Money Box Live: The Childcare Challenge

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Hello. There are big changes coming in this year to help millions of parents in England with childcare. So that's what we're talking about on this week's Moneybox Live podcast. Because while the children learn to count... One, two... 3 4 5 Parents are left counting the cost of some much bigger numbers. The price of nursery can be more than a mortgage. In fact, to send a two-year-old to nursery for 50 hours a week, allowing you to work full time, can set you back more than $14,000.

£1,000 a year, at least until the new funding kicks in. From April this year, working parents in England can claim 15 funded hours for two-year-olds instead of waiting for them to turn three to get help. Applications for that support are now open. But let's hear from some parents, including Jasmine, who's a mum of two...

with one child in nursery. Hi Moneybox, I'm Jasmine. I have a son called George who is two. He currently goes to nursery four days a week and that costs us around £1,000 a month, which is... astronomical it's basically a second mortgage and we are looking forward to the fact that you can get these 15 free hours in april but i still don't have a clue how to apply for them i do have a tax-free child care account

Does it go through there? Do we have to apply for the council? Do we have to contact the nursery? I think we're gonna have to contact the nursery just to find out because I don't want to miss out. No parent with a £1,000 monthly bill would want to miss out. Well, listening to Jasmine are today's childcare experts. I'm joined by Paul Rhodes from the Money and Pension Service and Megan Meek-O'Connor, Senior Policy Advisor on Child Poverty Act.

Save the Children UK. Good afternoon. Good afternoon, Felicity. Thank you very much for joining us. Megan, let's start with you then. To Jasmine's question, how does it work? How can people actually make sure they can claim these hours? Hi, Felicity. Thanks for having me on. I think the first thing to do is...

Like Jasmine said, it is always worth just talking to your nursery because they'll be able to explain things and, you know, they'll have got sort of training and help on this on how it can work best. But I can also give some advice right now while I'm on air.

What you need to do is create your child care support account. And actually, I think Jasmine said that she already has tax free child care. So it should all be on the same account. And that means you just you log in using your kind of government gateway and then you'll get a code.

The code will be generated just in the same way that it is for the three and four hours that parents of older children will know about. And then once you've got that code, you just have to take it to your nursery, show them the code, and then they'll see that you are officially eligible for the support.

OK, and we should just again be very clear, this changes for England only, the extra funded hours. We'll take a look at the other nations in just a moment. Paul, that figure that 50 hours a week for a two-year-old costs £14,000 came from... the children's charity. These additional funded hours were announced in the last spring budget. Can you just explain what's changing and when for parents in England?

Absolutely. So what we're talking about here is the free entitlement offer in England, and that's made up of three different parts. The first, as it currently stands, is the universal entitlement. And that's a... gives all three and four-year-olds 15 hours for 38 weeks of the year. So that's term time only.

There's then the extended entitlement, which is worth another 15 hours a week for working families. And then there's a two-year-old offer, which provides 15 hours a week, again, just during term time, if you're in receipt of particular benefits. Now, the expansion of this... The first part of which comes in force in April this year is that two year olds in working families will get access to 15 hours a week. And then from September, that will then extend to all children.

From nine months old, eventually culminating in 30 hours from September 25. Yes, it's going to build up, isn't it, over time. And the government says its reforms will save working parents using 30 hours a week an average of £6,500 a year.

Aside then from those funded hours, what other help is available to parents? Well, Jasmine's already mentioned that she has a tax-free childcare account, which is fantastic. That essentially is where for every £8 that you put... into your account the government tops it up with a further

£2 it's worth £500 every quarter so £2,000 a year per child so it's a really important scheme to access and actually the take up of it overall is really low so if there's any parents out there who aren't accessing it and this is the first time they've heard of it, then I'd really encourage them to sign up. And Megan, that tax-free childcare system is available in Scotland, Wales and Northern Ireland as well as England. This is available to a lot of parents.

Yeah, it's available to loads of parents, but as Paul said, there's huge underuse of it. I think there's a 2.4 billion underspend. So definitely, if you're listening and you haven't claimed it, take a look. Once you've set up your account, it's not too complicated. I think that the name can sometimes be off-putting. People think that it's going to be more administrative. administrative work than they think it actually will be. So definitely look into it because it can provide a lot of support.

And you can use it for your nursery hours, but you can also use it for older children, wraparound care, after school clubs, as long as they're Ofsted accredited. Yes, we're talking about the number of parents who aren't using it. Government figures show 800,000 families that could use it.

it aren't and no doubt it could benefit some of them i should say though parents have to be working at least 16 hours a week to qualify and if either parent earns a hundred thousand pounds or more in the current tax year then you're not eligible okay that's

Well, the Department for Education has told Moneybox Live it's investigating concerns that some parents... might not be able to access them from the 1st of April. And Moneybox Live producer Sarah Rogers has been looking into this and is here now. Sarah, this is about the time.

timing of the application process isn't it exactly that so parents who already use a system will know that they need to reconfirm their details every three months and then when they do this they can apply for a code that they need for those funded child care hours which they then then give to their provider to process. So sounds fairly straightforward. Yes. But listeners have been getting in touch with us on this. So Charlotte emailed to say that her reconfirm...

confirmation window is at the end of March. And so she's worried that her code won't be processed by the nursery in time to get the hours from the 1st of April. Martin also emailed on this. He commented, admin issue. So might some parents miss out in April then? Well it does definitely look like there's a potential for a delay. I did speak to the Department for Education about this. It acknowledges what it calls a small minority of parents who are in the

same boat as Charlotte and Martin and says it's working on further options to ensure that those parents can confirm places in time. Now that could be that nurseries amend invoices at a later date but of course that's not ideal if that's not what you you've budgeted for and the government also insists that the application system

is working and thousands of parents are applying for and receiving codes every day. But that also means that thousands of parents might also be affected by this issue as well. Yes, it does. Sarah, thank you very much. And of course, the Moneybox team will be keeping... a close eye on this. Let us know if you have any difficulties at all. Moneybox at bbc.co.uk. Now, parents may be relieved to get every funded hour they can. What about the childcare providers?

has been busy, has also visited this nursery in Bolton to meet the owner and staff and ask why fees are so expensive. Making a house with a penguin. Oh, that's an igloo. Often people think in early years that we babysit, we come in and they do nothing, and we look after them for all day. And you can see how excited these children are at learning new things. I'm Julie Robinson and I'm the owner of Eagley Schoolhouse Nurseries and we cater for 66 children a day.

Why is childcare so expensive for parents? I mean, let's be honest, a nursery fee is like another mortgage, aren't they? And we've known that for years. Parents don't always understand that they've got to pay and that can cause conflict. So when they come into the setting... I want my free hours. You're sort of defending what you do. What it means is you get funding.

and a contribution towards the fees. And it is term time only, so it isn't funded throughout the year. What are you charging for? So for hours, it's £59 a day. We are struggling with the rate that we've got. There's so much like the energy costs have increased. You know, our business rates have doubled, our energy costs trebled, and yet we don't have additional funding. I don't think I know any nursery owner that goes in this to make money.

And I think that's what people think. They'll see what you have and think, oh, you're just profit-making and it's all about taking money and having a nice fancy car. It really isn't. 10 little dinosaurs walking in a line, stomp goes diprodocus, and now there are... I'm Sophie Eckersley, I actually work at the nursery so I'm a practitioner here and my daughter comes here as well. She does three days and obviously I would have liked a little bit more but we just can't, the nursery is over.

full as it is so you work here yes i work here and i do not have an extra space for my child and i would love that Yeah, demand's huge and we already had a waiting list to secure places and we've also now got a waiting list for the extra days and the extra hours. And there isn't the space. And there isn't the space. Sadly, the sector has lost an amount of people in charge.

and I think that's from them feeling absolutely devalued. We're not able to pay the wages that we want to pay them because the funding isn't there. Hi, so I'm Ryan. I've been here... for about a year now. I've done a lot of work around men in early years as there is a lack of male participation in the early years sector. Like, I don't do this job for the money. But we all need to earn money. Yes, we do, yes. And I just wish that maybe we could get paid like a teacher would get paid.

Eight, nine, ten. That Diplodocus dinosaur storybook sounded absolutely brutal. Megan, Julie there. clearly understands this is a significant cost for parents, but she also knows that her own bills have gone up. What have childcare providers said about the funding that is available?

Yeah, we've had a lot of people in similar positions to Julie and childcare providers, I think they are just worried sick about how expensive things are, how they're going to continue to provide the kind of quality care and education. that the children they look after need. The new funding entitlement, it's just not really enough. The Early Years Alliance has estimated that providers will receive £4.80 per hour for three- and four-year-olds.

So that's per child per hour. But the real cost of providing it is more like £7.50. So that's an almost £3 per hour per child shortfall. It adds up really quickly. And they're just so worried about how they're going to continue to do this. Nursery providers, they're thinking about having to put a cap on the max number of free hours parents that they can have in their nursery.

They're thinking about how else they can make up that money. Previously, a lot of nurseries cross-subsidised, so they'd charge more for the non-free places in order to fund the free places. But their options for this have now been really limited. And there's just a lot of worry among childcare providers, among parents about how they're going to continue. OK. And can nurseries charge parents for the extra? Can they charge top-up fees?

So in theory, your nurseries aren't allowed to charge top-up fees when providing the free hours offers. And they can't actually, they're not supposed to charge extra. just for the free hours. But the problem is that there are very few parents who actually just use those 15 or 30 free hours. So what providers may ask for instead?

is other charges, so things like extra charges for nappies, clothes, extra charges for the non-free hours, extra charges for early pickup, late drop-off, and those kind of things, like most parents in sort of standard... hours of work will need late

late drop off will need early pickup. So it's just it becomes really complicated for them. And then the prices rise massively. Well, the Department for Education told us it's investing hundreds of millions of pounds to increase rates paid for government funded hours.

We know that places are an issue as well. So data from the Office for National Statistics has shown there were almost 5,000 fewer childcare providers last March compared to the same time in 2022. That includes childminders, of course.

Nadine is one and she's been in touch to say this. All the parents have messaged and said brilliant all our children are eligible for free childcare and we are left on the other side of the scale at the moment saying potentially yes you will be entitled to it but we don't know whether we could offer it because we don't know whether it will keep our business sustainable but it's really difficult you know I'm a single parent I run you know I'm self-employed

So I really will have to do some number crunching. So Megan, we were talking about... potentially not offering the full hours or not being able to offer all customers those hours and we heard a nursery worker earlier saying she can't even get extra hours for her child because their nursery is full is this sort of overcrowding over demand common does it stop

Yeah, absolutely. And I think parents listening to this will be familiar with the kind of long delays to finding a childcare place. I know that people are signing up their kids for childcare places before they're even born. And then now with this change in the free hours offer, what a lot of nurseries seem to be doing is... Just like that childminder was sort of saying, thinking about ways that they can balance the books, thinking about ways they can make it work.

We were speaking to a parent that we work with who stands to gain just £36 per week from the new free hours. That's a lot less than she anticipated. And it also comes with a reduction in the hours she can afford because the nursery is having to charge so much more. the early hours that she previously used. So I think Nadine's situation, it's far from unusual.

So it's not as straightforward as more hours, more care. Unfortunately not. Paul, you're witnessing this firsthand, aren't you? You have somebody in preschool, you have a three-year-old. Are the funding hours just an absolute smooth sailing for you? Yeah, so my son is three and a half. He's going to school in September. He only goes two days a week. So it's about 19 and a half hours. We do get the 30 hours free, but we spread it across.

the whole year so not just term time so that does mean we do have to pay um on top of that so we received our bill for january yesterday um and it's 85 pounds um so not you know a huge amount based on what we were paying before the hours. But it is still, you know, £85 isn't an insignificant amount of number if you think you're getting free hours.

Megan, briefly, can you split the funded hours between different providers, like a childminder and a nursery, if that's what you need to do to secure the actual hours that you need? Yeah, you can do that. And often that might work, for example, if you want... one close to home and one close to work. There is a limit on it. You can only choose two providers within the same day, but that's usually fine for most parents.

Thank you. Right. We've had an email from Sarah in Scotland about the new childcare funding for under threes. She says, I live in Scotland and so am unfortunately not eligible for this benefit. Paul, before we get to Sarah's... Question. Scotland does have a different funded childcare offering to England. Can you outline how the support is different across the whole of the UK?

Sure. So yeah, so in all four nations, we have different systems. So in Scotland, all three and four year olds can get the 30 hours funded during term time. Some two-year-olds are eligible depending on if your child has experience of care, if you get certain benefits and then there are also

certain local authority schemes as well. You can check mygov.scot for the information. In Wales, working parents of three and four year olds can claim 30 hours for up to 48 weeks of the year. Again, they can't claim over 100.

earn over £100,000 but they can check their local family information service for more details and then in Northern Ireland there is no free childcare scheme but there is preschool education so a little bit different in northern ireland but if you check out the money helper website we've got more information available on there

And also, if you're not entirely sure exactly what you're entitled to, you can visit the childcarechoices.gov.uk website, which does outline the support available across the nations. Right, back to Sarah's question. We put it to the Scottish Government and a spokesperson told... We'll see you next time.

status and they said if families were paying for that themselves it would cost about £5,000 per child per year. Right, what about though the costs of childcare once they make it to school? Nick got in touch with us on this. My family and I, we work full-time. My wife and I both commute into London. We've got a three-year-old, so she'll be going into school in September. The wraparound care is the big one.

I think we've been used to now having nursery up until 6 o'clock. How do we manage that? How do we find out about wraparound care and any top tips for how to cope with that? challenge we're all about the top tips on money box live megan nick already looking ahead to the costs that come next what what kind of bills might he be facing I think that's very sensible of Nick to be planning because it's not like all the problems just go away once your kids start school.

The first thing to say is that it can just vary so much from place to place, from borough to borough. So I definitely recommend sort of looking on local parents forums, speaking to your council and getting in touch directly with the school to see what support they offer. And also whether they know of any sort of local accredited childcare providers. So if you want to sort of work the same hours he was working previously while his kids were in nursery.

Probably need to access breakfast clubs where kids arrive before school starts and they can eat food there too. And also after school clubs. After school clubs, the kind of average cost across the UK was £67 per week. And that's across the whole country, across Great Britain. So that's around £2,600 per year. Again, this can vary a lot, so I'd look into that. Yes, depends on where you are and the kind of setting, doesn't it? Exactly. But that is something...

As long as it's Ofsted accredited, you can get support for that through tax-free childcare, as Paul sort of discussed earlier. And as well as after-school clubs and breakfast clubs, there's also holiday care. The average price of that can be around £150 per week. So it could be, you know, it could get you to about £1,000 over the course of the summer holidays. So it does add up quite quickly. And also it's worth saying here that...

This is if you can get those places. I think for both after school clubs and local authorities, sorry, after school clubs and holiday activities, Quorum did a survey and local authorities thought that... Only 25% of local authorities thought they had enough.

provision for holiday activities or after-school clubs within their council. So Nick is not out of the woods yet. Unfortunately not. Best of luck with it, Nick. Thank you for your message. Paul, we've mentioned tax-free childcare already, and as Megan says, you can potentially use it. for wraparound care, for holiday club. When we talk about the families that aren't using it, the 800,000 that could use it but aren't, do you think it's this kind of care they're missing out on?

I think so. I mean, Nick's situation is very similar to my own. My son's going to school in September. And at the moment, you think...

Fantastic. None of those nursery bills anymore. Actually, you realise that the school day doesn't sit with our working patterns and actually we are going to have to pay for that as well. One of the other... worrying things is that actually last year the department for education did did a survey of schools it admittedly was only small scale but it found actually that two-thirds of them um

only two-thirds of them were offering this wraparound support as well so actually it's it's do they have enough places Do they actually offer it in the first place as well is a concern for parents. That will be a concern for some parents. But if you're struggling to find a provider, it might be getting easier soon. So from September this year, the government says there will be an increase in places.

with all parents who need access having it by 2026. That's according to a government spokesperson. We've had an email in from Sophie who says, my son will be two on the 1st of May. I've read that I will not be eligible to receive the funded hours until the term after his second birthday, which would be September of Sophie. But that means I will not only be missing out on funding for the majority of the summer term, but also the holiday club that he goes to during the summer, which.

is eligible for the government funding. Paul, can you shed any light? Is it just bad news for Sophie? I'm afraid I think it is. It's the same for three-year-olds as well. So the rules around that are that you become eligible. for any funded childcare the term after they reach that relevant age. So I think unfortunately in this situation, unless I've misunderstood it, I think it is unfortunately bad news.

Another Sarah has emailed to say, when our boys started school, we hired an au pair. We had some wonderful young people from all over Europe and they helped with the housework. It was great. That does sound great. And another Sarah has been in touch. I think we're up to four Sarahs in this programme.

mum of three Sarah has messaged on Twitter to say that a lot of people don't know about the availability of unpaid parental leave which can significantly extend people's annual leave to cover school holidays if they can afford to take it. Megan, it's actually quite a lot, isn't it? You can have up to 18 weeks leave for each child and in total up to their 18th birthday with a maximum of four weeks a year for each child.

Yeah, you can. And it really depends on your circumstances, whether it's going to be affordable and achievable to take it. But for example, for a family who had, say, two kids who needed kind of holiday care. And then maybe a child in nursery where the price of their nursery might also go up during the summer holidays. It's worth doing those kind of calculations and thinking, am I actually going to be paying to go to work?

if I'm using this childcare. And it might be useful for the odd day here or there. Paul, as our listener Sarah says, it's if they can afford to take unpaid leave. It is very much so.

in a way it's great that it's there and certainly when I've looked into it before in terms of parental entitlement in the round it seems like a great to have but but I think it certainly wouldn't be something that i i don't think it would be a benefit to me i think i'd probably be be worse off so i think like megan says

Depends on your personal circumstances. Weigh that all up and do what's best within your own household finances. Well, if, like me, you're wondering if unpaid parental leave can be refused by an employer, I did check the ACAS website, the Advisory Conciliation and Arbitration.

service website. And they say that employers cannot refuse or completely cancel unpaid parental leave, but they can postpone it if it's going to cause issues at work. Megan, Liz has emailed to say, I'm listening while I work. My grandson goes to nursery and I pay for one day to keep the family costs down.

That's obviously very kind of Liz, but I suppose grandparents and wider family are providing all sorts of different support to get children or to get parents into the workplace and children looked after. Yeah, we're hearing about this sort of thing all the time, either grandparents picking up the cost or offering care themselves and providing it directly to their grandchildren. And I think it's just...

With the cost of living, the rising cost of everything that your child needs, as well as the incredibly high cost of childcare, we're seeing more and more of this. And also, you know, we're seeing a lot of it for parents who are in... They're in training or studying and they don't actually get any of these extra free hours. It's only available to parents who are...

Okay. So they often need this grandparent support as well. Thank you. Paul, we're going to squeeze this one in very quickly if we can. Emma says, I wonder if you could answer my question. I'm on maternity leave with my second child due to go back after Easter. My first child is...

two turning three on the 6th of April we're looking for the 15 hours but I'm not currently working 16 hours which is part of the criteria does this mean we won't get them does if you're on mat leave does that or parental leave does that still qualify you yeah you're still qualifying if you do if you if you don't work 16 hours, there's actually an income entitlement as well.

It's a 16-hour average, but it is actually based on income. So do check that out. That's good news for Emma. Brilliant. Thank you very much for your messages. Not to throw a tantrum, but that is all that we've got time for. in today's Moneybox Live on childcare. Huge thanks to everybody who took time out of some very busy days to get in touch. And thank you to our panel. We've been hearing from Megan Meeker-Connor from Save the Children UK and Paul Rhodes from the Money and Pensions Service.

Now, Paul Lewis will be here on Saturday just after the midday news with Moneybox. He'll be talking about flood insurance after last week's very heavy rain. Please do flood our inbox with your stories. How have you been affected? Do you have any questions about what to expect from your insurer?

If you want to get in touch on that or any other financial topic you'd like us to take a look at, you can email. It's moneybox at bbc.co.uk. Please include a phone number if you can. In this podcast, the producer was Sarah Rogers. Studio manager was Toby. James. Our editor is Jess Quayle. I'm Felicity Hanna and this was a BBC News Money and Work production for BBC Sounds. Why do so many business ideas that capture the imagination or actually become bestsellers end up toast?

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