Childcare in the Spring Budget 2023

The Spring Budget was announced on 15th March 2023 and in it, chancellor Jeremy Hunt placed childcare at its centre.

More 'free childcare'

New, so called 'free childcare' was announced for parents from when their child is 9 months old to when they start school.

30 hours 'free childcare' a week for children ages 3 and 4, during term time (38 weeks a year) has already been in place for most working parents for a number of years with additional 'free childcare' already offered to 2 year olds for parents who receive certain benefits.

However, the new government offer goes much further giving the vast majority of working parents 'free childcare' from after a mother's maternity leave until the child starts school.

Amazing, isn't it? Well, not everyone would agree. In fact the changes are set to be rolled out in stages with the full package not starting until September 2025.

From April 2024, all working parents of 2-year-olds can access 15 hours 'free childcare' per week, only half the promised 30 hours.

From September 2024, all working parents of children aged 9 months up to 3 years old can access 15 hours per week - again only half the headline 30 hours.

It's not until September 2025 that all working parents of children aged 9 months up to 3 years old can access 30 hours 'free childcare' per week.

Is it really free childcare?

Well yes, that's what the government call it but not all parents and childcare providers would agree. In order to fund the 'free childcare', the government provide funding to local authorities. Local authorities then set their own hourly rates that they pay to local registered childcare providers who take part in the scheme.

Each local authority has a different rate and the often the rates offered to childcare providers are lower than that they would usually charge, causing childcare providers to lose out.

The government have offered local authorities additional funding to help increase rates of pay and cater for the extra 'free childcare' hours but many argue this isn't enough by a longshot.

The government will provide £204m of additional funding this year, increasing to £288m by 2024-25. This funding is in addition to the £4.1 billion that the government will provide by 2027-28 to facilitate the expansion of the new free hours.

Childcare providers aren't allowed to take the funded rate in part payment of their usual rate. If they offer 'free childcare' then they can't charge more for childcare services.

However, childcare providers are allowed to charge extra for things like food, nappies and trips which can sometimes top-up the funded rate to their normal rate.

Some childcare providers also ask for a voluntary top-up payment to cover any shortfall but parents aren't obligated to pay it.

Many childcare providers feel the funded rates are too low and uneconomically viable and so choose not to take part in the 'free childcare' scheme. Other providers have called upon the government not to use the term 'free childcare' and to instead refer to the scheme as 'funded childcare' or 'subsidised childcare'.

Will this increase demand for childcare?

Yes, undoubtedly but the number of childminders and nurseries have been falling in recent years and many of those still in business are already at capacity.

To try and attract more childminders into the profession, the government announced start-up grants of £600 for those who register directly with Ofsted and £1200 for those who register with a childminder agency.

The start-up grants will help new childminders cover some of the costs involved in setting up but the £600 disparity between childminders directly registered with Ofsted and those registering with agencies seems unfair and discriminatory.

Ratios are changing too

Changing the ratios of the number of children that each childcare provider can care for has been a fierce debate for a number of years, with the vast majority of childcare providers having being opposed to it.

However, in the spring budget, it was announced a change to the staff-to-child ratios in nurseries for 2-year-olds, moving from 1:4 to 1:5 to align with Scotland.

The government say the new ratios will give providers more flexibility, without compromising children’s safety or quality of provision. They will be optional, with no obligation on providers to adopt them.

Wraparound care

The government will give local authorities in England £289 million over two academic years, starting in September 2024, to set up wraparound childcare provision in schools. That could be in direct competition to some childcare providers and experts argue that £289 million isn't going to go far.

Good or bad?

All in all, it's great to see that the government are, on the face of it, taking childcare more seriously and at least making some attempts to make it easier and cheaper for parents to find childcare.

However, it's important that childcare providers are fairly rewarded for the professional work they do. They shouldn't be in a position where they are forced to reduce their prices, simply because their local authority won't pay their standard rates.