Parents have until tomorrow - August 31 - to register for extended free childcare for all children at least nine months old. The new scheme, which comes into effect in September, requires parents to sign up on the government website by tomorrow to ensure they qualify for support this autumn.
This increased access to free childcare could save parents of the youngest children around £3,500 a year on average in nursery fees. However, there are concerns about the availability of enough places in the right locations for everyone interested in the scheme.
Rishi Sunak's government designed the free childcare regime, seen as crucial in enabling thousands of mothers with young children to rejoin the workforce. Historically, all parents of three and four-year-olds could claim 15 hours a week of free childcare as standard, later extended to eligible working parents of two-year-olds.
From September 1, it will be further extended to children aged nine months and over. High childcare costs have placed a significant burden on young parents, with the average cost of a full-time (50 hours a week) nursery place for a child under two in England being £305.11 a week.
The provision of 15 hours a week free of charge equates to a weekly saving of around £91.50. Assuming the free childcare is taken for 38 weeks a year, mirroring school term times, the saving would be around £3,500 a year per child.
Children aged 3-4 are currently eligible for 30 hours of free childcare, with plans in place to extend this to all children over nine months from September 2025. However, the new Labour government has expressed concerns about the feasibility of finding and funding the necessary additional nursery places.
Baroness Jacqui Smith highlighted that implementing the scheme will be a challenge, requiring an estimated 85,000 more nursery places and 40,000 additional sector workers. Financial experts have suggested that extending free childcare to include babies aged nine months and older could help mitigate rising costs for parents.
Hargreaves Lansdown noted concerns that despite increased funding, there may still be insufficient nursery places to meet demand. The firm also highlighted that approximately one in ten women have quit work due to childcare issues, according to the Fawcett Society.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The pledge to give extra financial help has been on the horizon and it's finally set to become a reality for parents of children over nine months. There are high hopes that it could help keep many more mothers in work, which would make a huge difference in helping to bridge the yawning pay, investment and pensions gap. Eligible working parents will be able to access 15 hours of funded childcare from Sunday, but there still could be a sting in the tail of this promise."
"There are concerns there won't be enough places at nurseries to meet demand from mums and dads, with a lack of childcare professionals in the sector."
The new government has pledged to transform over 3,000 unused classrooms into nurseries, but this will require significant time to put into action.
A study by the Local Government Association revealed that a quarter of councils in England expressed they are "not very confident they have sufficient early years and childcare places" to handle the new provision.
Susannah Streeter commented: "Delays in finding a place will be super frustrating for parents who have been holding out for this financial support."
"When childcare costs consume a massive portion of your wage, it's hardly surprising that so many women are leaving jobs or switching to part-time. The choice to take a back seat in our careers has major implications for our financial resilience."
"Women are increasingly being left behind, with pay gaps expanding and pension pots only nearly one third full compared to men according to data from the Pensions Policy Institute. This is even worse for single parents."
The HL Savings and Resilience Barometer indicates that single parents are particularly lagging in financial resilience, partly due to high childcare expenses.
The firm stated that addressing this could not only assist in closing the gender pay and pensions gaps but could also help keep inflation lower. That's because a surge of workers re-entering the workforce could alleviate concerns about the tight labour market.
Who's eligible?
Parents must be working a minimum equivalent of 16 hours per week at the minimum wage, but earning less than £100,000 annually. These fine print rules apply to both parents if they're applying as a couple.
Free childcare hours are typically spread over 38 weeks (to cover term time), but they can be stretched out to cover more weeks by using fewer hours each week.
Tips to tackle the childcare cost crisis.
* Make sure you promptly register for government-funded childcare. Parents need to register via this link https://www.gov.uk/apply-free-childcare-if-youre-working - and receive a code.
* Speak with your chosen childcare provider to ensure they can offer a place.
* If costs are becoming too much, consider reducing hours, but try not to quit entirely. Maintaining continuity in your career will pay dividends in the long run.
* Working parents can apply through HMRC for top-up money to assist with childcare costs, up to £500 every three months. You must be eligible, and you can't claim if you or your partner earn more than £100,000.
* Universal Credit and working tax credit both have 'childcare elements', where the government provides extra money towards paying for childcare. If you qualify, you can get up to 85 percent of what you pay for childcare, up to a maximum of £950.92 per month for one child, or £1,630.15 for two or more children.
* If you have the ability to work from home, request flexible hours so that you can finish work at 3pm and log back on for a few additional hours after bedtime.
* After you've accumulated a rainy-day fund, think about setting up a small direct debit of as little as £25 a month into a stocks and shares ISA so that your money has the opportunity to work harder. Just bear in mind that investments can decrease as well as increase in value, so you might get back less than you invest.
This can aid in building your own financial resilience and also help you support your children in the future, whether for education or even purchasing a house.
* For hours which aren't funded, it's worth exploring pre-schools rather than private nurseries for two years plus. They're typically cheaper but have shorter days.
You could always consider setting up a buddy group and take turns to care for each other's children from 3pm until 6pm.
* If you haven't yet started a family but hope to at some point in the future, it's worth establishing a savings or investment account, in addition to your rainy-day fund. Maximising your £20,000 a year tax-free ISA allowance will help strengthen your financial resilience as you expand your family.
