The scale of the childcare crisis in England has been exposed by new data showing some parents face spending as much as 80% of their take-home pay on childcare while others struggle to find a provider because of supply gaps in large parts of the country.
A study by the thinktank Nesta, seen by the Guardian, shows how hard it is for families in different parts of England to afford to pay for someone to look after their children while they work. Meanwhile, two other studies – one by the children’s charity Coram and one by the Labour party – show there are insufficient places in half of the country’s local authorities, with demand now more than double the country’s supply.
Labour will pledge to overhaul the government’s flagship scheme on Thursday, promising parents of young children 30 hours of free childcare a week if the party is elected at the next election. The overhaul will come as part of a wider reform of the childcare subsidy regime, which Labour says is “broken”.
Bridget Phillipson, the shadow education secretary, will say in a speech on Thursday: “The childcare model the Conservatives have built fails everyone, denying parents the ability to work the jobs they’d like, to give their children the opportunities they’d like, and is not of the quality that staff want to provide.
“In the Britain the Conservatives will leave behind, tweaking the system we have will not deliver the ambition or scale of reform we are going to need.”
UK childcare costs have been rising for years and are now double the OECD average, with a two-earner family now paying a third of their post-tax income on securing a place for their child. For a single-parent family on the minimum wage, that figure is over two-thirds.
The problem has triggered alarm in the Treasury, where ministers believe it is contributing to millions of people staying at home rather than entering the workplace, and are working up plans to ease the crisis to be included in this month’s budget.
The Guardian revealed last month that the education department had submitted proposals to the Treasury that would massively expand the free hours scheme to cover all children aged nine months and older.
The study from Nesta shows for the first time how affordability varies across England, with families in London facing an especially bad crunch. The figures show that a single parent earning the national minimum wage now has to pay about 80% of their post-tax income on childcare – though that figure does not include the impact of benefits payments.
The four least affordable local authorities are all in London, the data shows: Hammersmith and Fulham, Kensington and Chelsea, Camden and Brent. Manchester is the fifth least affordable.
Meanwhile, a separate survey by Coram of local authorities in England shows that only half say they have sufficient childcare places to meet the demand of parents working full-time.
The proportion of councils reporting enough places to cover the demand of full-time working parents has dropped from 59% in 2022 to 48% in 2023, and only 50% of the councils said they have sufficient places for children under two, down from 57% a year ago.
There are now 2.4 children for every childcare place in England, with a 19% decline in the number of providers since 2017, according to Labour’s analysis of government figures.
Coram’s research also shows that it is the most disadvantaged children who are at risk of missing out, with less than one in five (18%) local authorities in England that answered the survey reporting sufficient childcare for children with disabilities, a decrease of three percentage points compared with 2022.
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Megan Jarvie, the head of Coram Family and Childcare, said: “The need for reform of the childcare system is urgent. As well as eye-watering bills, parents are facing widening gaps in availability of the childcare they need. As the chancellor decides his budget, we urge him to recognise the value of investing in childcare – it is a wise investment, enabling parents to work and boosting the outcomes of young children.”
Joeli Brearley, founder of the charity Pregnant Then Screwed, said the current system was “crumbling before our very eyes”. She added: “We’ve been warning the government this would happen for years, but we are yet to see any action, plan or strategy.”
Speaking at the centre-right thinktank Onward on Thursday, Phillipson will set out a radically different vision of childcare funding in the future. In a speech designed to seize on political ground Labour feels has been abdicated by the Conservatives, Phillipson will say reforming the system will be her first priority in government.
Phillipson has been visiting other countries, including Estonia, Australia and Ireland, to see how childcare funding works abroad. Labour officials say she was particularly impressed by the system in Estonia, where parents are offered a guaranteed place at kindergarten for all children aged between 18 months and seven years, at costs as low as £50 a month.
A Labour source said Phillipson would say more about how Labour would replace the free hours scheme in the coming months.
A government spokesperson said: “The number of childcare places available to families in England has remained broadly stable since 2015 and standards remain high, with 96% of providers rated good or outstanding.
“We recognise that families and early years providers across the country are facing financial pressures, which is why we have spent more than £20bn over the past five years to support families with the cost of childcare.”
