Two million working families have councils that are failing to provide appropriate childcare

Nearly two million working families in England and Wales live in areas where councils are failing to provide appropriate childcare, a situation that has grown worse over the past 12 months.

Barely two-in-five local authorities in England provide enough nursery places, holiday and breakfast clubs or after-school services for parents who work full-time, down from 54 per cent last year. The problem in Wales is even more acute, with a fall from 28 to 18 per cent, the Family and Childcare Trust will reveal in a report to be published later this week.

Of the 3,032,000 families with children aged under 11 living in under-resourced authorities, nearly two-thirds require childcare, so the situation affects 1.95 million households, up from 1.78 million last year.

The shortages exist even though the 2006 Childcare Act obliges all local authorities in England and Wales to provide sufficient childcare for working parents and those who are training for jobs.

Family and Childcare Trust chief executive Stephen Dunmore said last night that “work won’t pay until there is a complete overhaul of our complex and inadequate childcare system”. He added: “The childcare system in Britain, with big gaps in supply, inflexible provision and often prohibitive costs is a big barrier to employment for parents. Local authorities must do more.”

One growing problem facing councils is that a scheme that entitled all three and four-year-olds to 15 hours of free early education a week has been expanded to include 40 per cent of two-year-olds from the poorest families.

The trust says authorities struggled to find enough places but focused so heavily on doing so, that there is a growing childcare gap for three- and four-year-olds who qualify for a free sessions. “Aspects of childcare market management may have been neglected,” the report will claim.

The report also found that 22 local authorities in rural areas in England and Wales, and only one in Scotland, provide enough childcare for working parents. The provisions for families with disabled children is even more alarming, with barely one-fifth of authorities meeting minimum standards in England and only 6 per cent in Wales.

Separately, a committee of peers will challenge the Government to simplify the tax-free childcare system in a report to be published later this month, after fears that more than 300,000 families will be unable to access one of two competing schemes. In its efforts to introduce universal credit welfare reforms, the Government will cover 85 per cent of the childcare costs for the poorest families. From the autumn, a separate tax-free childcare system will provide families with up to £2,000, or 20 per cent, of their costs. Critics believe this is confusing.

By 2016, there will be four forms of financial support for childcare in operation, including vouchers and tax credits. Some peers on the committee are known to have been swayed by suggestions that merging at least two of the systems and then setting a means-tested sliding scale of childcare families can receive would be simpler to administer.

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A committee source said: “We are concerned about the complex nature of financial support – there’s quite a lot of error and more people are under-claiming. There is an opportunity [for the Government] to explore this.” A second source said “it is a matter of balancing different objectives and spending money in the most efficient way”.

The inquiry was launched last summer and has compiled more than 600 pages of written and oral evidence. Witnesses included experts from Barnardo’s, who said in a written submission: “Childcare costs remain a significant concern for the parents we work with ... costs in England for under-twos are [about] 20 per cent higher in 2014 than in 2004, and 23 per cent higher for the over-twos.”

Many witnesses pointed to the importance of affordable childcare at a time when many families’ finances have been hit by the economic downturn and could continue to struggle. It has been projected, for example, that a million more children will be defined as living in poverty by 2020.

An Education Department spokesman said: “We have increased funding for early education from £2bn per year to around £3bn per year, and made clear that local authorities should pass on as much of this funding as possible to the front line. We are also... encouraging schools to offer facilities from 8am to 6pm; making it easier for high quality nurseries to expand; and launching childminder agencies.”