Child Care Sector

Sector leaders have warned of an “entire collapse” of the early years market if reported plans to expand free childcare for under-twos go ahead without adequate funding for the sector.

This is not an issue that only parents should be concerned about but one that affects us all. We need working age mothers to return to work to take an oar in the battle to row this country out of the doldrums. Many such mothers desperately want to return to work, and need to in many cases, but the vast majority pay every single penny they earn back to childcare and that’s the first indicator that the system is broken, and will not be fixed with the sticking plaster that the Chancellor announced in the recent budget.

The government’s claims that there are enough childcare places in England are “meaningless” as councils collect little to no information on whether provision meets local demand, experts have said. Local authorities are responsible for ensuring that the provision of childcare is sufficient to meet the requirements of parents in their area under Section 6 of the Childcare Act 2006.

In February the Minister for Children, Claire Coutinho, said in a parliamentary written answer: “The department has regular contact with each local authority in England, and if a local authority raises concerns about sufficiency issues, we will support it with any specific requirements. At present, all local authorities report that they are fulfilling their duty to ensure sufficient childcare.” But data obtained by the Early Years Alliance shows that only 15% of local councils in England collect data on the proportion of parents who are able to access the childcare they need. One might expect the minster to be hauled in front of a parliamentary committee for misleading parliament.

Last week, the chancellor, Jeremy Hunt, announced a change to the way childcare would be funded, confirming a £4bn expansion of support from 2025, and announced “an ambition” for all state primaries to provide childcare before and after lessons from 2026.

Pitched as part of a wider drive to help people into work and boost growth, the plan will provide an extra 30 hours a week during term time to parents of children from the age of nine months to two years, matching the existing offering for three- and four-year-olds.

Campaigners say more knowledge is needed about how many facilities are able to offer local services and where the gaps are, which leave parents unable to find nurseries, childminders and other support when they need it.

The Early Years Alliance data, obtained via freedom of information, also shows 14% of local authorities gather information on whether parents can access childcare on the times and dates they want, and only one in 10 of the local councils collect the same information for children with special educational needs or disabilities. This lack of knowledge of the state of the childcare and early-years system meant “any government claims of sufficient places are utterly meaningless in practical terms”, Neil Leitch, the Alliance’s chief executive, said.

While the unemployment rate may be at its lowest in almost 50 years, as of April 2019, a large percentage of parents of dependent children were not working. In fact, ONS figures show that 24.9% of mothers and 7.4% of fathers with dependent children were unemployed. This suggests that there is a huge talent pool of people returning to work after parental leave that employers can aim to attract.

Joeli Brearley, the founder of the campaign group Pregnant Then Screwed, said: “We need to see a strong commitment from the government to rebuilding the sector sustainably if we are to increase the number of parents in work. Unfortunately, the amount of money pledged to fund the free hours entitlement is nowhere near enough and so there is a strong possibility that we may lose even more nurseries as a result.”

“If you’re a parent who, say, needs a nursery, preschool or childminding place for four days a week, but can only secure one day a week, and it’s at a setting 25 minutes away, then constant assurances from government that all is fine are understandably going to ring completely hollow – and this is exactly the sort of situation that families up and down the country are currently facing.”

So if the UK cannot solve this issue, how is it that so many countries can?

Parents pay according to their income; high earners pay full rates. School starts at age two and a half. There is a garderie in each school from 7am, which costs 88p an hour. The school day for all children runs until 3.30pm. There is a garderie again for the children of working parents until 6pm. Essentially, childcare costs for full-time working parents of children aged two and a half upwards, are about £35 to £53 a month.

For 34 hours of care per fortnight parents pay £205 which is subsidised 50% by the government (subsidies of up to 85% are available under the Child Care Subsidy scheme, depending on the family’s income), so we are out of pocket £102 or about £4.86 per hour.

Parents pay anything from £4.16 to £11.89 per day, which is income assessed. Most will pay less than £5.95 per child. Daycares must meet certain standards to be registered.

Parents pay around £159 for two full-time places and receive £256 in children’s allowance. It is subsidised by the tax they pay. They are provided with hot meals and healthy snacks throughout the day.

The monthly cost of childcare is capped for parents at around £250 a month. Low income parents receive childcare for free or at a low cost. 

Every child in Finland under the age of seven has the right to childcare and pre-school by law, regardless of family income. People in Finland pay a lot in tax to fund childcare programmes so childcare is basically free. Parents can also claim paid childcare leave after the end of parental leave if they decide not to use official childcare.

Sweden spends more money on its pre-school budget than it does on its defence budget. Each child is guaranteed a place at a public pre-school and no parent is charged more than three per cent of their salary, with fees capped at just over £100 a month.

The issue in the UK seems to be the total lack of understanding of what returning mothers bring to the exchequer. For those parents wishing to return to work, it is screamingly obvious that they will add to the tax revenue for the government. In most cases, said tax revenue greatly exceeds the cost of childcare therefore, free childcare, or vastly subsidised childcare, is an income generator for the government and not a cost. Why oh why can the UK government not grasp this quite simple calculation?

The Truss administration made many missteps, but on childcare it was on the right track. Though details were lacking, the blink-and-you-miss-her prime minister was planning to rush through ‘big bang’ changes to childcare provision that would bring down costs both for parents and providers.

Our pre-school and childcare sector is broken. It’s unaffordable both for parents and the taxpayer and increasingly inaccessible. Providers are also closing at record levels and staff retention is poor.

Childcare is a case study in what goes wrong when government is lobbied by single-interest groups to expand its role in a particular sector. Back in the 1990s, childcare was largely private or charitable. Parents could either care for children themselves or pay for external childcare provided by private nurseries or childminders in a domestic setting. 

Successive interventions in the intervening period have cost the taxpayer billions and transformed childcare into a branch of education. This has increased costs, created anomalies, driven out providers and failed to satisfy anyone. A vast array of other issues have been plastered onto it – the gender pay gap, child poverty, one-parent families and more recently our declining fertility rate – making reform difficult politically.

For parents, the cost of childcare has soared in the past three decades. The annual fee for a full-time place for a child under the age of two has risen by 171% since 2000, from £5,148 to £13,939 in 2021. By contrast, the rate of increase in household earnings was significantly lower, at 66% over the same period.  

While parents are paying through the nose, government spending has risen from close to nothing in the 1990s to nearly £6 billion per year today. This growth has been justified on the grounds of encouraging mothers into formal employment and improving the educational attainment of young children. In practice, however, it has displaced other paid childcare and informal care from friends or family and failed to significantly increase the participation of target groups such as mothers on benefits in the labour market. The evidence of longer-term benefit to children’s development is also lacking. 

The UK has among the strictest ratios in western Europe, with some countries, including Denmark and Sweden, having no requirements at all. A 2018 study for the Department for Education found that 78% of costs in childcare are for staff: the higher the ratio, the more staff required, raising costs for nurseries and depressing wages for workers. 

But we should also ask what childcare is seeking to achieve. Tory MPs have insisted reform is needed to boost female labour market participation. Labour wants to provide comprehensive support from the end of parental leave. It may be in the government’s best interest to have mothers return to full-time work after 12 months of maternity leave and place their baby in a highly-regulated childcare setting, but how many politicians have stopped to ask whether this is what women want or is in the best interests of the child?

No mother should be forced or guilt tripped into returning to work but for those who wish to, the government has a duty to enable this without sucking every penny out of her purse for the pleasure of working, paying tax and contributing to the economy.

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