Affordability
The cost of childcare continues to rise. The National Living Wage, utility bills, and the impact of inflation all contribute to the increase in childcare fees. Coram Family and Childcare finds this past year, childcare costs continue to rise with a 7% increase for those aged under two.
Costs and fees vary between the districts in Lincolnshire. The table below shows the average fees charged within each district.
| District | Under 2s | 2-year-olds | 3 and 4-year-olds |
|---|---|---|---|
| Boston | £6.40 | £6.19 | £5.93 |
| East Lindsey | £5.79 | £5.67 | £5.53 |
| Lincoln | £5.35 | £5.34 | £5.29 |
| North Kesteven | £5.62 | £5.61 | £5.48 |
| South Holland | £5.49 | £5.48 | £5.30 |
| South Kesteven | £5.78 | £5.73 | £5.83 |
| West Lindsey | £5.37 | £5.43 | £5.21 |
| Lincolnshire average | £5.62 | £5.60 | £5.50 |
Lincolnshire has lower than the average national fees. National data shows the average hourly rate for 3 and 4-year-olds as £6.14, whereas in Lincolnshire it is £5.50.
| Age range | 2023 | 2024 | Difference | Increase |
|---|---|---|---|---|
| 0 to 2 years | £5.10 | £5.62 | +£0.52 | 10.2% |
| 2 to 3 years | £5.12 | £5.60 | +£0.48 | 9.37% |
| 3 to 4 years | £4.94 | £5.50 | +£0.56 | 11.3% |
Staffing costs are the largest overheads providers have. The National Living Wage has increased by 9% to £11.44 per hour since April 2024. Providers are seeing increasing running costs and overheads. This is reflective of the percentage increases in private fees that we see across the sector. However, the EYE funding to providers has also been significantly increased to support providers. Further details can be found under the 'early years funding' heading below.
However, parents are continuing to experience a cost of living crisis. Within the parental survey, 18% of parents said that affordability was a prohibitive factor to accessing suitable childcare. The childcare reforms announced within the spring 2023 budget are seen as a positive step forward in supporting parents to access the childcare they need, offering working parents of children 9 months to school up to 30 hrs funded childcare by September 2025.
The majority of parents are able to access government support with paying for childcare costs for children aged 0 to 14 years. Government offers are widely promoted to parents and providers in Lincolnshire using the Childcare Choices website. All providers are encouraged to promote this with their parents to ensure their fees remain affordable.
Within the provider survey, 97% of providers reported that they promote Tax-Free childcare to their parents.
Childcare providers can utilise the Childcare Choices communications toolkit to promote the Tax-Free Childcare and other offers. This is also promoted with the role of the outreach worker. Lincolnshire offers support and guidance to working and disadvantaged parents. Our website has recently been updated with a dedicated section on all the available support with childcare costs.
Early years funding
September 2023 saw an unprecedented mid-year uplift to the funded rates paid by means of a supplement. This was followed by a further increase to the funded rate in April 2024. Affordability for parents, rising costs for providers, and the NLW increase are all concerns. However, the funding increase over the past year has helped support the sector's sustainability.
| Funding | March 2023 | September 2023 | Percentage increase March 2023 to September 2023 | April 2024 | Percentage increase September 2023 to April 2024 | Percentage increase March 2023 to April 2024 |
|---|---|---|---|---|---|---|
| 2-year-old | £5.29 | £7.06 | 33.46% | £7.08 | 0.28% | 33.84% |
| 3 and 4-year-old | £4.42 | £4.75 | 7.47% | £5.03 | 5.89% | 13.80% |
Providers who deliver places for under 2s will receive £9.71 per hour funded rate from September 2024. This is in addition to the above rates. Significantly, the average private fee in Lincolnshire for under 2s is £5.62 per hour. This is £4.09 per hour under the funded rate for under 2s.
The average 2-year-old fee in Lincolnshire is £5.60 per hour. This is £1.48 per hour lower than the funded rate being offered for 2-year-olds. This should be supporting providers with the cost of delivering these places. In addition, Lincolnshire have included a deprivation supplement within the funding formula for disadvantaged 2-year-olds. This will ensure providers continue to offer these places to the most vulnerable families.