Childcare policies: what the general election could mean for parents

Labour and the Conservatives have announced a string of policies to win votes from parents – from free childcare hours to a higher child benefit cap.

Childcare policies: what the general election could mean for parents
(Image credit: Getty Images)

As we race towards the 4 July general election, both major parties are handing out sweeteners to win votes. And it’s not just the grey vote that they are trying to charm. In recent weeks, Labour and the Conservatives have both announced a string of policies that could impact parents. 

According to the Office for National Statistics (ONS), 43% of all families in the UK have one or more dependent children. That is a significant portion of the population. Any party that can secure the mass support of parents is likely to see significant success at the ballot box. 

With this in mind, we look at what the two main parties are offering parents. Plus, will the election impact the free childcare policy the government started rolling out earlier this year? 

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Free childcare hours

In his 2023 Spring Budget, chancellor Jeremy Hunt announced a series of childcare reforms which offered free childcare hours to the majority of working parents. 

The first phase of the rollout began on 1 April this year, and gave 15 hours of free childcare per week to the parents of two-year-olds. This is set to be extended to nine-month-olds from September 2024, before being doubled to 30 hours from September 2025. 

There have been some challenges with staff shortages and limited nursery places. However, the new measures still represent a big win for working parents, as well as those who have been kept out of the workplace by astronomical childcare costs.

The good news is that both major parties have committed to keeping this scheme in place if they win the general election. Previously, there had been some doubt as to whether Labour would commit to the policy amid concerns about the strain it would put on the sector.

100,000 more nursery places, funded by ending tax breaks for private schools

On top of this, Labour has promised to convert over 3,300 classrooms into nurseries in schools with spare capacity (due to falling birth rates), creating 100,000 additional nursery places. This would go a significant way to addressing the shortages created by the rollout of the new free childcare policy. The party has also promised free breakfast clubs for primary school children.

This policy could be particularly beneficial for mothers, who are disproportionately impacted by unpaid caregiving responsibilities. The cost of caring sees many women being squeezed at both ends of their careers. Some (known as “sandwich carers”) go from looking after young children to caring for elderly parents, with only a short gap in between. 

As well as losing current income, this creates a significant hole in their pension pots. The pension gap is a “double whammy for women,” says Alice Guy, head of pensions and savings at interactive investor. “Not only do they earn less on average, but investment compounding works in favour of those who have bigger pots in mid-life,” she explains. 

While additional nursery places will be good news for most working parents, those with children in private school could be the ones paying the price. Labour plans to finance the additional nursery places by ending tax breaks for private schools – a step that has been criticised by prime minister Rishi Sunak as stoking a “class war”. 

Introducing VAT on private school fees could see them soar by as much as 20%. This increase would come on top of other, inflation-related fee hikes parents have already suffered in recent years. The latest figures from the Independent Schools Council (ISC) reveal that fees for the 2023/2024 academic year increased by 8%, on average. 

More families to become eligible for child benefit

Meanwhile, the Conservatives have promised to make more families eligible for child benefit payments if they win the general election. Currently, this allowance starts to get withdrawn as soon as one parent earns more than £60,000 a year. 

The Conservatives have pledged to double this to £120,000, as well as moving to a system where the entire household’s income is taken into consideration. This comes after Jeremy Hunt already lifted the threshold from £50,000 to £60,000 in his Spring Budget

Alice Haine, personal finance analyst at Bestinvest, says that this move would “eradicate the unfairness of the current system, which penalises single-income parents or couples where one partner earns a significantly higher salary than the other.”

Haine also points out that it might be worth registering for child benefit, even if your family isn’t eligible to receive the payment. This is because, even if you take time out of work to help raise children, you are still eligible for valuable National Insurance (NI) credits.

NI credits are used to calculate how much state pension you are entitled to – and registering for child benefit lets HMRC know to include these credits on your record. If you aren’t eligible to receive the child benefit money and just want the NI credits, you can tick a box on the form to confirm this. Alternatively, you can repay the child benefit money through your tax return. 

Katie Williams
Staff Writer

Katie has a background in investment writing and is interested in everything to do with personal finance and financial news. 

Before joining MoneyWeek, she worked as a content writer at Invesco, a global asset management firm, which she joined as a graduate in 2019. While there, she enjoyed translating complex topics into “easy to understand” stories. 

She studied English at the University of Cambridge and loves reading, writing and going to the theatre.