UK Budget 2023: childcare costs up 20% in North East – as chancellor announces 30 hours free scheme expansion

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Childcare fees for under twos have been increasing across England since 2018, with parents in the North East being the worst affected by increasing rates.

Parents of children aged under two in the North East have seen an almost 20% increase in childcare fees in the last five years, more than any other region in England, new analysis by NationalWorld shows.

Chancellor of the ExchequerJeremy Hunt today announced (15 March) a new package of childcare support as part of the Spring Budget with the aim of getting parents, especially women, back into the workplace.

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The announcement followed years of rising costs for parents, with Department for Education figures showing the average hourly cost of childcare for under twos across England was £5.68 last year, up 13% on the £5.02 cost recorded in 2018. It would mean working parents of a single child wanting 40 hours of childcare for 47 weeks of the year would have faced an estimated annual cost of £10,700 last year.

But families in the North East region saw their costs climb by 18.4% over the same period, from £4.24 to £5.02 - the highest rise recorded across any region.

In his budget Mr Hunt announced that free childcare provision will now start from nine months of age, and provide 30 hours of free childcare a week – the equivalent of around four days. Currently only working parents of three and four year olds have been eligible for free care. The expanded scheme is being rolled out in phases and will not be fully operational until September 2025.

Childcare providers however have previously argued the existing 30-hours scheme is inadequately funded, with the government only covering part of the cost of the ‘free’ places – leaving  nurseries and childminders going bust as they struggle to withstand their losses. NationalWorld has previously revealed how the North East has seen particularly high rates of nursery closures, losing one in 10 early years providers in the year to March 2022.

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Childcare costs for under twos have increased by 13.1% in England since 2018. (Image: NationalWorld/Mark Hall)Childcare costs for under twos have increased by 13.1% in England since 2018. (Image: NationalWorld/Mark Hall)
Childcare costs for under twos have increased by 13.1% in England since 2018. (Image: NationalWorld/Mark Hall) | NationalWorld/Mark Hall

Despite Hunt describing the announcement as “a revolution in childcare support”, critics say the budget does not offer enough funding to support the expansion.

“We are concerned that the budget does not offer enough funding for early years settings to meet the increased demand created by this new provision,” Jane van Zyl, CEO of Working Families, said.

“Without adequate funding for growth, and without a workforce strategy to ensure that nursery staff are supported to deliver high-quality care, then the benefits reaped by parents and carers will be minimal.”

Rachel Statham, associate director for work and welfare state at Institute for Public Policy Research, added that families across the country, especially those in the North East, were “struggling” with the cost of living crisis, alongside “soaring” nursery fees.

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“We know 1 in 10 nurseries faced closure last year. This points to a local childcare sector struggling to stay afloat as bills rise and government funding has fallen short of running costs.

“The focus on childcare in today’s budget will be welcome news to parents – but providers will be holding their breath to see whether the funding uplift promised by the Chancellor is enough to put the sector on a sustainable footing.”

The most expensive parts of England for childcare

Every region in England has seen an increase in childcare fees since 2018. Besides the North East, the Midlands also saw high increases in average hourly fees for children under two years old. The East Midlands saw the second highest increase with 16.0%, followed by the West Midlands with 14.1%.


Parents in London are shelling out the most for childcare for under twos with the average hourly rate costing £7.31 – £2.46 greater than Yorkshire and the Humber which had the lowest average hourly rate at £4.85.

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All types of providers, such as childminders and nurseries, have seen an increase in fees in the last 12 months. In a survey by the DfE private group-based providers were the most likely to have increased rates in the last 12 months. The figures show 79% said they had increased their fees, whereas fewer than 40% of childminders said their fees had increased.


When is the new policy being rolled out?

The government said the new policy would be introduced in phases, with 15 hours of free childcare for working parents of two year olds coming into effect in April 2024 and 15 hours of free childcare for working parents of nine months to  three years old in September 2024. From September 2025 every working parent of a child aged under five will have access to 30 hours of free childcare.

The policy aims to bridge the gap between parental leave ending and preschool children receiving free care.

The government said the reforms will remove barriers to work for nearly half a million parents with a child under three not working due to caring responsibilities. It also said it would reduce discrimination against women and benefit the wider economy in the process.

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