In the Spring Budget, the Chancellor announced that the free childcare entitlement of 30 hours per week will be expanded to all children over nine months old to boost labour supply and support working parents with childcare costs. The cost of childcare is currently forcing one in four UK parents to give up their job or drop out of education. 

Parents should be supported in their return to work 

The CIPD has called for the UK Government to provide affordable childcare from the end of maternity leave to enable parents to return to work if they choose to. As outlined in our budget response, we believe it is vital that any new entitlements are properly funded.  

High-quality early years provision improves the social mobility of young people. It affects their outcomes at every stage of their life. When working, many mothers trade quantity of time spent with their kids with quality time, engaging in activities that positively influence child growth, like unstructured play. 

Maternal employment is associated with higher rates of academic achievement for the child later in life, as well as less negative behaviour. And returning to work when their children are young means parents, particularly mothers, are not penalised for their time outside of the labour market. Childcare availability and affordability are opportunities to positively influence return-to-work behaviour. Flexible working is also seen to help women stay in employment after their first child and means they are less likely to reduce their working hours. It enables working parents to access work that fits around their caring responsibilities. 

Challenges in the sector 

However, there are several issues that need to be addressed if the expansion of free childcare is to be rolled out effectively across the UK. A key challenge is whether there will be enough nursery places to cater for a significant increase in demand. 

Early years provision is currently delivered by an estimated 340,000 staff.  While statistics from the Department for Education (DfE) show around 50% of providers have one or more surplus places, this does not consider the uneven geography of provision. A surplus of places in the northeast of England is of no use to parents in London. For example, just 28% of local authorities in Outer London have enough provision for under-2s in all areas. There is a clear need for the government to support local authorities to ensure sufficient provision for all age groups following the staggered rollout. 

As well as nursery capacity issues, there are also signs of growing labour shortages. Lightcast data shows in January 2023 there were 22,165 unique job postings for nursery nurses and assistants almost three times the pre-pandemic level. The level of pay offered is a particular problem, with one in four staff over the age of 25, in private, voluntary, and group-based providers, paid below the national living wage. In addition, turnover is high due to unrealistic expectations of the role, low pay, and unfavourable working conditions The government will need early years workers to join in their droves to enable the expansion of free childcare provision. But the attractiveness of early years work is currently low. Employers will struggle with recruitment and retention due to low pay and working conditions. To mitigate this, a clear attraction and retention strategy is needed for the early years sector, covering all provider types.  

Early years under-funding 

A further challenge is funding. Nurseries currently receive £4.80 per hour for 3- and 4-year-olds covered by the free entitlement. Yet, the Early Years Alliance (EYA) says that the cost to the provider is more than £7.50. Currently, the care of these children is being “subsidised”. This is by charging a higher amount for care of younger children and those attending 30+ hours a week. When nurseries are unable to charge more for younger children, financial trouble will brew. Neil Leitch, the chief executive of the EYA said the changes “mean the government almost becomes the sole purchaser of early-years education. With that comes a responsibility for funding properly”. IFS estimate, that under the new reforms, Whitehall will be responsible for the price of 80% of all pre-school childcare in England. It is crucial that the government takes this responsibility seriously and ensures adequate funding to improve the quality of early years education. 

Low levels of awareness among parents 

Finally, evidence suggests that there also needs to be better communication to parents of the level of support that is available. Research by the Centre for Social Justice shows awareness of the existing support is surprisingly low. A quarter of parents of 0-4-year-olds were unaware of the 15-hour universal entitlement. Knowledge of other levels of childcare support for those receiving benefits was also low. Three in five (61%) of parents with young children agree the childcare support system is too complex. Better communication of existing and future entitlements is therefore needed, with government responsible for delivering an accessible system. 

For successful implementation, the government needs to learn lessons from the existing free childcare offer and foresee future challenges to ensure high-quality early years provision giving children the best start in life, while enabling parents to return to work.  

About the author

James Cockett, Labour Market Economist

James joined CIPD in October 2022 as a Labour Market Economist. He is a quantitative analyst with experience in a variety of topics on the world of work including low pay, equality, diversity and inclusion (EDI), flexible working, social mobility, wellbeing, and education and skills. 
James uses both publicly available data, and CIPD surveys to gain insights, with a keen interest in data visualisation. Prior to joining CIPD, James was previously an Economist for the Institute for Employment Studies (IES) where he worked within the policy team undertaking labour market research and evaluations of employment programmes to support people into work. He has also led the design and analysis of several workforce surveys and has presented to several government departments and key stakeholders. James has also worked as a Consultant undertaking evaluations in the area of social policy for public sector clients.

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