Tory backbenchers plan to put pressure on Hunt to cut childcare costs

<span>Photograph: Gary Calton/The Observer</span>
Photograph: Gary Calton/The Observer

A handful of influential Tory backbenchers have created an informal pressure group to push the chancellor, Jeremy Hunt, to cut the costs of childcare at next month’s budget, as experts say the sector is in crisis.

The MPs, led by Siobhan Baillie, have been meeting regularly in recent weeks to discuss a range of measures they want Hunt to introduce to help parents afford care for young children and get back to work.

Their proposals include changing subsidies and relaxing employment regulations in an attempt to bring down costs quickly, with Britain among the most expensive countries in the world for childcare.

Liz Truss, the former prime minister, planned a radical shake-up of regulations, which she argued would help bring costs in line with those in other countries. Those proposals were reportedly dropped by her successor, Rishi Sunak, earlier this year, leaving many Conservative backbenchers worried they could face a backlash from working parents unless they came up with alternative plans.

Baillie said: “I am absolutely clear that the chancellor cannot say nothing about childcare at the budget. It is an important part of the discussion over economic inactivity.”

She is being supported by a number of other backbenchers, including Robin Walker, the chair of the education select committee, and Edward Timpson. Members of the group have met increasing frequently in recent weeks, Baillie said, as they plan to increase pressure on Hunt.

Walker said: “There is quite a groundswell of opinion that this is something we need to be doing more about. Everyone agrees that childcare needs to be made to work better, even if they have a range of opinions on how to do so.”

Britain has the third highest childcare costs among developed countries, according to the OECD, with only Slovakia and Switzerland more expensive.

In the past five years, costs have risen by an average of 21% across the UK, according to a recent report by the thinktank Onward. It found families now spend more than a quarter of their joint incomes on childcare, compared with an OECD average of just 9%.

Truss made cutting costs one of her highest priorities, and was planning to increase the number of hours of free care that parents could claim, while scrapping rules dictating the number of children allowed for each carer.

Those plans threatened to be expensive and unpopular, however, and Sunak is reported to have scrapped them.

Hunt is planning to focus his budget on getting “economically inactive” people back into work, government officials say, and his colleagues want him to make sure parents of young children are among those.

Baillie and her colleagues are not proposing to relaunch the idea of scrapping childcare ratios. Instead, they want Hunt to relax other regulations that they say could help more people join the childcare industry and allow parents to claim the benefits to which they are entitled.

One demand is that the government makes it easier for parents to apply for the tax-free allowance to which they are entitled, of up to £2,000 a year. A report for the Treasury found that as of March 2021, only about a fifth of eligible people were signed up to the scheme.

Another suggestion is to change the childcare element of universal credit so parents do not have to pay as much upfront before claiming it back.

Members of the group have also suggested eliminating business rates for private childcare providers, with a recent report by the National Day Nurseries Association finding the average nursery paid about £13,000 in business rates last year.

The Treasury would not comment on measures under consideration for the budget. But a spokesperson for the Department for Education said: “We recognise that families and early years providers across the country are facing financial pressures and we are currently looking into options to improve the cost, flexibility, and availability of childcare, ensuring that any plans we bring forward focus on improving outcomes for children.”