place they deliver which governments have assured parents will be free. As a result of underfunding, early years providers have had to increase the cost of paid-for hours to make up the shortfall. When a provider’s biggest customer, the government, is not paying its fair share, others are left to pick up the tab.

From September 2024, children of working parents in England aged nine months upwards will be entitled to 15 hours of funded childcare per week. This is great news for them – not just enabling parents to work but high-quality early education and childcare supports children’s overall development, wellbeing and learning.

But here are the catches for parents:

• The 15 hours are only during term time – most parents work all year round so most providers will “stretch” these hours across the year – reducing the hours per week.
• The government only pays for the actual childcare sessions, which does not include any meals, snacks, consumables or additional activities – so families must expect that early years settings will be making charges for these.
• Depending on the length of their sessions, they will need to pay for any additional hours needed at the nursery’s usual fee — especially for early or later hours

For providers in England and some in Wales and Scotland, the possibility of making up the shortfall with income from fee-paying parents of under-threes is being squeezed. The IFS estimates that with expanded childcare 80% of places could be government funded. 

If funding is not sufficient, nurseries will be closing in much larger numbers than they are currently which could force governments to pay the going rate. Scrapping business rates and VAT for nurseries will help with their sustainability but so far ministers in England have not supported this policy, unlike those in Wales and Scotland.

Ratios of staff to children are higher for our youngest children so in many cases they need to recruit more practitioners. The Department for Education believes an extra 40,000 staff will be needed before September 2025. This is a serious challenge across the UK as more qualified practitioners turn away from the sector for better paid jobs.

NDNA is campaigning for more support for recruitment, retention and training; educating our youngest children must be respected and better paid in line with other teachers. Without sufficient staff, many families will be left without places. The social and economic benefits of early education must be recognised with serious investment.

We all know the benefits to children and families of being able to access high-quality early education and care so we want to see those eligible for funded childcare able to get a place in their preferred local childcare provider. While parents across the UK will feel the benefits soon, until the governments change the funding system, these places won’t be free to parents or to those who are delivering them.