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31 Mar 2023

Hot Take: Spring Budget breakdown

Hot Take: Spring Budget breakdown

NMT editor Briony Richter argues that families need support now and that the government must promise "significant financial investment" to the nursery sector.

Although a vital part of our economy, childcare has long been put on the back burner and pushed aside.

On the 15 March this year, Chancellor Jeremy Hunt unveiled the much-anticipated Budget packages and it represented, in theory, the largest expansion of childcare provision that England has had from a Conservative government.

Childcare in the UK is among the most expensive in the world and amidst a worsening cost-of-living crisis that has seen many nurseries close its doors for good, the government is being urged to inject more financial support into the sector and help with the cost to boost workforce participation among parents of young children, particularly women.

In his Spring Budget speech, Hunt shared his detailed plan on how the government aims to support both parents and childcare providers. Here's what you need to know.

 

£4bn expansion of ‘free’ childcare from 2025

In a £4 billion policy move, Hunt announced that the government would deliver 30 hours of free childcare for every child from the age of nine months, where all adults in the household work at least 16 hours. He has also claimed that this will reduce childcare costs for a family by nearly 60%.

Of course it has to be said that this is a major step in the right direction that is welcomed by parents and providers across the country. However, the plans will take years to come into effect and fail without sufficient funding.

One of the UK’s leading business groups, the Confederation of British Industry said as much as £9 billion of investment was needed to improve the system and expand free childcare to one- and two-year-olds.

 

When will it start?

  • From April 2024, working parents of two-year-olds will be able to access 15 hours of free childcare
  • From September 2024, 15 hours of free childcare will be extended to all children from the age of nine months
  • From September 2025, working parents of children under the age of five will be entitled to 30 hours free childcare per week.

The government has said that the staggered approach will give ‘childcare providers time to prepare for the changes, ensuring there are enough providers ready to meet demand.’ Although this is good news for parents over the next couple of years, it does very little for providers who are already extremely underfunded. Many have voiced concerns that Hunt’s plan, without an overhaul of central funding, could be catastrophic on the sector. 

We will need to wait and see how it progresses over the coming months but as always, the devil is in the detail.

 

Universal Credit

The government will pay childcare support to parents on universal credit up front by Summer 2023. The maximum amount of support will also be increased by almost 50%, to £951 for those with one child and to £1,630 for those with two.

So that is some positive news. The changes to Universal Credit now mean that low and middle income families will be able to get support for their childcare costs upfront. Of course, we would like to the support through Universal Credit raised even more but the changes proposed will help families remain in work and access support quicker.

 

Ratios

The controversial move to relax ratios got the green light as well in a move the government believes will cut costs.

The staff to child ratios for two-year-olds in England will change from 1:4 to 1:5, to align with Scotland. The government did announce that the relaxation will be optional and introduced from September 2023.

Plans to relax ratios have been widely criticised by the sector amid fears it could reduce the quality of care and safety available to children. According to the government’s consultation response, most respondents opposed the change. The most important thing that providers want to ensure is that their nursery is the safest and most nurturing place for a child to be. It’s highly likely that very few nurseries will move to the relaxed rules come September.

 

Recruitment

Other than an acknowledgement of the recruitment crisis there was very little said about the current situation during the Budget.

Growing childcare shortages are increasing across the country and many local areas now don’t have enough places for parents working full time. Two drivers of the shortages are the recruitment stresses on the sector and the underfunding of the current free hours offer.

The sector desperately needs an effective workforce strategy funded by the government to help attract more talent and boost participation in the sector. And this is not news at all. The sector for a long time has been plagued by recruitment and retention struggles. To properly address the demand, providers will need to focus a lot of energy and time on recruitment and they shouldn’t have to do this alone.

 

An election battleground

It’s a massive relief that childcare is on the political agenda and it’s likely to be a key battleground ahead of the next election with both the Conservatives and Labour mulling over reforms as the sector feels the strain of inflation.

In response to the government’s announcements, Keir Starmer accused them of following Labour’s lead on childcare reform, stating that while “more money in the system” was a positive “as parents up and down the country know it’s no use having more free hours if you can’t access them, and it pushes up the costs for parents”.

The Opposition want to ‘completely overhaul a confused and complex system’ and are currently exploring what their model would look like, but Shadow Education Secretary Bridget Phillipson said it will support parents from the end of leave.

It might come as a surprise the lengths the Conservatives went to in the recent announcements but with an election looming, we know that childcare will take centre stage in the upcoming months and now the other parties will have to ensure their manifesto promises can deliver better.

What both families and providers need is support now. Any plan to fix the childcare system must include significant financial investment to what is already underfunded then work up. Childcare cannot be on the back burner any longer, it’s a crucial part of our infrastructure and well-funded provision is central to its future.

 

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