'There won't be enough places': Fears childcare budget announcement will 'crash the system'

Jeremy Hunt has announced a multibillion-pound expansion to free childcare for one and two-year-olds in his spring budget.

The chancellor’s plan will include 30 hours a week of free childcare for parents in England with children in that age group – regardless of income.

Increased funding for the current childcare programme for three-year-olds has also been announced, in an effort to combat ongoing concerns about the cost of childcare amid the broader cost of living crisis.

It is thought the chancellor is introducing the measures to help get more people back into the workplace and boost growth.

The measure has been broadly welcomed, with one mother of a 16-month-old describing it as “almost life-changing”.

The chancellor's phased policy, which will be fully introduced by September 2025, will be worth up to £6,500 a year for working families.

However, critics say that increasing the demand for childcare places by making it cheaper without increasing funding for staff salaries may make it harder to find a nursery space in the first place.

Experts also say the policy does not explain how the government plans to increase the childcare workforce, meaning it's unclear where the extra nursery places will come from.

Sam Freedman, an author and political columnist, posted on Twitter: "...We haven't been given a figure for the new hourly rate but based on the overall cost for 3+4 year olds (£288m for 2024/5) it looks way too low. We proposed adding in £2bn to make it sustainable.

"This is really important because at the moment nurseries subsidise the too low free hourly rate by charging more for one and two year olds (thus such high prices). If one and two year olds also get free hours then they can't cross-subsidy. You risk a major supply problem.

"It is also not clear how the govt propose to increase supply in a market that is currently v dysfunctional or how they propose to increase the workforce when the hourly rate is not high enough to pay more than minimum wage. So the big Q is where will the places come from?"

Freedman also said the policy, which only provides free hours if both parents are working, could increase inequality gaps in pre-school children – a concern echoed by education charity the Education Endowment Foundation (EEF).

EEF CEO Professor Becky Francis said: 'It’s crucial that early years settings are well-funded and have access the support and resources they need, particularly in the most disadvantaged areas.

Watch: Tory MP says ‘absurd’ to say you can be too wealthy for free childcare

"What's more, any expansion to free early years care has to maintain a focus on the most disadvantaged children and make sure they have access to great early learning and development opportunities. Otherwise, there is a risk that we widen inequalities between disadvantaged children and their peers."

Labour MP Stella Creasy, who has campaigned for better childcare measures, said before the policy was announced that it may actually end up “crashing the system”.

She told Sky News on Wednesday morning: “I welcome the fact childcare is on the political agenda… but I really worry this announcement, if it's not backed up with the money needed that is actually needed to properly fund and expand the places – bare in mind half of local authorities tell us they don't have the places they need at the moment to meet demand – then this government could end up crashing the childcare system.”

Creasy said that half of nursery staff say they are “overworked and underwhelmed”, and that if they are not paid properly the policy will “add to the pressures”.

She added: “What looks like help could actually end up making things worse because there isn’t the supply there at a paid level.”

The chancellor's sweeping childcare reforms are being introduced in stages, such are their scale.

Hunt told the Commons on Wednesday: “Working parents of two-year-olds will be able to access 15 hours of free care from April 2024, helping around half a million parents.

“From September 2024, that 15 hours will be extended to all children from 9 months up, meaning a total of nearly one million parents will be eligible. And from September 2025 every single working parent of under-5s will have access to 30 hours free childcare per week.”

However, nursery owner Ann Miller also warned that there are not enough places for more children, telling BBC Breakfast: “Currently I’m turning people away at my nursery.

“You are going to drive the demand for places and the places aren’t going to be there.”

Purnima Tanuku, chief executive of the National Day Nurseries Association, said that providers cannot “magic up” places, telling BBC Newsnight on Wednesday: “The challenges are at the moment, suddenly nurseries can’t just magic up places all of a sudden because they are in a crisis.”

However, parent Nora Parr, a part-time academic based in Hornsey, north London, described news of the policy as “exhilarating”.

Parr, the mother of a 16-month-old, said she and her partner currently pay £1,040 a month for four half-days of nursery a week for their daughter.

The 40-year-old told the PA news agency: “We could apply for a mortgage, I could work more… (I) pick up the baby after lunch and finish work during her nap, every minute of childcare is spent on working hours.

“I could have five minutes to myself!

“The nursery is brilliant, but it takes a big chunk of our budget. The change to our finances would be almost life-changing… It would save us £1000+ a month.”