Childcare 'crisis' hurting economy, warns FSB

09 Mar 2023

The Federation of Small Businesses (FSB) has warned the government that the ongoing childcare crisis is adversely affecting the UK economy.

The business group has urged Chancellor Jeremy Hunt to take 'proactive measures' in next week's Spring Budget to help more people obtain work.

It stated that childcare providers are currently facing insufficient funding and are therefore caught in a tough spot, having to choose between shutting for good or passing costs onto struggling parents and carers.

The FSB has outlined a five-point plan to combat the issue. The plan includes extending the current free childcare entitlement from 38 weeks to 45 weeks; giving nurseries in England 100% exemption from business rates; raising the UK's tax-free childcare allowance from £2,000 to £3,000; and matching employers who make discretionary contributions for childcare.

'It's time to reduce the burden on childcare providers and improve the affordability and accessibility of childcare for all parents,' said Tina McKenzie, Policy Chair at the FSB.

'Childcare businesses are in dire straits: trying their best to provide affordable services but end up taking a loss under government funded hours, shutting up shop completely or passing the costs onto already-stretched parents.

'We're pushing for changes to ensure more parents can access affordable childcare, allowing them to work and stimulate the economy without having to worry about high costs, and to help a childcare sector that's been put under huge pressure from under-provision of per hour funding from the government.'

The Chancellor will present the 2023 Spring Budget on 15 March.