SOCIAL FABRIC
World class childcare is not only about giving children the best possible start to life. It is vital to support parents and carers during what can often be a stressful and yet wonderfully rewarding time of life. It is an essential part of helping these parents back to work and fulfil their full potential. In short, it impacts all of us. Onward has listened to the many helpful suggestions we received, examined all of the data closely and proposed some simple and clear suggestions for change. I am sure you will find this report compelling.
Childcare is too expensive, inflexible and complex. This is contributing to our national challenges with economic inactivity, as parents can’t afford to go back into work. It is also placing strain on families during the cost of living crisis, with 92% of parents saying that childcare costs impact their standard of living.
We argue that the childcare system would benefit from greater investment, but recognise the fiscal situation means further funding is unlikely. Onward have developed a five point plan for fixing childcare within existing spending plans which reduces complexity, improves flexibility, strengthens the early years workforce, and creates a more effective market of providers.
Complex and Costly
The Government operates at least eight schemes across three different Government departments to subsidise the cost of childcare, including the 15 and 30 “free hours” entitlements, Tax-Free Childcare, support through Universal Credit, and VAT subsidies. This is confusing for parents, complex and costly to administer.
Inflexible
Parents have little choice about when and how their children are looked after, and there is a lack of local support.
Dysfunctional providers
Providers are struggling to stay open; staff turnover is high and childminder numbers have plummeted.
Complex and Costly
The Government operates at least eight schemes across three different Government departments to subsidise the cost of childcare, including the 15 and 30 “free hours” entitlements, Tax-Free Childcare, support through Universal Credit, and VAT subsidies. This is confusing for parents, complex and costly to administer.
Inflexible
Parents have little choice about when and how their children are looked after, and there is a lack of local support.
Dysfunctional providers
Providers are struggling to stay open; staff turnover is high and childminder numbers have plummeted.
The most obvious driver of high costs for parents is a low level of public subsidy. As a share of GDP, the UK spends considerably less on early years support than international comparators: 0.56% of GDP compared to 0.7% across the OECD. The UK also has an imbalance in investment, prioritising 3-5 year olds over 0-2 year olds. Sweden spends two times more on 0-2 year olds than 3-5 year olds, and France and the Netherlands spend similar amounts, but the UK spends six times more on 3-5 year olds than 0-2 year olds.
In the last five years, costs have risen by an average of 21% across the UK. This has left us dramatically out of step with other countries: 26% of parents’ joint income in the UK goes toward childcare costs, roughly three times higher than the OECD average of 9%.
Today, the average price for a part-time nursery place of 25 hours a week for a child under two is £140 per week. To put this in context, an average household spends just under £70 per week on food and non-alcoholic drinks. So for many, part time childcare costs are double what they pay for their weekly shop.
A lot of attention has been given to staffing ratios, but England’s stricter requirements are necessitated by a less qualified workforce. In England you can start working in a childcare setting with no specific qualifications, but must have a GCSE-equivalent qualification to be a childminder. In France, a teacher looking to enter the early years profession requires a Masters level qualification. And the UK early years workforce is struggling more broadly. Nurseries have a staff turnover rate of 24%, compared to a national average of 15-18% a year, costing the sector an estimated £879 million in 2019. Over the last 10 years, the number of childminders has halved.
To read more of our Social Fabric work, please click here.
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