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The secret that could help parents save on childcare costs

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Childcare providers – nurseries, pre-schools, childminders and other childcare settings such as before and after school clubs and holiday schemes, relied on by tens of thousands of working parents across Devon – are struggling to an extent that some are at risk of closing.

Rising energy prices, and increased staff costs combined with difficulties recruiting qualified staff are all taking their toll.

And now many childcare providers are faced with having to raise fees to offset these additional costs.

That’s likely to hit parents hard, with household bills rising and money to buy the basics, like food and heating, already stretched.

Our Cabinet Member responsible for early years and childcare, Cllr Andrew Leadbetter, said:

“It’s a really challenging time right now for everyone, and it’s difficult to see what childcare provision in Devon is likely to look like in a year to two years’ time.

“Having picked their businesses back up from the effects of the pandemic, childcare providers are struggling once again.  This time, it’s increased running costs, on top of challenges around the recruitment of qualified staff.

“Their options are limited, but the likely scenario is that we’ll see the cost of childcare rising in the New Year so providers can cover their increased operating costs, and that’s not good news for parents.”

It’s feared that the gloomy prediction could potentially lead to a downward spiral. If parents reduce the hours of childcare that they use, or stop using childcare altogether, the fewer childcare providers are needed, leading perhaps to some providers becoming unviable and closing through lack of demand.

In rural areas, where the numbers of children attending childcare are already low, the reduction of hours by one or two parents could be disastrous.

“But there is possibly a solution, or at least something that can help parents and childcare providers alike,” says Cllr Leadbetter.

The Government’s Tax-Free Childcare scheme helps working parents with children aged 11 or younger, or up to 16 if the child has a disability, pay for childcare so that they can work.

With it, families receive 20 per cent top-up on childcare costs up to a total of £2,000 per year per child, or up to £4,000 for a disabled child.

Put simply, for every £8 paid into their childcare account by a parent, the Government tops it up by an additional £2.

It can be used to pay towards costs including nursery, childminders, pre-schools, breakfast clubs after school clubs, holiday schemes, and wraparound care. And it can be used at the same time as 30 hours free childcare for three or four-year-olds if parents are eligible for both.

But despite the savings available, hundreds of thousands of families in the UK are missing out. It’s estimated that around 1.3 million families are eligible to receive the support, and yet only around 800,000 are using it.

“Surprisingly, the take up of Tax-Free Childcare is low, nationally,” says Andrew Leadbetter. 

“We believe that it’s also low here in Devon. We plan to survey parents and providers early next year to find out how many are claiming it. But we believe that there are thousands of parents in Devon who are missing out on money that they are entitled to – money that could help them pay for childcare while they’re at work.

“That’s free money they’re not having to find – welcome money that could otherwise be spent on other pressing household bills right now associated with the rising cost of living.

“That help could also maintain the demand that childcare providers need to keep them afloat through these difficult times.”

Ninety two percent of childcare providers in Devon are registered to accept Tax Free Childcare, and the council is encouraging more to do so.

Parents can find childcare on Pinpoint Devon and check at the same time whether providers are registered for Tax Free Childcare.

Cllr Leadbetter said,

“It appears to be the nation’s best kept secret. We’re not really sure why the take up of Tax-Free Childcare is as low as it is. But we encourage parents that pay for childcare to open a Tax-Free Childcare account so they can start to feel the financial benefits.”

Our Early Years and Childcare team can help parents to find childcare if they are struggling, with a form available on the council’s website for parents to request support.

For more information, visit our webpages about Paying for childcare. Or email our Early Years and Childcare Service on for an informal chat.