More parents in England plan to increase their working hours or return to work as they become eligible for free childcare support, but many are struggling to access childminders or nursery places.
According to long-term savings business Phoenix Group, 71% of working parents said they would increase their hours if they could access free childcare support, and 64% of those currently out of work said they hoped to return to employment.
However, despite the expansion of free childcare places from 1 April, one in six adults within a child under five have found it difficult to access formal childcare.
Childcare access for workers
Parents ‘raid savings and pensions’ to cover childcare
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Two-thirds of councils lack childcare places for full-time workers
Parents of two year olds are now able to claim 15 hours of free childcare, and from September nine-month-old children will be brought into the scope of the entitlement. By September 2025, the government expects to offer 30 hours of free childcare for children from nine months.
Recently only one in three councils in England said they have enough childcare places to support full-time workers.
Phoenix Group found a quarter of adults with a child under five have reduced their working hours due to childcare costs, while 4% have left work entirely.
The cost of childcare has stopped 34% from saving for their future, its March 2024 survey of 500 people found.
It said many who reduce their working hours contribute less into their pension, and that women were three times more likely than men to be excluded from pensions auto-enrolment because their salary fell below the auto-enrolment threshold of £10,000.
The survey results echo findings from campaign group Pregnant than Screwed, which claimed nearly half of parents have had to raid their savings to cover nursery or childminder fees because their salary does not stretch far enough.
Last week the campaign group found 22% of parents who are eligible for the new entitlement are still considering leaving their job or reducing their hours due to childcare costs, and that 25% said the new government funding would save them less than £90 per month.
Patrick Thomson, head of research and policy at Phoenix Group’s longevity think tank Phoenix Insights, said: “Childcare costs can be crippling, and parents often face the dilemma of reducing working hours or dropping out of work entirely as they weigh up the benefits of working compared to paying childcare fees.
“Alongside the immediate impact on take home pay, it is also important to consider how this can affect future finances. Most people saving in a workplace pension pay a proportion of their salary to their retirement savings alongside an employer contribution, so any decrease in earnings from working less can lead to reduced pension contributions.
“Expanding the free childcare hours in England will offer some financial relief for working parents, and also support them to remain in work and continue to save if they are able. But it is crucial this goes hand-in-hand with measures designed to boost the availability of formal childcare. There is also an important role for employers to offer more flexible working arrangements for those with childcare responsibilities, particularly for those who feel that leaving work is their only option.”
On 12 May, parents will be able to apply for codes to access the additional funding for children from nine months, which kicks in in September.
Joeli Brearley, CEO and founder of Pregnant Then Screwed, questioned what was being done to plug gaps in staffng numbers.
“Years of neglect by successive governments has led to a staffing crisis and a deterioration in provision. The new childcare schemes will increase demand whilst supply dwindles,” she said.
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“Without swift investment and a workforce strategy, the rollout of these new funded hour schemes could be the match in the powder barrel.’’
