You are here: The Spring Budget: reasons for celebration and caution
What a huge week for childcare. The £4bn investment in the childcare and early education system is welcomed by parents crippled by the current huge costs of childcare - over £14,000 per year for a full time place on average. It means that by 2025 parents will be able to access substantial support from the end of maternity or parental leave rather than managing eye watering costs until their child is entitled to 30 hours at age 3 as is currently the system. It goes a long way to solve the affordability problem in the childcare system.
While this investment is hugely welcome and exciting, it does not solve every problem in the sector and, most importantly, it does not yet grasp the full potential childcare policy has to change lives.
Let’s look at the good news first. The changes to Universal Credit mean that low and middle income families will be able to get support for their childcare costs upfront and that support will cover more expensive childcare than is currently the case. While we would still like to see the support available through Universal Credit raised even further in order to support the cost of full time care right across the country (the maximum amounts are still below the average cost of full time care in 62% of local authorities), these changes will really help families to move into and stay in work.
The real game changer for families though is the expansion of 30 hours of childcare for under 3s. We know that the key pinch point for families has been when children are young and costs are high, with little support available - this support is targeted directly at that period.
The key challenge now is making sure that this offer lives up to parents’ expectations - and that means enough places available right across the country. Our Childcare Survey 2023 found large and growing childcare shortages - less than half of local areas have enough childcare for parents working full time and this is down 11 percentage points in just a year. Two drivers of these shortages is underfunding of the current free hours offer and recruitment and retention pressures on the sector. Getting the funding right for this expansion is key - but the Women’s Budget Group have found that there is likely to be a £5.2bn shortfall by 2025/26. The expansion of free hours will mean that the Government will be the biggest buyer of childcare in England, and childcare providers will have limited opportunity to make up any shortfall from parents’ fees. It is essential that the Government gets the funding rate right so that childcare providers are actually able to offer these places.
In addition, there needs to be an effective workforce strategy to attract workers to join this hugely rewarding sector. This strategy needs to fully understand the factors that are making recruitment and retention so difficult - pay is high among these factors, but also recognising the invaluable work they do caring for and supporting the development of children during their crucial early years. The incentives announced for new childminders will feel like a nice bonus for those who receive it, but does not seem like enough to address the steady decline we have seen in childminder numbers over many years. It also does nothing to help retain the experienced and skilled childminders who may consider leaving the sector.
The decision to increase adult to child ratios for two year olds from four children per adult to five makes recruitment and retention even more challenging. It is a move in the wrong direction. It does not prioritise the quality of early education and childcare and instead has the potential to exacerbate the workforce challenges.
I get really excited about childcare when we think of the double potential it holds - it not only enables parents, and mothers in particular, to work in the way that they want to work, but it also boosts the life chances of young children, with the biggest benefits for the most disadvantaged. This budget made great strides in enabling parents to work, but it did not grasp the opportunity to change young lives. All the new funding is directed towards working, and therefore better off, families. There was nothing for those facing disadvantage. It will make it easier for parents to move into work and raise their family income, but the child whose parents do not or cannot work will start school having been entitled to just a third of the early education and childcare that their peers with working parents will have been entitled to. There is strong evidence of the benefits that high quality early education makes for young children’s outcomes, which is why this inequality in access feels so unfair.
Currently disabled children are the most likely to miss out - our research found that just 18% of local areas have enough childcare for disabled children. This expansion provides a huge opportunity to rethink how childcare is delivered and fix the problems that have frozen disabled children out to date. The Government will now hold more control on pushing up the quality and accessibility of childcare and we look forward to working with the Government to make sure that every child is able to access high quality early education and childcare.
So it’s time to put down the glass of champagne, roll up our sleeves, and get to work on making sure this announcement lives up to its potential.

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