Annual childcare costs for children under two in England have fallen for the first time in 15 years, according to a report by children’s charity Coram. The decline comes as the government expands its funded childcare scheme, which will offer 30 hours of free childcare per week to eligible working parents of pre-school children starting this September.
Currently, parents of children under three can access 15 hours of government-funded childcare weekly. Coram’s annual survey reveals that eligible working parents have seen a 22% reduction in annual childcare costs. However, the report also highlights growing concerns among nurseries and childminders, who warn that rising operational costs and insufficient government funding may force them to withdraw from the scheme.
Funding Challenges for Nurseries
While the expanded childcare scheme has been welcomed by parents, many nurseries say they are struggling to cover rising expenses, including increased National Insurance contributions from April. Claire Kenyon, owner of The Children’s Garden Day Nursery in Stamford, says her nursery faces an additional £200,000 in staff costs annually. She is considering capping funded hours or leaving the scheme altogether to stay financially viable.
Kenyon’s concerns are echoed by the Early Years Alliance, which found that 185 out of 1,100 nurseries surveyed are likely to opt out of the scheme within the next year due to financial pressures. Neil Leitch, from the alliance, warns that many providers are limiting funded places or exiting the program entirely, citing unsustainable costs.
Parental Struggles and Regional Disparities
Despite the cost reductions, many parents face challenges securing childcare places due to high demand. Meg Pattern, a mother from Birmingham, is eight months pregnant and has struggled to find a nursery spot for her second child. Her three-year-old son, Rupert, is eligible for 30 hours of funded childcare weekly, but his nursery only has space for two days. Pattern’s parents have stepped in to help, but she describes the situation as “really stressful.”
The report also highlights regional disparities in childcare availability and costs. Wales is now the most expensive place in Great Britain for full-time nursery care for children under two, costing £15,038 annually. Meanwhile, costs for three and four-year-olds have risen across England, Wales, and Scotland.
Government Response and Future Plans
Education Secretary Bridget Phillipson says the survey demonstrates the positive impact of the expanded childcare entitlements. She emphasizes that improving the early-years system is a “top priority” and promises more support from September, when funded hours for working families will double from 15 to 30 per week.
However, nurseries argue that government funding does not cover the true cost of providing care. Last month, the Department for Education (DfE) instructed nurseries to allow parents to opt out of paying for extras like lunches to ensure affordability. But some providers say these charges help subsidize care for older children, and over 5,000 nurseries have signed an open letter urging the DfE to delay the new rules.
A Mixed Picture Across the UK
Childcare support varies across Great Britain. In Scotland, all three and four-year-olds and eligible two-year-olds receive 30 hours of funded childcare weekly, regardless of parents’ employment status. In Wales, the government is expanding support for two-year-olds, focusing on disadvantaged communities.
While the drop in childcare costs is a milestone, Joeli Brearley of the charity Pregnant Then Screwed warns that a “looming crisis in availability” could leave many families without access to affordable care. As demand surges, the government estimates an additional 70,000 nursery places will be needed by September.
Conclusion
The reduction in childcare costs marks a significant shift, but the sustainability of the expanded scheme remains in question. With nurseries facing financial strain and parents struggling to secure places, the government faces mounting pressure to address funding gaps and ensure the system works for both providers and families.
