Spring Budget: childcare provision opens door for diversifying workforce

Budget measures represent some positive steps, but questions linger over viability

In his spring Budget (announced 15 March) the UK Chancellor Jeremy Hunt set out a series of policies encouraging more adults to return to work, after coming under pressure to remove financial barriers preventing workers from re-entering the labour market.

As part of his reforms, Hunt confirmed that all children from nine months up to school age will be eligible for 30 free hours of childcare a week, where all parents are working at least 16 hours.

Currently, state-supported care is only available for children aged three and four. The new measures provide continuity of support following parental leave, the majority of which is taken by women. Therefore, the increased help should in theory make it financially easier for more women to return to work after having children.

While half of non-working mothers would prefer to work if they could arrange childcare, research undertaken by the charity Coram found that the average annual cost of a full-time nursery place for a child under two in the UK is just shy of £15,000.¹

Hunt’s childcare measures, for now, only apply in England. They will be rolled out in stages from April 2024 and will not be fully implemented until September 2025, by which time some parents will have missed the benefits of the policy.

However, the announcement provides an opportunity for the Scottish Government – as well as the UK’s other devolved governments – to follow suit and implement new childcare reforms themselves.

The Scottish Government already provides care for eligible two-year-old children, as well as three- and four-year-olds; yet after the SNP elects its new leader on 27 March, there will be an expectation that the Scottish Government will enhance its childcare provision to bring it in line with that announced by Westminster.

The UK Government’s ambition to remove barriers hindering returns to the workforce is laudable. Given that women tend to be children’s primary caregivers, there is a real chance that the labour market will experience long-overdue gender diversification by cutting costs for women to return to work.

However, rather than completely dispelling anxieties over the viability of returning to work, Hunt’s announcement has prompted questions surrounding the extent, funding, and quality of childcare which the state can adequately provide in the short term, with childcare professionals voicing significant concern.

Nevertheless, the Chancellor’s Budget offers real potential for meaningful gender diversification by making it easier for women to go back to work. This combined with a more flexible post Covid working practise with hybrid working can remove further barriers. For those women who want to balance their career with caring responsibilities, it could be a real pivot time.

While there was the controversial decisions on removing the LTA on pension – which is viewed as a tax savings to benefit the few – these breaks may prompt some generational diversification of the labour market. Some people who were forced to take early retirement can now return if they chose, and the pressure on grandparents to support childcare may be a positive impact.

Hunt’s hour-long address to the House of Commons demonstrated that bolstering the workforce is a priority for the UK Government.

While the intention is clear and admirable, a policy shift on this scale will drum up a number of pertinent questions and will ultimately be judged on delivering answers on some of the fine print practicalities of the reforms.

Increased gender diversity in the workforce over the medium term will be a key indicator of the policy’s success, by affording more women the opportunity to resume their careers if they choose.

This also begs the question: can the UK Government implement Hunt’s childcare policy with enough drive and commitment to turn this potential into a real increase of women in work – and crucially, will it be enough to keep them there?

_{¹Coram findings quoted in BBC article, ‘Childcare: Full-time nursery for under-twos nearly £15k a year, says report’, accessed 16 March 2023}