In today’s budget the Chancellor has confirmed several new measures on early education and childcare:

• Working parents in England will be able to access 30 hours of free childcare per week, for 38 weeks of the year (or spread their free hours over a higher number of weeks), from when their child is 9 months old to when they start school. This will be funded by an additional £4.1 billion by 2027-28. The new entitlements will be rolled out in stages:
  • From April 2024, all working parents of 2-year-olds can access 15 hours per week
  • From September 2024, all working parents of children aged 9 months up to 3 years old can access 15 hours per week
  • From September 2025 all working parents of children aged 9 months up to 3 years old can access 30 hours free childcare per week

• The government will also uplift the hourly rate paid to providers to deliver existing free hours offers with £204m of additional funding this year, increasing to £288m by 2024-25. The Chancellor suggested this will mean a 30% in the 2-year-old rate but did not say what this would translate to for the 3-/4-year-old rates.
• The government will also change the staff-to-child ratios for 2-year-olds, moving from 1:4 to 1:5 and will consult on further measures to give providers flexibility. They will be optional, with no obligation on providers to adopt them.
• The government will also provide start-up grants for new childminders, including for those who choose to register with a childminder agency. Childminders who register with Ofsted will receive a start-up grant of £600, whereas those who register with a childminder agency will receive £1200.

Our analysis

The decision to relax the ratios for 2-year-olds from 1:4 to 1:5 despite overwhelming opposition from the sector and parents is extremely disappointing. While most of the sector are unlikely to implement this, the pressure on settings budgets and staffing increase the risk that settings will use this flexibility, and that it will increase the pressure on the remaining staff and impact on safety and quality. We hope that Ofsted will monitor the situation carefully.

We called on government to prioritise fixing the funding for current entitlements before trying to add on further ones. The additional £204m for this year is not enough to address the severe funding problems in the sector – based on their own estimates, the actual figure needed is probably closer to £2bn. We therefore expect providers to continue to struggle with their viability.

This will be further compounded when the additional entitlements are introduced if these are paid at a similar hourly rate to the current funded 2-year-old offer, as the more hours are paid for at government rates, the fewer parent-paid hours are available to generate cross-subsidy. Parent-paid hours are likely to cost even more, and additional charges to become higher and more widespread. Some providers may not be able to afford to offer the new funded entitlements.

The decision to make the new entitlements only available to parents working at least 16 hours at the minimum wage is not well thought through. It mirrors the current 30 hours entitlement for 3- and 4-year-olds, which is premised on the universal 15 hours, and assumes that parents only need support for additional hours if working longer hours (which already overlooked that childcare is needed to cover travel times as well as working hours). In the absence of a universal 15 hour offer for under 3s, parents working fewer hours will not qualify – even though their lower incomes will increase the need for support. This may be offset by childcare support through Universal Credit. The changes to the latter are welcome, but as this will only be paid up front for new claimants or those extending their hours, many will still be left having to claim in arrears.

With a workforce recruitment and retention crisis already impacting the sector, the only workforce measure here is a bonus for new childminders, which is heavily weighted towards childminders joining agencies instead of being Ofsted registered. This seems unlikely to offset the dramatic and long-term decline in the number of childminders, or to change childminders’ preferences to be Ofsted-registered rather than belonging to agencies. There is no mention of how the wider workforce will be increased and upskilled to deliver the increased number of places for babies and children under the new entitlements, which should surely be a priority.

While we welcome the ambition of this government to support working parents and put in place early childhood education and care from the end of maternity leave until the start of school (and to provide wraparound care for children in school), the detail of these policies leaves much to be desired. The current system does not work for children, parents or providers, and the new measures look likely to perpetuate the problems of underfunding, which in turn is impacting on workforce recruitment and retention, provider viability and the availability of high quality, affordable early education provision accessible to all.