Chancellor announces more funding for childcare

Chancellor Announces More Funding for Childcare

Rishi Sunak, the Chancellor of the Exchequer has delivered his budget speech, detailing the government’s spending plans for the next few years. Despite a reputation for financial austerity, the Covid-19 crisis has forced Sunak’s hand over the past year to commit the government to serious spending in order to keep the economy going. This is potentially good news for the childcare sector as the pandemic has proved that it is absolutely vital to the country’s livelihood and moreover – as venture capitalists have increasingly understood in recent years- it is an industry in which expenditure pays real dividends.

Accordingly Sunak has committed to an additional £160m funding in 2022-23, £180m in 2023-24 and £170m in 2024-25. Commenting on the announcement, childcare minister Will Quince tweeted that the extra money specifically for “local authorities to increase hourly rates paid to childcare providers for the government’s free childcare entitlement offers and reflects the costs of inflation and national living wage increases.” These are undoubtedly impressive sums and have been generally been welcomed by sector trade associations, who have long campaigned for an increase in funding. There is still a note of caution however, and many within the sector will wait until they see how the money is actually spent before they start writing thank you notes to the chancellor.

The budget was not all good news for the childcare sector however. Business rates relief, which was offered during the pandemic will not continue, despite the retail, leisure and hospitality sectors being offered a 50% discount for the next year. There is some hope that this may be an oversight – the childcare sector was only included in the existing relief after a vocal campaign – and the government is being urged to revisit the decision. 

Funding will always be  a concern for a sector where margins are inevitably tight and competition for staff is growing ever more fierce. The government’s recognition of this is a very positive sign, but it does not mean there will not be further demands as the economy comes back to life in the post-pandemic world.