A third of parents eligible for new childcare funding considering leaving job or reducing work hours due to recent hikes in childcare costs
- A third say new funding will save them less than £100 a month
- Almost half (48%) have not heard back from their provider since submitting their code to access the scheme
- 1 in 4 say issues with new funding scheme are causing them problems at work
DATE: 22nd February 2024; New data from Pregnant Then Screwed has uncovered that over a third of parents (34%) who are eligible to receive the new childcare funding for 2 year olds, are now considering leaving their jobs or reducing their hours due to increased childcare costs.
The survey of 11,100 parents with a child under the age of 5 years old, including 6,256 parents eligible for the new funding for 2-year-olds, has found that costs for childcare and sundry items (AKA top up fees) are increasing for the majority of families, meaning any cost savings from the new funding are lower than expected. This, coupled with challenges in accessing the scheme, is causing issues for many parents.
With just six weeks to go until the first stage of the Government’s flagship childcare funding scheme, the poll found that almost half of parents (48%) have sent their code to their provider but have not had any response as to whether the code has been accepted. Just 1 in 5 (21.4%) parents say they have given their code to their provider and everything has been fine. According to data published today from the Early Years Alliance, 50% of providers are still waiting to hear what the funding rates are from their local authority.
Meanwhile, childcare costs continue to rise. A quarter (24%) of parents who are eligible for the scheme say their provider is charging large sums for sundry items – rendering the so-called ‘free hours’ not free at all. The majority of parents (70%) say costs have recently increased or are about to increase, with almost 1 in 5 (18%) saying costs are rising by more than 11%. And over half (53.7%) said costs have risen or are about to rise by more than 5%. This means that for the majority of parents, costs are rising faster than inflation.
Danielle, a mother from Cheshire, explains, “My little one is 2, and we received a letter last week to say that fees will be going up from £65 a day to £86 a day. We are now paying £1490 a month for 4 days a week. I’m going to have to leave my job as I simply can’t afford this. The 15-hour funding doesn’t kick in until April, which will help slightly, but what do I do right now as I simply can’t afford it. We’re not going to benefit in the slightest from the new government scheme, in fact, we’re now worse off.”
The Government has repeatedly said that the scheme will save parents an average of £6,500 a year once it is fully rolled out, but the survey found that half of parents who are eligible for the first phase of the scheme will save less than £170 a month (or £2,040 a year).
Joeli Brearley, CEO and Founder of Pregnant Then Screwed, comments, “the Government has stated that the average saving for parents will be £6,500 a year once the new schemes are fully rolled out, but our data tells a different story. Many providers are increasing costs for sundry items and for childcare outside of funded hours as a desperate attempt to cover their losses from delivering these schemes; this is drastically reducing anticipated savings. The new benefit sounded too good to be true, and for many families, it will make little difference to their outgoings. Once again, parents are picking up the tab due to underfunding from the government.’’
Alison, a mother of two from Dorset, comments, “My daughter attends nursery 4 days/week, and the plan was for my son to join her in April when I will go back to work full time. However, we received the payment schedule for April-Sept and cannot afford it. Our nursery has increased costs by £10/day per child for the non-funded hours and increased costs of the “extras” for the funded hours by £3/day, almost wiping out any benefit from the free hours my daughter would be entitled to. As a result, we are having to reduce the days they attend nursery, and I will have to give up a day at work because my company does not offer compressed hours.”
The survey, which ran from Thursday, 15th Feb (the deadline by which all parents should have received their code) – to Sunday, 18th February 2024, found that 1 in 10 (11%) parents eligible for the scheme either still hadn’t received their code or couldn’t work out how the system worked. More than half (52.8%) of those eligible say they feel stressed due to issues with the new funding schemes.
It is clear from the data that providers are taking a variety of measures to ensure they don’t go bust from offering these new schemes. The measures include increasing costs, charging large top-up fees, increasing the cost of sundry items for those using the 3-4 year old entitlement, and placing restrictions on how the funding can be used. Some providers have even made the decision to stop offering the 3-4-year-old entitlement and any other Government benefits – 2% of eligible parents said this is the case for them.
Data released On Sunday as part of Pregnant Then Screwed’s ‘State of The Nation’ report found that parents are in more debt than ever before, with 45% of parents borrowing money or withdrawing their savings to pay for childcare – a 30% increase from 2023.
Joeli Brearley, CEO and Founder of Pregnant Then Screwed, comments,
‘’Investing an additional £4 billion in childcare was a hugely progressive move, and the Government should be commended for that, but if we are serious about making childcare work for families and the economy, then we need to be more ambitious. Unless the funding to providers increases, they will have no choice but to continue charging high fees to make up the shortfall. We are therefore calling on the Chancellor to increase the hourly rate, particularly the 3 – 4-year-old entitlement, in the Spring statement next month.’’
ENDS
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More information about the survey
Pregnant Then Screwed surveyed 11,100 parents with a child under the age of 5 years old who use childcare. 6,256 are eligible for the new funding for 2 year olds. This was a self selecting survey conducted via Typeform. It opened at 1pm on Thursday 15th February and closed on Sunday 18th February.
The data in full:
Three-quarters (77%) of parents who are not eligible for the new funding but use childcare say that costs have recently increased or are about to increase with more than a quarter (24.9%) saying the costs have increased by 11% or more
One in ten (11.5%) said the costs have increased by 16% or more
Bearing in mind that the average cost of a full time childcare place in 2022 (according to Coram) was over £14,000 this means costs for a quarter of families have increased by over £1,400 a year.
More than a quarter (28.3%) say their costs have increased or will increase by an additional £10 per day, or an additional £200 a month for a full time place.
Of those eligible for the new 2 year old funding:
7.1% say their reconfirmation window hasn’t opened yet and they haven’t received their code in the post
3.9% say they don’t know how it works
When asked if they have had any problems with using their childcare code, just 1 in 5 (21.4%) responded that they had given it to their provider and everything has been fine.
Almost half (48.1%) say they have sent their code to their provider and haven’t heard anything else.
1 in 10 (9%) parents say their provider has said they can’t accept the code as they don’t know what to do with it.
1 in 5 (18.1%) parents say their provider is either not offering the new funding for 2 year olds or they haven’t yet confirmed if they will; 17.1% of those eligible say their provider has still not confirmed whether they will be offering this scheme.
Just a third of parents (37.5%) say their provider is offering this scheme and has not imposed additional restrictions on how the scheme can be used. (Restrictions include: limiting how many hours can be used each day, not allowing the full 15 hours to be used each week, or saying the funding can only be used if the overall hours childcare is used increases). A quarter (24%) of parents who are eligible for the scheme say their provider is charging large sums for sundry items, whilst 1 in 10 (11%) say their provider is limiting how many hours a day they can use the funding for.
2% say their provider has recently removed access to the 3-4 year old entitlement (for this we removed anyone who said ‘I don’t know’ and anyone who said their provider never offered this)
The majority of parents (71%) say costs have recently increased or are about to increase with almost 1 in 5 (18.1%) saying costs are rising by more than 11%
And over half (52.2%) saying costs have risen or are about to rise by more than 5%. This means that for the majority of parents costs are rising faster than inflation
Of those who said their costs are increasing, a quarter (25%) say their costs are rising by £10 or more per day. A fifth (18.5%) of all parents said their costs are increasing by £10 or more a day.
As the 15 hours of funded childcare is term time only, it equates to just 11 hours per week if you use a full time place. Therefore it is estimated that outside of the funded hours, costs have recently increased by £150 a month.
These cost increases are having a devastating impact on the careers and earning potential of parents. More than a third (34.2%) say they are now considering leaving their job or reducing their hours at work despite being eligible for this new funding.
Of those who know what their childcare provider will be charging for ‘sundry items’, 2 in 5 (19.6%) said they are being charged £11 or more per day. Sundry items are top up fees where a provider charges an amount to cover unfunded items.
Of those who know how much this new benefit will save them 1 in 10 (11.3%) say it won’t save them any money or it will cost them more than it saves them
With a third (34.5%) saying it will save them £100 or less a month
1 in 5 (21.4%) say it will save them less than £50 a month
The Government estimated that the cost savings to parents would be up to £6,500 a year when all the schemes are rolled out in full.
More than half (52.8%) of those eligible say they feel stressed due to issues with the new funded hours for 2 year olds
1 in 4 (24.8%) say issues with the new funding scheme are causing them challenges at work. Those challenges include: not being able to confirm how many hours they can work, and being unable to look for a new job
Of those who are eligible for the 3-4 year old entitlement 1 in 20 (18.8%) are paying more than £19 a day in sundry items
A quarter of parents using the 3-4 year old entitlement say that costs for top up fees have increased, or are about to increase, substantially.
