Fact checking the government’s new childcare policy

Startups explores eight flaws in next September’s extension to Early Years care, to examine whether the policy will actually go ahead.

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Helena Young
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Parents in the UK have been promised a lifeline in September 2025, when the government will extend its 30 hours free childcare offering to all eligible children under five.

Expectant mums and dads, who had been braced for budget-busting fees, are now itching for the (other) big day to arrive. Those in the most expensive city for childcare, London, currently shell out an average of £1,781 per month on nursery or childminder charges.

For decades, working parents – particularly mothers – have grappled with the difficult budgeting choice between career and family. By extending the entitlement, the government hopes to tip the scales and enable people to balance work aspirations with affordable family stability.

That includes people like Charlotte Snowden, a television producer in London. Snowden is expecting a baby this September. She says the extension has helped to ease anxieties that many working parents face around childcare planning once maternity leave ends.

“When we realised the entitlement would be available for us we were so relieved, knowing that childcare costs would be covered,” Snowden tells Startups. 

As soon as the policy was announced, though, questions around deliverability arose – questions that have so far gone unanswered. 

Last week, a report by the National Audit Office (NAO) marked all three of the program’s major aims for September 2025 as ‘Amber/Red’, meaning “urgent action is required” to course-correct what it refers to as “uncertainties around feasibility, costs, and benefits.” 

So, can the government deliver its free childcare pledge come 2025? And what’s behind the pessimism at the National Audit Office? 

We’ve analysed the government data, and spoken to childcare experts, to make sense of the policy and what it will mean for UK parents. Read on for our simplified breakdown of eight major discrepancies in the new childcare plan.

1. Eligibility barriers

Research by TUC has shown that 1.46 million women are currently being kept out of the labour market due to caring responsibilities – including 10% of working women in their 30s. This is a major contributor to the UK’s gender pay gap.

Johanne Hardwick quit her high-flying marketing job to become a childminder after she was unable to find suitable childcare. “I had spent 25 years building up my career and I was at the top of my game,” she recalls. “In most households, it’s the mum who takes the hit.”

Whitehall had hoped to improve maternal employment figures with the new policy. When Chancellor Jeremy Hunt confirmed the childcare extension in this year’s Spring Budget, he predicted it would result in 60,000 mothers entering employment.

However, the impact is unlikely to be this large. Only families where both parents are already in paid work (and no parent earns over £100,000 a year) are eligible for the entitlement. That means the policy will mostly cater to children who are already enrolled in formal childcare. 

It is impossible to guess the number of out-of-work mothers who will be encouraged into using childcare. But DfE’s revised, low-ball estimate finds as few as 17,000 may enter the workforce as a result of the extension. That shrinks initial projections by around two thirds.

Employers might have hoped the policy would encourage more part-time workers to increase their working hours and, subsequently, improve UK labour participation. However, the 30-hours of free childcare only covers around three working days (plus commuting time). 

While they will save money as a result of the extension, it’s unclear how many of this group would choose to extend work hours and return to full-time work. They would need to fork out for an additional 20 hours of paid, unsubsidised childcare per week to do so.

2. Lack of available spaces

According to government estimates, an additional 85,000 spaces will be needed to meet the 30 hours’ free childcare plan. Yet there is little confidence this number will be reached.

In a DfE survey, just 9% of local authorities said they were confident they had enough places in their area to accommodate the September 2025 rollout. Tests that would have confirmed feasibility were reportedly cancelled due to money troubles.

The Department for Education (DfE)’s 2023 Childcare Survey tells a similar story. Around 42.5% of the UK’s estimated 56,300 childcare providers report having zero full-day spaces available. Notably, UK childminders have fewer than one space available, on average. 

Hardwick says she has already turned away 50 families who were hoping to sign up for the 30 hours’ free childcare next year.

“I have five families on my waitlist and most days there are another three or four inquiries that come in,” she tells Startups, “There is a lack of workforce in the industry to meet the demand for what the government is promising.”

DfE recommends parents apply for a space one year before their child’s ideal start date. But wait list horror stories are turning the hunt for convenient and affordable childcare into a prenatal check for some.

“I started visiting nurseries at about 14 weeks,” reveals Charlotte Snowden. “I can’t afford to live on statutory maternity pay when it kicks in, so [I have to] go back after 11 months.”

3. Increasing childcare fees

The government expects to spend £15.2bn over the next three years to cover childcare fees for eligible families. But while this will address household financial concerns, provider budgets remain tight.

Based on current price growth (Early Years fees grew on average by 5.77% between 2022 and 2023) the NAO has stated there is a risk that government funding “will not keep up with provider’s cost pressures”, which have surged due to inflation and the new Living Wage

Many nurseries and childminders have introduced “top-up fees” to bridge the gap. Some have even opted out of the free childcare scheme, arguing it will cost them too much to implement.

This throws into question the government’s prediction that the entitlement will save full-time workers £6,500 a year. Hiked staffing bills and running costs would result in fewer employees, spaces, and providers – leading to more expensive rates for parents. 

Better targeted support would help, says Brett Wigdortz, founder of tech-driven childminder agency (CMA), Tiney.co. Wigdortz has given many policy suggestions in DfE consultations. For example, the government could fund childminder regulation fees, instead of Ofsted.

“We currently have to charge a childminder £1,000 a year just to break even,” he says. “The government makes these big announcements of billions of pounds, but does not think through how the money gets to providers.”

4. Pay crisis

To meet the demand for spaces that the new childcare plan will create, the government predicts it must recruit another 40,000 workers to the sector. That will be difficult to carry off when our analysis shows that industry pay is far below the median salary.

ONS figures reveal that average weekly pay for nursery team members last year was £355.50, or £18,456 per year. Given that the median annual salary in the UK was £34,963 in 2023, recruiters would struggle to describe Early Years pay as competitive.

Joanna Lings completed an Early Childhood degree and previously worked as an Early Years teacher at a mainstream school in North Yorkshire. She says the pay did not reflect her workload; much of which leaked into evenings, weekends, and holidays.

“Practitioner pay in nurseries is shocking,” she stresses. “That’s why it’s mostly young people who may not have loads of qualifications that work in nurseries. It also means the care that is provided is not the best it can be.”

Among the most striking findings in the 2023 Childcare Survey, an estimated 11% of workers at group-based nurseries – and 5% at school-based nurseries – were earning under the National Living Wage of £10.42 per hour at the time. 

This is most likely due to the high number of apprentices (40% of group-based providers employed apprentices in 2023) and students being relied upon to plug staffing shortfalls.

5. Care quality concerns

Legally, staff:child ratios mean that a provider can only offer a set number of spaces according to the size of its workforce. In order to fast-track expansion, the government lowered the ratio in England for two-year-olds to 1:5 (previously 1:4) in September 2023.

But the expected influx of children entering care in 2025, combined with the number of new, less-experienced recruits needed, has created doubts as to the quality of care that can be provided by resource-stretched schools and nurseries.

According to the NAO report, the majority of providers will not lower staff ratios, believing it would compromise quality and jeopardise the safety of children.

DfE’s research from November 2023 indicates that so far, around 60% have no plans to adopt the change. This will likely further complicate existing issues with provision.

6. Meagre recruitment incentives

In response to the staffing crisis, the government has thrown its weight behind a cash sign-on scheme, which is today being trialled across 20 local authorities in the UK.

Similar to teachers, Early Years recruits will be awarded a £1,000 cash bonus if they accept a job in the sector. The pay boost will “give nurseries and early years providers the workers they need and offer more childcare places for parents”, claims a government press release.

Tiney.co was responsible for 40% of newly-qualified UK childminders (including Hardwick) last year, and Wigdortz knows a lot about the sector’s recruitment woes. His view? “Sign-on bonuses make me annoyed and incredibly angry.

“It just shows a lack of creativity when you start throwing a thousand pounds at people to join a career,” he adds. “No-one is going to become a childminder and change their career for £1,000 pounds. All it does is bring bad people into the sector.”

Brett Wigdortz, TeachFirst founder and tiney - Credit Daniel Oakes

Image credit: Daniel Oakes

7. Retention problems

At the same time that Whitehall is pushing out “uncreative” recruitment campaigns, the number of active workers in the sector is dwindling. 

Our analysis of the DfE 2023 Childcare Survey finds that staff turnover in UK nurseries today sits at 19%. Over half of people who choose to leave the industry will exit it altogether, indicating that staff are being enticed by pay and perks in other sectors.

Even new entrants are experiencing career regret, with the NAO report finding that only around a quarter of those who start relevant qualifications then stay on to work in the sector.

Rather than rolling out bonuses and wage increases for the existing childcare workforce, Whitehall has set aside £180m to upskill employees. However, our research finds that skill level has little to no influence over a person’s decision to stay in a childcare role.

The proportions of staff leaving the industry match the existing proportions of staff qualified at different skill levels. This suggests that investing in progression will not impact retention while issues around pay and workload persist.

Qualification Level% staff in the workforce% leaving the workforce
Level 1 or below11.115.7
Level 2109.6
Level 358.856.9
Level 43.93.2
Level 55.04.0
Level 611.310.6

8. Term-time trap

Another barrier for entry is the free hours entitlement has been calculated based on term-time usage (i.e. 38 weeks out of 52 in the year).

The DfE’s 2023 Childcare Survey also shows that, on average, just 55% of nursery group providers (and 10% of school-based) are open during both term-time and during school holidays, meaning that many parents will be left on their own for 3.5 months of the year.

During this time, desperate mums and dads will need to rely on employee benefits from their employer – like extended annual leave, carer’s leave, or flexible working arrangements – to make up the shortfall during work hours.

It’s already a concern for many. “I think it’s really unhelpful that the provisions are just for term time,” says Snowden. “I can’t afford to have that much time off from work. It seems ridiculous that childcare isn’t properly funded throughout the whole year.

Will the government meet its childcare commitment?

Last year, a DfE blog declared: “we’re confident in the strength of our childcare market to deliver the expanded offer, making sure there’s a place for every child that needs it.” That confidence will likely vanish in light of the above findings.

Election year announcements must always be taken with a pinch of salt. The government’s bold childcare plan increasingly looks to have been a game of political football, designed to give the Tories a quick win this year – and a big loss for an incumbent party the next. 

Charlotte Snowden, whose unborn baby will be due to start nursery when the entitlement is rolled out, says she is “very apprehensive that [the extension] may not be possible, if a new government comes in and doesn’t honour it due to the lack of planning.”

Sadly, this looks likely to happen. While some will undoubtedly benefit, most UK parents face a future of fee uncertainty, care waitlists, and school holiday havoc. The impact of the changes on maternal employment is expected to be minimal.

Private tech-driven solutions could help the market to stabilise. While high staff turnover creates turmoil elsewhere, Tiney.co has grown its childminder spaces by 206% in two years. 

Wigdortz says he would be happy to take up the mantle if it means moving away from the government’s “old solution of throwing money against the wall and seeing what sticks.

“This isn’t rocket science,” he adds. “There’s probably millions of people out there who love working with children and don’t have the opportunity now to do it. If you pay them what they’re worth, and value them properly, you’ll get an amazing workforce.”

Written by:
Helena Young
Helena is Lead Writer at Startups. As resident people and premises expert, she's an authority on topics such as business energy, office and coworking spaces, and project management software. With a background in PR and marketing, Helena also manages the Startups 100 Index and is passionate about giving early-stage startups a platform to boost their brands. From interviewing Wetherspoon's boss Tim Martin to spotting data-led working from home trends, her insight has been featured by major trade publications including the ICAEW, and news outlets like the BBC, ITV News, Daily Express, and HuffPost UK.

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