Parents ‘saving thousands less’ on childcare than government claims, says study

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Parents will save thousands of pounds less per year on free childcare than the government claimed they would, according to a new study.

Research by prominent campaign group Pregnant Then Screwed found that the average saving from the new 15 hours of funded childcare for two-year-olds each week will be up to £1,440 a year – substantially lower than the £6,500 a year the government estimated parents would save once the rollout of the provision is complete.

The study discovered that parents eligible for the new provision will still find it hard to afford childcare due to the recent surge in costs.

A quarter of parents say they will save less than £90 a month, while a fifth say they will be saving less than £50 a month.

Joeli Brearley, chief executive and founder of Pregnant Then Screwed, said: “Once again, parents are picking up the government’s tab due to underfunding.

“The fault does not lie with the childcare providers but at the door of No 10. Nurseries cannot magic up money to plug financial gaps left by years of chronic underfunding, and so they have to increase their fees.”

It comes after The Independent revealed that parents are facing a hike in nursery fees of up to 15 per cent as they pick up the tab left by funding gaps in Jeremy Hunt’s flagship scheme to expand free childcare.

The first part of the chancellor’s £4bn extension of free childcare – an attempt to win over voters in the lead-up to the election later in the year – comes into force in a week.

Under the new policy, eligible working parents of two-year-olds have been told they can claim 15 hours a week of free childcare for 38 weeks per year from April onwards.

From September 2025, working parents who have children under the age of five will be able to claim 30 hours of free childcare for 38 weeks per year.

The latest polling from Pregnant Then Screwed found that about six in 10 parents have seen the price of childcare rise in the last six months – with one in five parents saying they have already quit or are considering quitting their job or cutting down their hours because they cannot afford to work.

Researchers polled more than 3,300 parents eligible for the new funding from April.

Neil Leitch, chief executive of the Early Years Alliance, which represents nurseries, preschools and registered childminders, said: “This policy is being implemented at the worst possible time for the sector. Even before it was announced, settings across the country were grappling with the effects of sustained underfunding and the worst staffing crisis in years.”

Recent research by Coram Family and Childcare found that the average cost for a full-time place for a two-year-old child amounted to £14,765 per year in 2023.

A spokesperson for the Department of Education said: “We are confident in the strength of our childcare market to deliver the largest ever expansion in childcare in England’s history, and we are already seeing providers looking to expand their placements across the country.

“The Institute for Fiscal Studies has independently reported that the average funding rates for two-year-olds and under-twos paid by government from April 2024 are projected to be substantially higher than the market rate paid by parents last year.”