How changes to the UK childcare system will impact employers

19 April 2023

The 2023 Spring Budget update revealed the UK Government’s plans to reform the childcare system and increase funding for childcare providers.

Employers have increasingly been voicing their opinions on the need for urgent action to address the cost of childcare provision in the UK, which is one of the highest in the OECD.

In the past, parents have been forced to give up work when they choose to start a family – with women bearing the brunt of this trend. Thousands more were prevented from taking on more hours of paid employment due to childcare issues. Both situations mean employers were losing valuable talent and expertise.

The Governments’ recent announcement signals that employers have been heard, and recognises the need for effective and affordable childcare to ensure a productive, engaged and inclusive workforce.

What’s changing?

As of 2023, parents working over 16 hours per week and earning less than £100k are entitled to 30 hours per week of free childcare for children between the ages of three and four.

From April 2024, this will be extended to all children aged between nine months and four years old.

To ensure adequate time to prepare for these changes, the modifications will be introduced in a staggered way as follows:

April 2024

Working parents will be entitled to 15 hours per week free childcare for children from two years old.

September 2024

Working parents will be entitled to 15 hours per week free childcare for all children over nine months.

September 2025

Working parents will be entitled to 30 hours per week free childcare for children under the age of five.

There are a variety of adjustments that will assist in implementing these modifications.

The introduction of these measures – at an estimated £4bn investment – should mean a more diverse and equal workforce, higher productivity and lower staff turnover. All things that employers should and will welcome.

For employees, these childcare reforms should mean better access to childcare provisions and the ability to more easily return to work or increase their working hours.

Coupled with the ‘new normal’ we’re seeing with hybrid working models and the increased popularity of flexible working, employees should be in a better position in terms of life-work balance, and be happier and more productive.

How ZEDRA can help

If you’d like to find out more about how these changes might affect your UK employees or to discuss any other aspects of payroll, HR and employee benefits, please get in touch with Amie Crowther-Bali or Gurpreet Singh.

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