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Cost of childcare continues to rise in spite of increased government spending

Coram Family and Childcare has published the results of its nineteenth annual Childcare Survey. The findings are based on surveys from local authorities in England, Scotland and Wales, which were returned to Coram Family and Childcare between November 2018 and January 2019. The key findings from this year’s survey are outlined below.

Childcare cost

  • Childcare prices for children under three have risen slightly above inflation this year.
  • Working parents of three and four year olds in England can now get 30 hours of funded childcare a week with the extended entitlement. If they need 20 extra hours to take this up to 50 hours a week, the average price will be £96, 2 per cent higher than in 2018.
  • The average price for families using an after school club for five days is £59 per week.

Childcare sufficiency

  • Only around half of local authorities in England (57 per cent) and Wales (43 per cent) have enough childcare for parents working full time.
  • Fewer than one in four local authorities have enough childcare available for children needing after school care, parents working outside normal office hours, or disabled children.
  • A significant majority of local authorities have enough childcare for three and four year olds eligible for the universal entitlements, but sufficiency for the targeted two year old offer is slightly lower.
  • While there are still significant gaps in the availability of childcare, in England there have been improvements and more local authorities report that they had enough childcare than last year.

30 hours in England

  • Sixty-two per cent of English local authorities have enough childcare for children using the 30 hours extended entitlement, which is higher than in 2018.
  • The majority of local authorities have not seen any impact on the availability of early years childcare, including the entitlements, as a result of the introduction of 30 hours. Generally, local authorities were more likely to be positive than negative about future impacts.
  • However, there were some areas for concern: a quarter of local authorities thought that 30 hours had caused prices to rise for three and four year olds outside of the entitlements and a third thought it had a negative impact on the financial sustainability of childcare settings.

Recommendations

Government should develop a childcare strategy and reform all current spend on childcare to create a simple and efficient system that makes sure all parents are better off working, encourages quality improvement and promotes child development.

In the shorter term, the Scottish, Welsh and UK governments should:

  • Make sure every parent is better off working after paying for childcare. This includes increasing the maximum amount of childcare costs paid for under Universal Credit and moving to upfront payments for childcare to make it possible for parents to move into work.
  • Make sure there is enough childcare available for all families, prioritising the families currently most likely to miss out, including disabled children, parents working outside the typical 9 to 5 and older children. This should include start up grants for childcare providers.
  • Regularly review the funding rate for early years entitlements to make sure that they meet the cost of delivering high quality childcare.
  • Help parents to improve their skills and employability by extending the 30 hours entitlement for three and four year olds to families where parents are in training.
  • Improve access to early education for disadvantaged children by doubling the early years pupil premium.
  • Monitor what effect new funding (Tax Free Childcare and 30 hours) is having on childcare prices and whether it is helping parents into work and narrowing the achievement gap. This should consider how current spend could be reallocated to better meet the needs of disadvantaged and low income children, including current underspend of the Tax Free Childcare budget.

Responding to Coram Family and Childcare’s Childcare Survey 2019, PACEY Chief Executive Liz Bayram said:

“Whilst this report highlights that childcare costs for families in the UK have continued to rise, it is only half the story. The cost of delivering childcare has also increased substantially for childcare providers in the past year – minimum wage increases, pension costs. All this is against a backdrop in England of underinvestment in government’s flagship childcare policies that now provided eligible families with up to 30 hours of funded early education a week. This report rightly highlights the negative impact on families, in particular parents with disabled children but has to be viewed against a backdrop of ongoing underfunding in England. Until that is addressed – as they are managing to do so in Wales – these issues will not go away.

“Equally of concern is the lack of available places for many families and a continued lack of flexible childcare for parents who work long or unsociable hours. We know this is being made worse by the decline in the number of providers – in particular registered childminders in England and Wales. The report found that only 60% of childminders in England are delivering funded places compared to 86% of day nurseries. In England, childminders could deliver substantially more funded places if long-standing barriers were removed: the low hourly rate for funded places; delayed/uncertain payments; local authority red tape associated with the administration of funding and the removal of ongoing, illogical restrictions on childminders caring for related children. The Welsh Government is actively tackling these issues with a dedicated focus on supporting childminding to thrive. These barriers could be removed if we had the same dedicated focus from the Department for Education. If maintained nurseries can be given additional dedicated funding and support, so should other providers struggling with the same issues.”