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Plum, along with experts, calls on Prime Minister once again to prioritise and improve childcare provision for under 5s
14 February 2024
Last year, Plum delivered an Open Letter to Number 10 Downing Street on behalf of the many working parents in the UK who are struggling to access or afford childcare.
Though significant policies on childcare have been announced since then, when surveying parents of young children, we found that:
Together with leaders from across the childcare sector, Plum’s Head of Money, Rajan Lakhani has written once again to the Prime Minister, urging him to prioritise and improve childcare provision for under 5s.
Dear Chancellor/Prime Minister,
We wrote to you in March to highlight the importance of childcare reform and called for a range of changes. Among these proposals were increasing funding to childcare providers providing early years support to help deliver higher quality care, and expanding the free hours provision to children aged under two years old.
So, when the Chancellor announced the expansion of childcare in March, we were optimistic that this matter was finally being addressed.
However, it is becoming painfully apparent that the reforms announced will struggle to be delivered adequately and childcare support is heading in the wrong direction. Figures from Ofsted show there were almost 5,000 fewer childcare providers at the end of March 2023 compared to the same time last year, with a net loss of 650 nurseries leaving tens of thousands fewer childcare places available.
The central driver for these closures is Government funding not keeping pace with the rise in costs for childcare providers, with staff retention a particular challenge given the relatively low level of wages for childcare. While the rise in the living wage is deserved by hard-working staff, it adds further pressure on childcare providers without a commensurate increase in their funding. This means that, despite an extra £400m for childcare, providers are facing a real terms cut in their overall funding according to the IFS. The Government’s new recruitment campaign to boost staffing numbers is welcome but this will also take time to have an impact when qualified candidates are needed now to deliver the expansion in free childcare hours.
Less supply and higher demand will naturally lead to those childcare providers that remain having to charge parents more to cover the shortfall from Government funding.
But parents are becoming increasingly desperate as the situation is worse than last year. Our latest research found that they were having to make very difficult choices, with 70% of parents saying the cost of childcare is affecting their work decisions, up from 64% in January 2023. More than two-thirds also find childcare support inaccessible and confusing.
Childcare costs are continuing to rise, with almost 40% spending more than £200 a week, up from 29% in January. Alongside this, mortgage arrears have increased to the highest rate in six years. With mortgage costs rising alongside the price of everyday goods and services, this will have a crippling impact on family finances across the country.
It is the level of state support that is the critical difference between how much parents pay for childcare in the UK compared to other countries. Recent research by the Social Market Foundation found that, while the cost of providing childcare is lower in the UK than in Sweden, British parents pay five times as much as a proportion of their income because the state covers less of the bill.
We recognise that the Government needs to manage its finances carefully, especially to retain market confidence following recent economic upheavals. But more investment on childcare can help to balance the books by supporting growth, reduce the gender pay gap and loosen the labour market, which has been a major factor in higher inflation.
What’s more, higher quality early years care may also support children’s learning and wellbeing, improving their future earnings potential and in turn the Government’s tax receipts.
Together, we stand with parents, and are calling on the Government to:
When the Government is ostensibly trying to find ways to tackle the UK’s poor levels of productivity, the failure to deliver properly on childcare is an own goal both morally and economically.
If you can find the economic headway for tax cuts, surely you have the room to properly address childcare which could deliver benefits for the UK economy that will deliver a more sustainable, longer-lasting legacy?
Signed by:
Rajan Lakhani, Head of Money, Plum
Adrienne Burgess, Joint CEO, The Fatherhood Institute
June O'Sullivan, CEO, London Early Years Foundation
Kate Dyson, Founder, The Motherload
Sign our Open Letter here