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Pressure mounts on Government to cut soaring childcare costs

Rebecca Goodman
Written By:
Rebecca Goodman

A group of influential Tory backbenchers is calling on the Government to address the cost of childcare in next month’s Budget.

The group, led by MP Siobhan Baillie, has proposed scrapping business rates for private nurseries, changing the tax-free childcare system and making it easier for those receiving universal credit to pay for childcare.

According to a report in The Guardian, the group of influential MPs have been meeting regularly to discuss measures to fight the childcare crisis.

Parents in the UK already pay the highest fees of any developed country, according to the OECD, and some pay around 65% of their income on fees.

Yet, at the same time, providers are struggling to survive financially and many are being forced to shut down because of a lack of funding.

Liz Truss, the former prime minister, had proposed a change to the ratios for children under two, increasing the minimum number of children looked after by one member of staff from four to five.

These were criticised for not being safe and many groups said they would not save parents or providers any money. It has been alleged that Rishi Sunak has scrapped these proposals.

A Department for Education spokesperson said: “We recognise that families and early years providers across the country are facing financial pressures and we are currently looking into options to improve the cost, flexibility, and availability of childcare – ensuring that any plans we bring forward focus on improving outcomes for children.

“We’re investing millions in better training for staff working with pre-school children and have set out plans to help providers run their businesses more flexibly.”

Tax-free childcare needs to be easier

One area the group has reportedly looked at is making the tax-free childcare system easier for parents.

It gives parents access to a £2,000 top up each year for their childcare fees. Yet it has been criticised previously for being too complicated and lacking clarity.

In a report from 2021, it was found that around a fifth of eligible families were using the scheme. Of the 1.3 million eligible families, just 282,000 were signed up.

The latest figures, from September 2022, showed that 401,000 families had signed up – around a third of those who could be benefitting from the scheme.

Another proposal is to change the way those receiving universal credit pay for their childcare fees so they don’t have to make big upfront payments before they’ve received their benefit money.

This comes as many low-income families are paying out more if they decide to work over 15 hours a week because of the cost of childcare and the way the system works.

Early years providers are set to see their budgets fall by 8% by 2024, and another measure reportedly proposed by the group is to scrap business rates for private nurseries.

‘Childcare needs to be made to work better’

Baillie told The Guardian: “I am absolutely clear that the Chancellor cannot say nothing about childcare at the Budget. It is an important part of the discussion over economic inactivity.”

“There is quite a groundswell of opinion that this is something we need to be doing more about. Everyone agrees that childcare needs to be made to work better, even if they have a range of opinions on how to do so.”

It has been reported that the Chancellor will focus his Budget next month on getting “economically inactive” people back into work.

Yet last month the government was slammed for proposing a letter writing campaign to encourage mothers back to work. Many at the time responded that the main barrier to women returning to work was the sky-high cost of childcare.

Neil Leitch, chief executive officer of the Early Years Alliance, said: “Let’s be clear, to protect the future of the early years sector it is crucial that the early years is included in the upcoming Budget.

“As such, it is good to see that MPs are calling on the government to focus on early years reforms and look at how to lower the cost of early years for families, but it is absolutely vital that this does not sacrifice the quality of education and care early educators are able to provide.

“After all, the early years doesn’t simply exist to help parents return to work but, more importantly, it helps lay vital foundations that have a lasting impact on children’s development. Any upcoming reforms must focus on the importance of early education rather than solely childcare provision and ensure that not just parents but the sector, has enough long-term support to not only be sustainable but to thrive for years to come.”