There are just a few weeks until eligible working parents can access Government funding for two-year-old children, but the majority of families face price hikes in the meantime, with many feeling worse off as a result.
A third of parents eligible to receive the new childcare funding for two-year-old children are considering leaving their jobs or cutting their hours because of early years settings hiking prices.
A survey by Pregnant Then Screwed of 11,100 parents with a child under the age of five – including more than 6,200 eligible for the expanded scheme – revealed that the majority reported an increase in childcare costs and top-up fees.
This means any cost savings from the new funding are lower than expected.
Expanded childcare scheme
In the March 2023 Budget, the Government announced the “largest-ever expansion of free childcare”, offering up to 30 hours per week of funded term-time care to all children in working families in England from the age of nine months by September 2025.
The programme is expected to roll out in the following phases:
- April 2024: Up to 15 hours for eligible working families in England with a two-year-old.
- September 2024: Up to 15 hours for eligible working families in England with a child between nine and 23 months old.
- September 2025: Up to 30 hours for eligible working families in England with a child from nine months old up to school age.
In January, parents were able to register for the 15 hours of free childcare, but many reported problems with obtaining a code, while others claim their early years setting won’t accept them.
The latest poll from Pregnant Then Screwed found that almost half (48%) of parents have sent their code to their provider but have not had any response as to whether the code has been accepted.
Just one in five parents said they have given their code to their provider and everything has been “fine”.
But, in the meantime, childcare costs continue to rise, as 70% said costs have increased recently or are about to rise by more than 5% – higher than the rate of inflation (4%).
‘Worse off under the new scheme’
Pregnant Then Screwed said the Government has signalled the scheme will save parents an average of £6,500 per year once it is fully rolled out, but the survey found that half of parents who are eligible for the first phase of the scheme will save less than £170 per month (or £2,040 per year).
Danielle, a mother from Cheshire, said: “My little one is two, and we received a letter last week to say that fees will be going up from £65 per day to £86 per day. We are now paying £1,490 per month for four days per week. I’m going to have to leave my job as I simply can’t afford this.
“The 15-hour funding doesn’t kick in until April, which will help slightly, but what do I do right now, as I simply can’t afford it. We’re not going to benefit in the slightest from the new Government scheme – in fact, we’re now worse off.”
The campaign group said it is clear that providers are taking a variety of measures to ensure they don’t go bust from offering these new schemes. The measures include increasing costs, charging large top-up fees, increasing the cost of sundry items for those using the three- and four-year-old entitlement, and placing restrictions on how the funding can be used.
It said some providers (2%) have even decided to stop offering the entitlement for older children.
‘Parents are picking up the tab’
Joeli Brearley, CEO and founder of Pregnant Then Screwed, said: “The Government has stated that the average saving for parents will be £6,500 per year once the new schemes are fully rolled out, but our data tell a different story. Many providers are increasing costs for sundry items and for childcare outside of funded hours as a desperate attempt to cover their losses from delivering these schemes; this is drastically reducing anticipated savings.
“The new benefit sounded too good to be true, and for many families, it will make little difference to their outgoings. Once again, parents are picking up the tab due to underfunding from the Government.’’
