Rishi Sunak has been warned that high-profile plans for a huge expansion of free childcare are “undeliverable”, as hundreds of nurseries across England said it would lead to a chronic shortage of places and leave many parents still having to pay.
A survey of hundreds of childcare providers seen by the Observer reveals a sizeable mismatch between the free places parents are expecting and what nurseries and childminders can provide. They also warn that many parents will continue to be charged, or face higher fees, as providers face a growing shortfall.
The Conservatives regard the proposals on childcare as a key part of their election pitch to voters. The chancellor, Jeremy Hunt, used his budget in March to announce eye-catching plans to extend the government’s existing offer of 30 hours of “free childcare” to children aged between nine months and two years by 2025.
However, with eligible parents expecting the free hours and nurseries already facing surging inquiries for when the full package is introduced, the vast majority of childcare providers said they were not planning to increase their capacity, due to costs, staffing levels or the space they had available. More than 40% of all providers surveyed said their service was already full, with a waiting list.
The findings come from a nationwide survey of about 800 providers by the Early Years Alliance, shared with the Observer. Of the 96% of respondents who currently offer places to two-year-olds, 20% plan to offer a limited number of places under the government’s scheme and charge privately for the rest. Another 33% said they were unsure whether they would deliver places under the new scheme. Of the 54% of providers who currently offer places to one-year-olds, 40% are undecided about delivering new funded places, while 20% plan to offer a limited number and charge privately for the rest.
Among providers planning to offer places under the scheme for two-year-olds, 83% expected an increase in demand. Of these, 60% were not planning to increase the number of places offered. Some 77% of those planning to offer one-year-old places anticipated higher demand, but 72% were not planning to increase places.
Concern is acute because childcare providers have traditionally used the fees provided by younger children to cover the shortfall created by the “free” provision handed to three- and four-year-olds. In reality, they say, state funding for older children has never covered their real costs. Under the expanded scheme, they will have less scope to make their services economically viable.
Even before the new offer kicks in, 86% of nurseries and childminders currently offering funded places for three- and four-year-old children said the government funding pledged from September would be less than the cost of delivering the places. Some 70% said they would cope by increasing fees.
Neil Leitch, chief executive of the Early Years Alliance, said the government had “blindly made a promise to families that many providers simply will not be able to deliver on”. He said: “A combination of poor funding, a lack of capacity and insufficient time to prepare means that many preschools, nurseries and childminders may – quite understandably – choose to limit the number of funded places available under the expanded offer, or in some cases opt out entirely. As a result, many of the parents and carers who are pinning their hopes on benefiting from the new offers when they roll out next year are likely to be left sorely disappointed.”
Bridget Phillipson, the shadow education secretary, accused the government of trying to “hoodwink parents” with the pledge. “These findings suggest that the chancellor has written a postdated cheque to Britain’s children, and at this rate the cheque will bounce.”
The Department for Education said: “We are rolling out the single biggest investment in childcare in England ever, set to save a working parent using 30 hours of childcare up to an average of £6,500 a year.
“To make sure there are enough places across the country we will be investing hundreds of millions of pounds each year to increase the amounts we pay providers – and are consulting on how we distribute funding to make sure it is fair.”
The Early Years Alliance carried out its survey of members between 10 and 21 July 2023.
The nursery manager: ‘There won’t be enough spaces’
It is still more than two years until working parents of children aged between nine months and two years are given 30 hours of supposedly free childcare. Yet Mihaela Fulga, the manager of Meadow View Childcare in Welwyn, Hertfordshire, is already worried about what parents are expecting and what she and her counterparts will be able to deliver.
“We already have inquiries about places for 2025,” she says. “Parents want places for September 2024. We have six or seven visits a week now from parents. Since the government announced this plan, the parents want to make sure they will get the space because they know there will not be spaces for everybody.”
Eleanor Lucas, the nursery’s business manager, added: “The government again has clearly underestimated what early years providers need to keep their doors open, to provide high-quality practitioners and care. We are the forgotten sector.”
The introduction of 30 hours of “free” childcare for eligible working parents, which chancellor Jeremy Hunt promised by the end of 2025, has not only created a worrying gap between what parents think they have been promised and what many nurseries think they can deliver: it has also left nurseries with unanswered questions about how they will fund the places.
Working parents are currently given 30 hours of supposedly free childcare for three- and four-year-olds, but Fulga said that, in reality, these places were not fully funded by the state. In fact, they are cross-subsidised by the fees paid by parents of younger children. Expanding free hours to younger children has left nurseries questioning how they will cope – or whether they will simply not take part in the government scheme, or charge some parents even more.
She said all her costs were going up and she didn’t want to save money by easing staffing ratios, as ministers have allowed nurseries to do. “In our opinion, it is not really safe,” she said. “It’s not because something will happen with the children. You would overwork the staff. They are already overworked anyway.”
