Liz Truss is said to be considering a shake-up of the childcare subsidy system whereby parents, rather than nurseries, would be handed Government cash to spend as they see fit.
As it stands, all three and four-year olds in England are entitled to 15 hours’ free childcare a week during term time, while some families can claim up to double that amount.
The funding for each place is currently sent straight to approved providers, such as nurseries or childminders.
The money, which typically works out at about £2,000 a child per year, is paid directly to nurseries at present. However, the Prime Minister and her Education Secretary, Kit Malthouse, are reportedly weighing up proposals which would see the money paid directly to parents to invest as they wish.
The Department for Education (DfE) said “a wide range of options” are being explored to make childcare more accessible and affordable, but no decisions have yet been made.
The Times said one option is for parents to be given a flexible childcare budget in place of a paid-for space, with the Government potentially loosening the rules on which providers can offer the care and how old children need to be to qualify.
A government source told the newspaper that the existing system for subsidised childcare was a “convoluted, Heath Robinson process”. Instead, parents could be given a budget — probably equivalent to the amount now paid to nurseries — to spend over time as they wished.
The Early Years Alliance, which represents about 14,000 childcare providers in England, said the idea risked creating a “two-tier system”. Neil Leitch, the charity’s chief executive, said: “Wealthier families able to top up their government ‘pot’ could access higher quality care and education far more easily than those on lower incomes who can’t afford to do so.”
Bridget Phillipson, the shadow education secretary, said: “These half-baked plans show the Conservatives have no idea how to create a system that works for families. Labour will create a modern childcare system that supports parents from the end of parental leave to the end of primary school.”
Alternatively, families could be given near-total freedom on how they spend the cash, potentially passing it on to grandparents helping out with childcare.
The shake-up comes after a rocky few days for Liz Truss following a colossal U-turn on the cut to the 45p tax rate. During the Conservative conference some Tory MPs are “openly talking” about how Ms Truss might be removed, said former No 10 chief of staff Nick Timothy – predicting it would be difficult for the PM to survive the challenging start to her premiership.
The senior Downing Street official who worked under Theresa May said it remained “very, very difficult to recover” after the disastrous mini-Budget which sparked a backbench rebellion.
A DfE spokesperson said: “We are exploring a wide range of options to make childcare more accessible and affordable for parents, but no decisions have been made.”