Children England response to the Spring Budget 2023

Children England is concerned with the creation and sustainability of the ecosystems children need to thrive, including their communities and the services all families rely on. 

So we’re delighted that the Chancellor has recognised the need for investment in two key parts of that social infrastructure for children - early years education and childcare, and charities supporting local communities who are struggling right now. We welcome the government’s commitment to significantly expand the early years offer to working parents of younger children, and exploring wraparound care in school settings - both signal appreciation of working parents’ needs. Understanding the pressure our own members are under to meet more children and families’ needs while paying higher service delivery costs and while funding falls far short, we also appreciate the promise of £100m for the most pressurised parts of the voluntary sector.

With such large amounts of public money involved, we should all be interested not only in the sums involved but how it’s distributed, because if it doesn’t reach the right places at the right time, children won’t benefit from these public goods.

Money is currently spent in the early years ecosystem not only inefficiently, with profits increasingly going to private equity owners of large private providers, but through a mechanism that actively damages other types of providers’ finances. The standard unit fee for each ‘free’ place is both too low to cover the real costs of any childcare place, and also fails to recognise the variation between each provider’s unique costs. We are concerned that, even were the uplift in fees for ‘free’ three- and four-year old places sufficient for many providers’ current costs, it cannot reflect the varying costs of individual provision, which go beyond varying salaries, rents and other operating costs to the complex balance of different hours, ages, entitlements and additional needs that change not only from family to family but within each family over time. Distributing funding for ‘free’ places through this unit price mechanism means those places aren’t free at all to providers, and they are already clear about the struggle to balance their books by cross-subsidising free places with paid-for ones, as well as through other charges.

To ask providers to extend their ‘free’ provision to one and two-year olds, in this context, and thereby remove one of their routes to recouping lost income and replace it with yet another uniformly-funded offer could mean closure, rather than expansion, for many providers. We know the government won’t want its very positive ambition for children’s early years to be undermined by such fundamental precariousness across the system, and we’re ready to work with them and the many other champions of good quality, accessible and affordable early years education and childcare to design a funding mechanism that is guided by the needs of individual providers and the diversity of families they serve, rather than a pre-set mechanism better suited to procuring goods than human services.

Changes to Universal Credit, meaning childcare contributions are paid in advance instead of in arrears, and that allowances per child are raised, are extremely welcome, and we believe will relieve some of the financial pressure on families receiving UC. We’re concerned, however, that the government’s clear aspiration to support more parents into work, and to work for longer hours, is at odds with their decision to create a one- and two-year old free offer to working parents in term-time only. This simply creates yet another barrier to finding suitable work, and makes the financial saving much less generous than it seems. 

Childcare is not just a service to look after children while their parents go to work, and we worry that the government fails to value the education and development that children - especially those in disadvantaged families - derive from it. The budget offers nothing for the people who pour their skills, knowledge and hearts into working with our youngest children, instead threatening them with the prospect that they may end up having to work with larger groups of children and be stretched even more thinly. With early years educators already underpaid, overworked and overlooked for the levels of professional development and recognition other professions receive, the budget’s new measures seem destined to drive staff out of the system rather than draw new staff to it. 

With issues of funding mechanisms and workforce unaddressed, an already unsustainable system will be hastened into market collapse and the Chancellor’s apparently generous measures will fall flat for families, providers and children alike. 

Many charities are also facing a precarious future, and it’s vital that the new fund of £100m to support those most in need is distributed swiftly, transparently and equitably to ensure it reaches the range of charities and communities who can benefit. We hope the government will work with the voluntary sector to rapidly decide how this money will be distributed and ensure the process is inclusive of the organisations who have the least capacity to complete lengthy assessments.

We urge central government not to forget charities delivering public service contracts, most of whose fees have not kept pace with rising delivery costs. Our members report uncertainty and variation in how their contracting authorities are responding to inflation, and are struggling to plan sustainably for staffing and services in this context. With local authorities in various degrees of financial stress themselves, it is only the Treasury who can make the resources available to ensure all public service contracts are uplifted to meet real costs, and avoid the closure of services and loss of experienced staff.