Childcare costs in London will continue to be a barrier to parents, particularly women, taking up paid employment unless national government does more to enlarge provision and the means for paying for it, according to a new report.
Compiled by accountancy giant KPMG for BusinessLDN in partnership with business improvement district Central District Alliance (CDA), it recommends that a forthcoming programme of increased childcare availability announced a year ago by Chancellor Jeremy Hunt and due to start coming into effect in April is made more comprehensive and its long-term funding secured.
The report describes the Early Childhood Education Care system in England as “already facing significant cost pressures and labour shortages” with London among the areas where the growing problem could be most damaging due its big demand for labour and generally high living costs.
The economic benefit of taking up the options for changes suggested is summarised as a gross domestic product boost of £11.3 billion resulting from enabling “250,000 currently economically inactive parents or carers with children under the age of five to return to the workforce”.
The report argues: “The starting point is to decide, as a society, what we want. There is a strong, clear case for greater government intervention through higher levels of funding to make childcare more affordable, as many European countries have done, helping to drive higher employment and participation rates.”
In her foreword to the report, entitled No Kidding, Anna Purchas, KPMG UK’s office senior manager and regional chair, says “getting childcare right” creates “better outcomes and opportunities for our children” and “parents better able to progress in their careers”, both of which benefit the economy.
Muniya Barua, Business LDN’s deputy chief executive, stresses in her own forward that the problem in London is “particularly acute” due to housing and travel costs taking up greater shares of parents’ income.
Citing a survey of more than 1,000 London parents jointly conducted by BusinessLDN and CDA, she writes that a quarter had said childcare shortcomings had held back their careers and over half said they were struggling to meet the cost of it.
Chancellor Jeremy Hunt announced one year ago a gradual expansion of the hours of free care to eventually reach 30 hours a week for all children aged between nine months and five years, with the first phase due to come into effect in a few weeks. To be eligible, all adults in a household have to be working for a minimum of 16 hours a week.
Interviewed yesterday, Hunt said the government is “on track” to deliver the first stage of the increase – a promise of 15 hours of free care for working parents of two-year-olds – but was unable to give “an absolute guarantee” that all the places needed would be available by next month.
The full 30 hours offer is due to become available in September 2025, but there have been concerns from the start about funding for the scheme and the availability of childcare workers, with some doubting the programme will really solve the problems working parents face.
The new report’s recommendations include:
- Making the 30 hours of free care per week currently scheduled to be rolled out from September 2025 available for 48 weeks of the year instead of 38, which corresponds to school term times, “so that parents of pre-school age children do not have to muddle through the school holidays”.
- Widening the eligibility criteria for the 30 hours entitlement to embrace parents in training or eduction.
- Bringing forward plans to increase funding for primary schools to provide “wraparound care”, which is charcterised as “limited or patchy” in London at present with funding beyond an existing “pathway scheme” described as “not secure”.
Read the report in full HERE.
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