Working parents can now get 30 hours of free childcare. But do the numbers add up?

Across England today, we should be seeing joyful (and a little tearful) images of parents dropping their little ones off at nurseries, childminders, preschools and playgroups for the first time. This should be a watershed moment: there is now government-funded childcare for children as young as nine months old, recognising the chasm that opened up at the end of paid statutory maternity leave until children turn three under previous schemes.  

It happens to coincide with Mums’ Equal Pay Day – the point in the year when mothers, on average, stop earning relative to men according to analysis of ONS data. Equal pay day for mothers falls three months earlier than for all women, a stark reminder of the impact of the motherhood penalty on women’s long term economic inequality.  

Today’s rollout of funding should be a significant step towards closing that gap. The Women’s Budget Group (WBG) would ultimately like to see universal free early education and childcare funded for all children, just like the rest of education is. This would give children the best start in life regardless of their parents’ circumstances, enable parents to access education, training or work or simply give them a break from the rewarding but exhausting work of full time parenting.

Furthermore, with a valued and well paid workforce, our analysis has demonstrated that it would boost the economy with an expansion of good jobs and additional spending power for mothers and the majority women working in the sector.  

But instead of celebrating today’s progress towards that goal, we are seeing stressed-out nursery managers, burnt-out childcare professionals and frustrated parents because this vital social infrastructure is still treated as an expense by the Treasury rather than an investment, curbing the amount the government spends on it and – despite very welcome uplifts in rates for under-threes – continuing the tradition of paying hourly rates for three- and four-year-olds that don’t meet the cost of delivery.  

On the surface, the impact of the rollout looks promising. The average cost of a full-time nursery place – 50 hours a week – for a child under two in England is £12,425 in 2025. That is still eye-watering for most families, but it represents a 22% drop from 2024, according to the Coram Family and Childcare charity.

Yet with today’s expansion of funded hours, 30 of those 50 hours will now be ostensibly paid for by the state during term time. This will leave providers with fewer hours to charge parents to cover their cost and pay their staff, and to make up for the shortfall in what the government pays them for the state-funded hours.   

Read more:

• ‘It’s sad we have come to this’: Inside the schools turning into food banks to stave off holiday hunger
• Millions of pupils missing school due to hygiene poverty: ‘We have reinvented a Victorian problem’
• Childcare costs families £1,000 per child in the summer holidays: ‘It makes me feel sick’

Even before implementation began, we were raising concerns about the numbers behind the policy. Our calculations from February last year highlighted a £5 billion shortfall in funding for the expansion. Since then, costs have only risen: National Insurance contributions are higher, energy bills have risen, and everyday running costs for providers have surged. 

Yet there has been no serious attempt to bridge the gap between the government’s hourly rates for three- and four-year-olds and the cost of delivery. The Treasury’s spending review only provided the Department for Education a £1.6bn boost to match higher-than-anticipated demand.

The government has not published any analysis of its own estimation of costs of delivery since 2015. Meanwhile, both parents and providers are being asked to trust that the maths will add up, while reality suggests otherwise. 

The Early Education and Childcare Coalition, which WBG is a member of, has revealed that one in five providers surveyed have had to dip into their reserves just to keep going. Even more alarming, one in 10 are likely to close in the next two years. This threatens to undermine the government’s promises to parents and its own missions to give children the best start in life and kickstart economic growth.

The chancellor has personally committed to close the gender pay gap. Getting this and parental leave policies right are the best way to do that. She has an opportunity to do so in the autumn budget, but must listen to parents, providers and early-years professionals and get the funding rates right.

Anything less would be not just a broken promise, but a betrayal of the very families and women this expansion was supposed to help.  

Erin Mansell is head of external affairs at the Women’s Budget Group.

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