Childcare: What concerns have been raised about the chancellor's new policy?

ITV News Deputy Political Editor Anushka Asthana breaks down today's budget and what it means for the government

Children under the age of five, where eligible, will receive 30 hours of free childcare per week in England from the moment maternity care ends, the government has announced.

Chancellor Jeremy Hunt made the pledge on Wednesday as part of his Spring Statement, while the country continues to battle a cost-of-living crisis and stalling economy.

Mr Hunt told the House of Commons: "I today announce that in eligible households where all adults are working at least 16 hours, we will introduce 30 hours of free childcare not just for three- and four-year-olds, but for every single child over the age of nine months.

"The 30 hours offer will now start from the moment maternity or paternity leave ends. It’s a package worth on average £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week and reduces their childcare costs by nearly 60%."

The chancellor explained that as it is "such a large reform" it will be rolled out in stages.

He added: "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 nine 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, analysts have cast doubts on how workable the system is in practice. So, what are some of the main concerns?

ITV News Correspondent Sarah Corker looks at how the budget will impact people

Could the policy offset existing issues?

Political Editor Robert Peston explained that existing free childcare provided to older children has a "toxic impact" on the rest of the system as a whole.

He said: "It pays childcarers a rate that many say means that the businesses that run childcare can't make a decent profit and, therefore, at the moment what they do is they charge parents of younger kids more and that subsidises the system.

"So some people are saying that if they simply pay childcarers at the rate that they're currently paying them a load of businesses will just go to the wall.

"So one of the things we want to know is what rate will the government mandate for paying childcarers."

'There are plenty of people who say that the childcare that's currently being provided to older children actually has a toxic impact on the system'

Christine Farquharson, an economist at the Institute for Fiscal Studies, said the government's policy could "save families considerable cash", but added that there are risks.

In a tweet, she said: "The average family paying for childcare for a 0-to-two-year-old spends more than £80 per week.

"But there are risks here too, chiefly the impact it might have on the childcare market.

"Real-terms hourly funding for the existing three and four-year-olds entitlement has already fallen by 13% from its peak in 2017-18. Some providers raise prices on younger kids to cross-subsidise.

"If the reform goes ahead, getting the funding rate right really matters. Too low, and providers may refuse to offer the new entitlement - or even exit the market entirely.

"That could make childcare an even bigger headache for parents than it is now."

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

Are there enough childcare workers for the policy to work?

Another concern raised is whether there will be enough childcare workers to enable parents to make use of the increased allowance.

As ITV News' Political Editor noted, "you talk to any parent, they say 'there just aren't enough of them [childcarers] around'".

"One of the things that the chancellor hopes is that this policy will be seen by the Office for Budget Responsibility [OBR] as bringing people back into the workforce and accelerating the growth rate," he added.

"But that won't happen if there aren't childcarers to provide the childcare."

Where is the funding coming from?

Mr Hunt said his policy will cost £4.9 billion by 2027-28 and will be worth up to £6,500 a year for working families.

But experts have questioned whether the government has underestimated the finances involved.

Joeli Brearley, CEO and Founder of Pregnant Then Screwed, said that she is "concerned that the money pledged is not enough to reduce costs for parents sustainably".

She said: "It is imperative that there is a clear and remunerated strategy to attract more educators into the sector, to retain those workers and to offer progression opportunities.

"Without a workforce plan providers will continue to be forced to close, and increasing ratios will be detrimental to staff retention, what they need is better pay which will come from significant investment into the sector and into the roll out of the free hours scheme.

"The CBI estimates that to do what the government is planning costs £8.9 billion not £4 billion, so we need to see the detail as to how this money is being distributed and we need to know that the government is investing in these new schemes based on the actual cost to deliver them."

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