Childcare costs fall for the first time in 15 years – but nurseries are worried

Annual nursery costs for a child under two in England have fallen for the first time in 15 years, according to the children's charity Coram.

It comes as the government continues to roll out its funded childcare scheme, which will provide all eligible working parents of pre-school children, not only three and four-year-olds as currently, with 30 hours of childcare per week from September.

However, some nurseries and childminders say they may have to drop out of the scheme as government funding struggles to meet rising costs, including National Insurance increases from April.

Education Secretary Bridget Phillipson says the survey highlights "the real difference the expanded childcare entitlements are making".

In England, the government has been rolling out a scheme to help working parents with the high annual cost of childcare, which peaked at more than £15,000 last year.

However, currently parents of children under three years old can access 15 hours a week of childcare paid for by the government.

Coram Family and Childcare's annual survey shows the impact of the changes, with eligible working parents seeing a 22% reduction in their annual cost.

Elsewhere, prices have risen for childminders, nurseries, pre-schools and after-school care.

Wales is now the most expensive place in Great Britain for a full-time nursery place for a child under two, which costs £15,038.

The cost for three and four-year-olds has risen across England, Wales and Scotland.

Coram Family and Childcare's head, Lydia Hodges, said that while the funded hours in England are "a welcome step" for making childcare affordable for working parents, the system now needs to be rebalanced.

She says parents ineligible for the funded childcare "are unlikely to be able to meet the cost involved in giving their children the same amount of early education that other children get for free".

The report also found that the availability of nursery and childminder places varies between council areas, with the lowest provision for children with special educational needs and disabilities and families living in rural areas.

For Meg Pattern, who is eight months' pregnant, the funded hours have been a massive help and brought her childcare costs down.

However, securing a space for her second child has been difficult because of the increase in demand.

She says she has tried all of the local settings, including the nursery her three-year-old son Rupert goes to, but they are full until September 2026.

The nearest one with availability next April is a 40-minute drive from her house, in the opposite direction to work.

"I told them when I was eight weeks' pregnant, which is pretty early," she says.

"It's really stressful - when I go back to work, I'll have both kids going in opposite ways."

Her son Rupert is eligible for 30 hours of government funding per week, but his nursery only has a space for two days.

It means Meg's parents, who also live in north Birmingham, are helping out until he starts school.

Joeli Brearley, from the charity Pregnant Then Screwed, says the decrease in cost for under-twos is "a milestone worth celebrating", but that "a looming crisis in availability threatens to leave families stranded".

The Children's Garden Day Nursery in Stamford has a waiting list until September 2026.

Working parents who already have a space are now requesting more hours from this September, when the government will double the number of hours for which their children are eligible.

Claire Kenyon, the owner, says she is considering capping the amount of funded hours people can use, or pulling out of the scheme altogether, because she cannot balance the books.

This would mean fewer government-funded nursery places available. The government estimated 70,000 additional spaces will be needed by this September because of the increase in demand.

Ms Kenyon says, on one hand, the government is telling parents they can expect cheaper bills, but she believes they are not paying enough to nurseries to provide them.

Last month, the Department for Education (Dfe) sent a letter to nurseries saying parents should be able to opt out of paying for chargeable extras including lunches, "to ensure no family is priced out".

However, Ms Kenyon says some nurseries have been using these payments as a way to subsidise the funding for three and four-year-olds, and that more than 5,000 nurseries have now signed an open letter to the Dfe asking for the new rules to be delayed.

"The government has decided to impose stricter rules on us, and I think some nurseries are just saying, 'We can't do it - if we want to keep our businesses and our staff employed we're going to have to pull out'."

Changes to National Insurance are also adding further financial pressure. Ms Kenyon says she will have to pay an additional £200,000 a year in staff costs from April.

The National Day Nurseries Association says nurseries would have to increase their fees by around 10% to remain sustainable.

In December, the government announced that early years funding would increase by £2bn this year to support the expansion.

Neil Leitch, from the Early Years Alliance, says their research suggests many providers are choosing to limit their funded places, or opt out of the offers entirely, "due to unsustainable financial pressures".

About 185 nurseries out of 1,100 surveyed by the charity said they were "likely" to opt out of the scheme entirely within the next 12 months.

There are different types of support available for families across Great Britain.

Thirty hours a week of funded childcare during term time is available to all three and four-year-olds and eligible two-year-olds in Scotland regardless of their parents' working status, according to the Scottish government.

The Welsh government says its focus is on the "most disadvantaged communities", and is expanding childcare support for two-year-olds across Wales.

Phillipson says delivering a better early-years system "is a top priority".

And there is "much more to come from September, as government funding increases from 15 to 30 hours a week" for working families.

Data analysis by Wesley Stephenson

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