Jeremy Hunt’s childcare budget boost ‘will not work’ without further reform, MPs warn

Parliament’s education committee calls on ministers to address ‘structural problems’ in early years system, including ‘unprecedented staff turnover’

Jeremy Hunt’s expansion of state-funded childcare “will not work” unless more is done to address rising costs, stagnant funding and the recruitment crisis hitting the profession, MPs have warned.

Parliament’s education committee has called on ministers to address “structural problems” in the early years system to ensure families benefit from high-quality affordable childcare under its reforms.

And they said plans to expand the number of subsidised childcare places for working parents in England “should not come at the expense of quality”.

The chancellor’s March budget contained measures aimed at boosting economic growth by encouraging non-working mothers to rejoin the workforce.

The reforms will allow some families of children as young as nine months in England to claim 30 hours of free childcare a week.

From April next year, working parents of two-year-olds will be able to access 15 hours of free childcare. This will be extended to working parents of all children older than nine months from September next year.

From September 2025, working parents of children under five will be entitled to 30 hours of free childcare per week.

Under the current system, working parents of three and four-year-olds in England are eligible for 30 hours of free childcare per week.

But parliament’s education committee today warned that the Early Childhood Education Care system (ECEC) is in crisis.

In a report, they said providers are closing, unable to make ends meet against a backdrop of rising costs and stagnant funding.

And the committee said those that remain face “severe recruitment challenged”, with childminders quitting the profession “at an alarming rate”.

Mr Hunt’s funding package, which will almost double government spending on ECEC by 2025, is “welcome and demonstrates that the government is listening”, the report found.

But it said: “This investment is much overdue and more will need to be done to address the structural problems in the ECEC system if the funding increases are to be implemented effectively.”

They recommended focusing the funding on deprived areas, where providers “already struggle more” than those in wealthier areas.

And the committee called for all nurseries to be exempted from business rates and VAT, “in recognition of their role in delivering a public good”.

Staff pay should also be brought more in line with that of those in other teaching settings such as primary schools, the MPs said.

And they said they are “deeply concerned” by plans to relax the ratio of staff to children, from one staff member to every four two-year-olds, to one for every five, warning it could downgrade the quality of care.

“The impact of these changes should be closely monitored and reversed if quality is degraded,” their report said.

Education committee chairman Robin Walker said the childcare market is facing ‘significant challenges in affordability and availability’ (Gov.uk)

Education committee chair Robin Walker said Mr Hunt’s spending commitments “were well-intentioned and showed the government recognises the huge benefits to the country of fixing this sector”.

But he added: “Simply extending the number of hours that the government calls free will not work unless the funding rates accurately reflect the costs of providing high-quality early education and childcare.”

Mr Walker also stressed the expansion of childcare will only be successful if the government can “stem the tide of people leaving the workforce”.

“There needs to be a revamp of career development, with improvements to pay, progression and conditions so that the profession is given the respect and status it deserves,” he added.

Mr Walker said: “The childcare market is facing significant challenges in affordability and availability, with unprecedented staff turnover and nurseries closing, despite massive demand from parents who want a career and to provide for their families but struggle to find affordable services. It is clear that ministers have more work to do to address this.

“Simply extending the number of hours that the government calls free will not work unless the funding rates accurately reflect the costs of providing high-quality early education and childcare.”

Neil Leitch, chief executive of the Early Years Alliance (EYA), said: “Not only have years of severe underfunding plagued the sector but the worst staffing crisis in decades has created a perfect storm which must be addressed if the sector has any chance of survival in the coming years.

“If that wasn’t bad enough, it’s likely that the upcoming sector expansion will be dangerously underfunded and will place unrealistic expectations on providers already on the brink.”

He added: “For the committee’s findings to truly have a lasting impact, we hope against hope that it finally wakes the Government up to the reality of the situation facing families and providers and prompts urgent and effective action.”

A government spokesperson 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 per year and give children the best quality early years education.

“To make sure that we are supporting our fantastic early years workforce, we will be investing hundreds of millions of pounds each year to increase the amounts we pay childcare providers. We also are consulting on how we distribute funding to make sure it is fair.”