Business leaders call on Hunt to fix childcare crisis and boost economy

Business leaders call on Hunt to fix childcare crisis and boost economy

Business leaders have urged the chancellor, Jeremy Hunt, to take urgent action to fix the UK’s childcare crisis and unlock a £11bn boost to the economy by enabling more parents and carers to work.
In a report published ahead of next week’s budget, the BusinessLDN group, which represents some of London’s largest companies, said the government needed to clarify the funding arrangements for childcare providers before the April deadline for rolling out additional financial support.
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The report, which was co-authored by the accountancy firm KPMG and the Central District Alliance, warned that many childcare providers in England were struggling to meet the extra demand for funded places, amid confusion and delays surrounding the introduction of the new free hours scheme.
The scheme, announced by Hunt at last year’s budget, aims to offer 15 hours a week of free childcare to working parents of two-year-olds from April, and to working parents of all children older than nine months from September. The scheme will be extended to 30 hours for these children within a year.

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However, the report said that many providers were unsure about how much funding they would receive from the government, and whether it would cover their costs. It also said that there was a shortage of qualified staff in the sector, and that some providers were considering closing down or reducing their services.
The report said that fixing the childcare system could have significant economic benefits, by increasing the employment rate among parents of under-fives by 250,000. This could increase UK GDP by £11.3bn a year, and generate up to £3.2bn a year in extra tax revenues for the government.

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Muniya Barua, the deputy chief executive of BusinessLDN, said: “While the government has announced a welcome expansion of childcare support, without urgent action to clarify funding for providers, many parents are likely to face disappointment in April.
“There’s no quick or easy fix to the UK’s childcare challenge but it’s clear that bolder action could deliver a sizeable economic prize.”
The report also suggested a range of measures to transform the UK’s childcare system, which is among the most expensive in the developed world. These include:

  • Increasing the funding rate for childcare providers to reflect the true cost of delivering high-quality care

  • Introducing a national childcare strategy to address the skills gap and staff retention issues in the sector

  • Simplifying the childcare support system for parents and providers, and ensuring that information and guidance are clear and accessible

  • Exploring the feasibility of a universal childcare entitlement for all children from birth to school age, similar to the model in Sweden

  • Reviewing the impact of the High Income Child Benefit charge, which requires claimants to pay back 1% of their family’s child benefit for every extra £100 they earn over the £50,000 threshold each financial year

The report said that these measures could help to make childcare more affordable, accessible, and flexible for parents, and improve the quality and sustainability of the sector. It also said that improving childcare provision could help to reduce gender inequality, child poverty, and social exclusion.


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