E-petition 255237 relating to the provision of free childcare

David Foster; Philip Loft

The debate may be viewed on Parliamentlive.tv and the UK Parliament YouTube Channel.

The text of the petition is:

Provide 15 hours free childcare to working parents for children over 9 months.

After 9 months of maternity leave, most working mums do not receive any maternity pay and need to go back to work. I think all working parents should be entitled to 15 hours free childcare from the time a child is 9 months. It makes more sense to provide this funding from 9 months instead of 2 years

Many working families struggle week to week due to the cost of childcare. You are required to go back to work after a year of maternity pay however many go back after 9 months due to funds. Once you go back the majority of your wage goes to childcare and in some cases you are better of[f] not working. This should not be the case.

The petition received 146,397 signatures.

The Department for Education’s response to the e-petition on 8 May 2019 included the following:

[…]

Supporting parents who want to work with the cost of childcare is important. The Government offers a package of schemes: this includes the entitlement to 15 hours of free childcare a week for disadvantaged 2-year olds; universal 15 hours for all 3-4 year olds, and an additional 15 hours for working parents of 3-4 year olds. Parents of 3 and 4 year olds can save up to £5000 per year in total if they use the full 30 hours of free childcare available. The Government currently has no plans to extend these schemes to working parents of children over 9 months.

The Government has also introduced Tax-Free Childcare, which will save parents up to £2,000 per child on their annual childcare bill for children aged 0-11 (or up to 17 for children with special educational needs or disabilities). Eligible families can also get help with up to 85% of their childcare costs through Universal Credit, subject to a monthly limit. For further information, please visit https://www.gov.uk/universal-credit/what-youll-get.

The 2018 Office for National Statistics report on families and the labour market in England shows that many parents return to work and need childcare when their child turns three, hence the 30 hours free childcare entitlements scheme aims to support working families with the cost of childcare, and support parents back into work, or to work more hours should they wish to.

[…]

Current Policy (England)

At present, all 3- and 4-year olds in England are eligible for 570 hours of free childcare a year. This is often taken as 15 hours of free childcare over 38 weeks. However, parents and carers can choose to stretch their entitlement over more than 38 weeks if they wish (subject to agreement with their childcare provider).

The Government also provides 570 hours of free childcare a year for two year olds who meet at least one of the following criteria:

They live in a household that receives certain benefits.
They are or, in some circumstances, were looked after by a local authority
They have a statement of special educational needs or an education, care and health plan.
Receive Disability Living Allowance.

Some people may also be able to claim for their 2-year-old depending on their immigration status. Further information is available on Gov.uk at: Free education and childcare for 2-year-olds.

Additional 15 hours of free childcare (“extended entitlement”)

Since September 2017, eligible 3- and 4-year olds whose parents are in qualifying work have been eligible for what is often referred to as “30 hours of free childcare” (also provided for 38 weeks of the year). Again, the statutory provision of 1,140 hours can be stretched over more than 38 weeks (but it cannot be condensed into a period shorter than 38 weeks).

Only 3- and 4- years old from working households and certain other households specified in regulations qualify for the extended entitlement, namely:

households where a single parent, or both parents in a two-parent household, earn at least the equivalent of 16 hours at the National Minimum Wage or National Living Wage as appropriate (depending on their age) per week; but no more than £100,000 per annum of adjusted net income (each, if applicable);
one (in a couple household) or both parents are in receipt of benefits in connection with sickness or parenting (i.e. on sick leave or annual leave, or on parental, maternity, paternity or adoption leave). Where this only applies to one parent, the other parent has to meet the income means-test set out above
where one parent (in a couple household) is in receipt or could be entitled to be in receipt of: Incapacity Benefit; Severe Disablement Allowance; Carer’s Allowance; or Employment and Support Allowance and the other parent meets the income means-test.

As noted above, the Government stated in its response to the e-petition that it “currently has no plans” to extend the free childcare entitlements to working parents of children over 9 months.

Tax Free Childcare

Tax Free Childcare (TFC) is the replacement scheme for childcare vouchers (see below).

Anyone can apply for TFC, but they cannot be in receipt of TFC at the same time as being in receipt of:

childcare vouchers; or
Universal Credit, Working Tax Credit, or Child Tax Credit.

The eligibility criteria for TFC are the same as the for the 30 hours of free childcare (see above), but TFC can be paid in respect of any child aged under 12 years of age, or under 17 of age if they are disabled.

The TFC scheme works by the payment of funds for childcare into a TFC account. The Government tops up the amount paid in with an extra 20p for extra 80p paid in, up to a maximum of £2,000 per annum per child (or £4,000 per annum for a disabled child).

Childcare vouchers

Parents who receive childcare vouchers from their employer may be entitled to claim tax relief on this benefit, provided they joined their employer’s scheme on or before 4 October 2018.

The Government published detailed plans for Tax Free Childcare (TFC) in March 2014, and at this time confirmed that as part of this reform tax relief for employer-supported childcare (ESC) would be withdrawn for new schemes. Following delays in the roll-out of TFC, in March 2018 the Government confirmed that ESC would be withdrawn for any parents joining an employer scheme after 4 October 2018.

Benefits and tax credits

Working families can get help with childcare costs via the childcare element of Working Tax Credit and the childcare disregard in Housing Benefit. Tax credits and “legacy” social security benefits, including Housing Benefit, are being replaced by Universal Credit (UC). UC includes a childcare element, which pays up to 85% of childcare costs up to a maximum of £646.35 a month for one child or £1,108 a month for two or more children.

Costs of childcare

The latest edition of the Childcare Survey was published by Coram in February 2020. It reported, based on surveys from local authorities between November 2019 and January 2020, that the average price of 25 hours of childcare a week for a child under 2 in England is £131.61 a week or £6,800 a year. It noted, however, that this describes the typical price charged and most parents will receive some support through Tax Free Childcare or the benefits system to help pay the costs. The report additionally found that:

In Great Britain, childcare prices for children under three have risen above inflation. 25 hours of nursery for a child under 2 costs 5 per cent more than it did a year ago. For a child aged 2, it costs 4 per cent more.
The price of a part time childcare place for a child under 3 is about twice as much as the average household spends on food and non-alcoholic drinks each week.
Prices for full time care (50 hours a week) tend to be slightly less than twice the price of 25 hours a week. In England, the average price of 50 hours of care for a child under 2 in a nursery is £257.75 a week or £13,403 a year.
Working parents of 3- and 4-year olds in England and Wales can now get 30 hours of free childcare a week. If they need 20 extra hours to take this up to 50 hours a week, the average price in a nursery will be £99.66 in England.
Around a third of local authorities thought that 30 hours extended entitlement had caused prices to rise for those aged 3 to 4 years outside of the funded entitlements. Half thought there had been a negative impact on the financial sustainability of childcare providers.

The report recommended that the Government should “reform all current spending on childcare to create a simple and efficient system that makes sure all parents are better off working, and all children have access to high quality childcare which helps their development.” It also made a number of recommendations aimed at fixing “urgent problems in the system.” This included extending the 30 hours free childcare entitlement for 3- and 4-year olds to families where parents are in training.

Party manifestos

The Conservative Party manifesto for the 2019 general election stated that a Conservative Government would “establish a new £1 billion fund to help create more high quality, affordable childcare, including before and after school and during school holidays.”

In its manifesto, the Labour Party stated that it would extend paid maternity leave to 12 months. It additionally committed that:

Within 5 years, all 2, 3 and 4-year olds will be entitled to 30 hours of free preschool education per week and access to additional hours at affordable, subsidised rates staggered with incomes.
The party would “work to extend childcare provision for 1-year-olds and to ensure that childcare provision accommodates the working patterns of all parents.”

The Liberal Democrat manifesto included a commitment to offer “free, high quality childcare for every child aged two to four and children aged between nine and 24 months where their parents are in work: 35 hours a week, 48 weeks a year.”

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