UK Credit

Driving to reduce the cost of childcare for parents

The government today announced ambitious new plans to improve the cost, choice and availability of childcare which will benefit hundreds of thousands of parents across the country.

The UK has some of the highest quality childcare provision in the world with 96% of childcare facilities rated good or exceptional by Ofsted, but it is also one of the biggest costs to which face working families today. This means that some families, especially women, feel that they cannot return to work after giving birth due to the high cost of paid child care.

As the cost of living continues to rise, the government is committed to doing all it can to support families with their finances while keeping people in secure, well-paying jobs that contribute to growth economy. New plans are being made today to ensure quality and affordable childcare is available to all.

To reduce costs for providers and parents, a new consultation will aim to increase the number of children that each member of staff can care for in early childhood settings.

It will propose changing staff-to-child ratios from 1:4 to 1:5 for two-year-olds, giving providers more flexibility in how they run their business while maintaining safety and quality of care. Childcare for children aged 0-2 is the most expensive for providers to provide, largely due to the need for a higher level of supervision.

This could potentially reduce the cost of this form of childcare by up to 15%, or up to £40 a week for a family paying £265 a week for childcare for their 2-year-old, if providers adopt the changes and pass all the savings to the parents.

Education Secretary Nadhim Zahawi said:

Every child deserves a good start in life and that means giving families the support they need.

Child care is an integral part of our economy, and these reforms prove once again that this government is on the side of working families. I am extremely grateful to the thousands of dedicated early years professionals who care for and educate our youngest children on a daily basis, which is why I am determined to support them by giving them greater flexibility in managing their services.

This will in turn support thousands of families across the country, helping to develop children’s skills while helping parents to work.

The government will also increase choice and affordability for parents by taking steps to open up the market for childminders.

While childcare facilities such as crèches are the most popular option for families, childminders are generally the most affordable and flexible form of childcare. While the average cost for a two-year-old attending daycare for 50 hours a week in England is £265 a week, that compares to £236 with a childminder. The government will help more people become childminders by:

  • Reduce the initial costs of becoming a childminder through financial support;
  • Allow childminders to spend more time working from more locations – for example a local community center or village hall rather than their own home;
  • Give childminders greater flexibility in ratios when caring for their own children or siblings of other children;
  • Work with Ofsted to reduce inspection of childminders; and
  • Early Childhood Core Stage relief specific to childminders, reducing the frame by a third to ensure content is focused and easier to navigate.

The government will streamline the Ofsted registration process for suppliers. More providers signing up would mean that parents would have a wider choice of providers from which to use these programs, to pay for the child care services that support their working lives.

The government will also encourage the growth of Child Care Agencies (CMAs). CMAs could eventually become major players in the child care market, driving competition and reducing costs while providing parents with more child care options. CMAs are central agencies that remove the administrative and regulatory burden from individual childminders and often provide parents with tools such as mobile apps to book their childcare.

Minister for Children and Families, Will Quince, said:

I am proud of the excellent quality of childcare and early education in England, which is a huge asset for working parents. But too many people struggle to juggle work and childcare costs.

We know that there are thousands of parents who are eligible for government assistance but are not taking advantage of it. That’s why we want to increase awareness of existing childcare offerings, enable providers to deliver services more flexibly, and ensure that funding goes where it’s needed most.

An additional investment of £10m for Retained Preschools was also announced today, as part of the additional funding they receive from 2023-24. These establishments often care for some of the most disadvantaged children in the country and have additional costs that other early childhood establishments do not have – such as the requirement to have a headteacher – because they are constituted in schools.

Since the introduction of the National Early Years Funding Formula in 2017, the government has provided additional funding to these nurseries to protect their funding levels.

This additional funding is part of a separate consultation on plans to reform the distribution of early years funding across England, to ensure the system is fair, efficient and responsive to changing needs.

The government has spent more than £4billion each year for the past five years to help families with childcare costs, but nearly a million eligible families have failed to exercise their right to duty-free childcare, which is worth £2,000 a year or £4,000 for disabled children. Universal Credit Childcare allows families to recover 85% of their childcare costs, worth up to £1,108 per month.

The government is also running a renewed campaign via the Childcare Choices website so parents can access the support they are entitled to, through a fast-track £1.2million-backed marketing campaign, which launched last week . It will also encourage providers to take the necessary steps to offer the full range of childcare services to parents using their services.

Exchequer Secretary Helen Whately said:

Tax-Free Childcare provides a childcare cost boost for working families, but thousands of parents could be left without it.

With nearly one million families eligible, I want to encourage parents to take advantage of this support of up to £2,000 a year for each child.

Secretary of State for Work and Pensions, Thérèse Coffey, said:

We want more people to take advantage of the Universal Credit financial support for child care that is available now to help working families. We also want more childcare providers to register with Ofsted and unlock more places that can be subsidized to reduce the cost of living.

The government also provides 15 hours per week of free childcare or pre-school education for all 3- and 4-year-olds, increasing to 30 hours for working families and 15 hours for disadvantaged 2-year-olds.

The government recently announced that eight million of the most vulnerable households (around a third of all UK households) will receive £1,200 this year and all families will receive £400 – this is on top of changes to Universal Credit, the national living wage and the national wage. Insurance thresholds, so people keep more of what they earn.

This brings the government’s total support for the cost of living to more than £37billion, more than other major economies around the world.

Gemma, from Portsmouth, a mum of one uses Tax-Free Childcare. She says:

As a working mother, it can be difficult to balance childcare. But Tax-Free Childcare allows me to free up money that can cover the costs of other things – when you’re talking about saving 20% ​​on your childcare costs, that can make a big difference.

The government has recently launched a new website which brings together government support on offer in one place so the public can see what support they may be eligible for: www.gov.uk/costoflivingsupport

Broadcast on radio, social media and bus stops, the campaign aims to increase parents’ awareness and understanding of government support for childcare, and to maximize the number people who accept our offer. This will coincide with the summer school holidays, maximizing use during the long break and beyond.

The campaign will point out to parents, bringing together in one place the support available through Universal Credit, duty-free childcare and free 15-30 hour childcare, clearly outlining eligibility requirements and providing a calculator convenient for parents to estimate their entitlement. We will also be looking to further simplify the website to make it as easy as possible for parents to understand the support available.

Universal Credit’s childcare offer can save families hundreds of pounds every month – for example, a single parent with a young child who works in social care three days a week could benefit from around £500 £ per month if he applied for help with his childcare costs.

Tax-Free Childcare helps working families, including the self-employed, reduce household expenses and keep more of what they earn. Working parents on annual salaries of up to £100,000 can get up to £2,000 in childcare support each year, or £4,000 for disabled children.

Recent tax-free childcare statistics from HM Revenue and Customs (HMRC) revealed that 512,415 families received up to £2,000 towards the cost of childcare in the year of taxation 2021 to 2022, against 374,135 the previous year. More than 384,000 families used Tax-Free Childcare in March 2022 – the highest monthly number of families recorded using the program since its launch in April 2017.

The announcements follow visits by Children’s Minister Will Quince to the Netherlands, Sweden, France and Scotland – whose staff-to-child ratios for two-year-olds the consultation launched today seeks to reflect.

The government will also explore ways to improve the recruitment and retention of staff in the sector, giving parents as much confidence as possible in the care their child receives.