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All parties’ manifesto pledges will lead to shortfall in early years funding

By Rachel LawlerCalculator cost of childcare pledges election

Parents face increased childcare fees and more additional charges after the next election, according to new research on the main parties’ manifesto pledges.

Independent early years expert Ceeda has warned that the Conservative, Labour and Liberal Democrat manifestos will all create significant early years funding shortfalls if enacted.

While the Conservative party has not made any new announcements on childcare this election, the party has promised to increase the National Living Wage without any additional funding increase or review. Ceeda estimates that this will create a £824 million shortfall.

The Labour party has pledged to extend the 30-hours offer to all two-, three- and four-year-olds and offer up to 60 additional hours at a subsidised rate, based on the parents’ income. The party also plans to increase the minimum wage to £10 an hour for all workers aged 16 and above. Ceeda estimates that these policies will created a £80 million shortfall.

Liberal Democrats
The Liberal Democrat manifesto promises 35 hours a week of childcare for children in working households from nine months. All children aged two, three and four would be given 35 hours a week, across 48 weeks a year. Ceeda estimates that this will create a shortfall of £314 million, but says that annual rate increases and a phased introduction could “soften the blow”.

Growing concerns
Previous Ceeda reports have estimated that there is already a £662 million funding shortfall in the early years sector, as current funding rates are based on data from 2012-13 and do not take into account increases to the national minimum and living wages, pension contributions and business rate increases.

Neil Leitch, chief executive of the Alliance, commented: “Whoever ends up on the steps of Downing Street next month needs to be honest about the true cost of ‘free childcare’.

“No other business sector is expected to deliver a flagship government promise without adequate funding – why should childcare be any different? More of the same is not good enough: we need to ensure funding covers the true cost of delivering quality childcare because anything less will continue to hit parents in the pocket and lead to many thousands more provider closures.”

Dr Jo Verrill, managing director at Ceeda, added: “This analysis of party pledges and sector operating costs throws into sharp relief the challenges which lie ahead for the sector whoever wins the election. 

“A new Conservative administration would continue the funding freeze and seriously threaten the sector’s sustainability, particularly in deprived areas. In contrast, the Labour proposals appear well-costed, with significantly lower shortfalls. The Liberal Democrat commitment is the most radical and would need a careful, phased rollout tied to annual fee increases if large funding deficits and major staff shortages are to be avoided.”

Find out more
Read our guide to the main parties' pledges on childcare
Read the full report from Ceeda