Dear Chancellor,
Yoopies UK, one of the UK’s leading childcare platforms, is delighted to submit views to HM Treasury in preparation for the 2020 Budget.
As the UK embarks on opening a new chapter for the economy, we would like to use this opportunity to reiterate the importance of a sustainable, accessible and affordable Childcare Sector to ensure the growth of the UK economy into the next decade. The Early Years Industry has grown to be a major pillar of modern society, permitting parents to return to work and providing the next generation with essential life skills. Yet, while the need for childcare has risen, with over 70% of mothers now in work, access to flexible childcare options has, by contrast, declined. In the last ten years, Childminder numbers have fallen from 63,300 (2009) to 39,400 (2019), severely reducing the number of childcare places available.
Thousands of childminders are being pushed out of the Early Years Industry every year and potential childcare providers are increasingly disinclined to join due to rising costs, low income, unproportionate funding and a lack of support. In light of this declining trend, we would like to offer the following proposals to ensure that the UK inspires more people to join the profession and retains the current exceptional childminders.
Proposal 1: Introduce an inclusive Childcare Business Grant Scheme
One of the principal issues the childminding profession faces is encouraging people into the sector. Over the last ten years, we have seen a persistent declining trend in which more childminders are leaving the profession than are joining. With fewer flexible childcare options for families, the UK risks encouraging an environment in which women are less able to return to a full-time career.
Yoopies UK hopes that the Government will take the opportunity of this Budget to make a strong commitment to attracting more childminders into the sector. Currently, childminders have no support to set up their childcare business and are faced with crippling costs including DBS checks, First Aid, OFSTED fees and childcare training which can amount to over £600. Amidst fears of rising OFSTED costs and consistent increases to the cost of living, childminding is becoming progressively viewed as a less financially viable career choice.
We were disappointed to see the Government scrap the Childcare Business Grant in 2019, the only nationally funded scheme for childminders to start their business. The Department of Education explained that its closure was due to a “lack of demand.” Nevertheless, the scheme was only open for childminders offering 30-Hours Free Childcare, which many choose not to offer due to funding shortfalls.
The Government should use the Budget to introduce a Childcare Business Grant that is open to all new childminders and reimburses the cost of setting up a childcare business. A Childcare Business Grant should not be used as encouragement for childminders to register for Government-Funded childcare schemes, but provide all new childminders with essential financial footing to inspire people into the profession.
Proposal 2: Streamline Tax-Free Childcare and the 15-hour and 30-hour Free Childcare Schemes
As a widely used childcare option, childminders are an essential asset to national family policy, but they are expected to balance care and running a small business, all while earning on average less than the national minimum wage. In a survey of 100 childminders carried out by Yoopies UK, the three most popular responses to the “difficulties faced by childminders” were “paperwork” (80%), “balancing childcare and administration tasks” (40%) and “making ends meet financially” (40%).
The integrated online marketplace model has revolutionised many industries, with automated payments and an intuitive customer experience now expected. However, the childcare sector has not matched this pace of change and has been left behind, particularly when involving the Government childcare schemes. Childminders have a lot of administration and difficulties to retrieve payments, while local authorities lack the control and governance over the accurate delivery of funded hours. Concerning the 15 and 30 hour schemes, the current system is very burdensome for childminders who juggle submitting headcounts, complex billing and discrepancies between estimated and actual payments. In regards to Tax-Free Childcare, childminders, again, manage multiple payments from different sources and experience difficulty tracking and reconciling payments.
Yoopies UK would like to see HM Treasury invest in improving access and management of Government-funded schemes for childminders. HMRC, the DfE and Local Authorities need to integrate the childcare benefit schemes into payment systems already being used by parents, such as the online booking and payment offered by Yoopies and similar providers. For childminders, this integration would mean less off-putting paperwork, less need to go back and forth between different platforms to manage funding claims and therefore more time to focus on delivering good quality childcare. For parents, this would make claiming benefits such as Tax-Free Childcare an effortless experience. A more efficient system of accessing Government funding will be more cost-effective and the money saved could be reinvested into providing high-quality training and resources for childminders.
Proposal 3: Close the Funding Gap between Government-Funded childcare places and the cost of providing care
High-quality Early Years education is essential for the next generation of children, by optimising physical and mental development, and as such, providing the best possible start in life. However, mounting evidence suggests that many childcare providers are struggling to remain financially viable and that Government-Funded schemes are at the root of this issue. While Yoopies UK welcomes the increase to local authority funding confirmed by DfE in 2019, we maintain that the funding proposed is unproportionate to the rising cost of providing care. The Government sets to raise the National Living Wage by 6%, however, local authority funding will see a disproportionate increase of 8p an hour for 2-year old places and up to 8p and hour for some 3-4-year-old places.
The gap between Government funding and the cost of providing care has meant that ‘Free’ childcare hours are, in practice, far from free. Many childcare settings choose not to offer the schemes or have had to find alternative ways to make up the cost difference. This includes charging parents additional fees, cutting back on resources or risk closing their doors altogether. Most childminders don’t charge extra to parents for provisions, however, in 2019, Government statistics showed that 23% of childminders had already raised their fees for at least one age group in 2019. Poorer families may not be able to afford extra fees meaning childcare settings in more deprived areas are most likely to suffer. Parents are then less able to return to work and educational opportunities for their children are restricted. Hence, disproportionate funding risks exacerbating a situation in which the poorest children are denied the same start in life as wealthier families, and escaping the poverty cycle becomes more difficult.
Yoopies UK calls upon HM Government to provide urgently needed funding to close the gap between the rising cost of living and local authority funding for childcare places, particularly in deprived areas. We also urge the Government to commit to a cross-departmental annual review with a more realistic formula to calculate the funding provided to childcare settings. The formula should ensure it takes into consideration the testimonies from childcare providers on the expenses of delivering childcare. This will ensure the funding is proportionate and makes sure childcare settings are financially viable.
We hope the importance of a sustainable, affordable and accessible childcare sector will be prioritised by the Government in the upcoming Budget, and we look forward to seeing significant improvements to the sector in 2020.
Yours sincerely,
Lily Pryer
Yoopies UK Business Developer
+44 (0)20 3608 8269