Call for review of extended childcare funding rates

A report by the London Assembly Economy Committee is calling for a review of funding rates for the Government’s expanded childcare plans amid concerns they will put greater pressure on the sector.

Small child playing with brightly coloured bricks on the floor in a childcare setting


Parents in London struggle to access childcare more than in other regions in England, particularly parents of a child who is disabled or has special educational needs or for parents who work atypical hours, according to a report.

The London Assembly Economy Committee says this is likely to get worse due to the underfunding of the Government’s childcare expansion plan. It wants the Government to review funding rates for early education entitlements in London.

An investigation by the Committee into early years childcare in London found that the capital has the highest childcare costs in the country, with childcare costing between 25 and 33 per cent more in London than in Great Britain as a whole.

The Committee heard that as well as costs, the availability of childcare places was another key issue for parents. This was the experience of many parents or carers who responded to a survey on childcare conducted by the Committee, with some describing availability as “limited” or with long waiting lists for places.

The Committee says that, while it welcomes the Government’s plans to expand the free entitlements for children under the age of three, it is worried the plans will have a significant impact on the sector and the provision of childcare in London.

Its report also found that:

  • For some parents it does not make financial sense to take on more hours and pay childcare costs for this additional time. This can impact career progression, particularly for women, and has a detrimental impact on London’s economy.
  • The childcare sector in London is experiencing severe staffing shortages, with ongoing challenges related to recruitment and retention. There has been a considerable reduction in the number of childminders operating in England, with London seeing the largest fall.
  • Childcare providers generally spend more on wages and rent or mortgages in London than in other parts of the country.

In addition to review of funding rates, the Committee is recommending:

  • The Mayor and Deputy Mayor for Children and Families, working with London Councils, boroughs and the childcare sector, should carry out and publish a constructive London-wide review of the sector in 2023-24 to understand the challenges it faces in delivering the expansion of free childcare entitlements and meeting the expected rise in demand, especially in relation to the most disadvantaged families.
  • The Mayor and Deputy Mayor for Children and Families should investigate the barriers to childminders working from private and social rented accommodation, and the scale of the problem in London. The Mayor and Deputy Mayor should then work with social housing providers and private landlords in London to ensure that they are taking steps to permit tenants to set up as childminders in rented accommodation.
  • The Government should take action to simplify the system of shared parental leave to increase take-up. The Mayor should encourage London employers to promote shared parental leave to their employees, including through the Good Work Standard.

Marina Ahmad, Chair of the Economy Committee, said: “While we welcome the Government’s plans to expand the free entitlements for children under the age of three, we are concerned that the childcare sector in London will struggle to cope with the expected rise in demand for places.

“If we do not take action to address this soon, even more families and even more children will be driven out of London.”

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