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SOCIAL FABRIC

First Steps: Fixing childcare

Why we need to fix Britain’s broken childcare system
Bel Guillaume
December 2, 2022
First Steps: Fixing childcare

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.

Siobhan Baillie MP

Britain’s childcare system is unfit for purpose, harming children’s development and placing a huge strain on families’ finances as the cost of living crisis bites.

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 conducted new polling of 1,037 parents with children under 5 and found that:
  • Half of parents (50%) say that childcare costs have risen in the last year, but just 9% of parents have been able to cut back on childcare. 
  • Nearly a third of families say that childcare is one of their most expensive costs (32%), behind only housing costs (74%), energy bills (75%) and food and drink (66%). 
  • Fewer than half of parents agreed that “the amount of support I receive each month makes the costs of childcare manageable” (47%). 
  • 30% of parents say that the costs of childcare have forced them or their partner to consider leaving work to care for their children. 
  • 65% of parents not in work agreed with the statement: “The main reason I do not work is because the demands of childcare are too great” versus 16% who disagreed.
  • The only reform with net negative support among parents is relaxing staff to child ratios: 52% oppose the idea that “childcare professionals should be able to look after more children at the same time, as they do in other countries” with only 27% supporting.

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. 

 

 

Problem

Recommendations

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.

  1. Create a new system of Childcare Credits for children aged 1-4, paid monthly in advance, to radically simplify the market and empower parents. Low income families would be supported with an Additional Childcare Credit.
  2. Parents should have the option to front-load Child Benefit payments when a child is younger, in exchange for lower payments when the child is older. This would be capped at maximum of a third of the whole entitlement over the first three years of a child’s life.
  3. Reform parental leave by abolishing separate maternity and paternity leave in favour of a single parental leave scheme. Parents would have a shared entitlement to 12 months leave from work, which they could draw down however they wanted.
  4. Expand Family Hubs to enable easier access and better outcomes for families, as well as smarter use of local authority budgets and resources. To ensure better data collection surrounding early childhood outcomes, Unique Pupil Numbers should be assigned at birth.
  5. Introduce a number of provider side reforms, including boosting childminding agencies by giving them £1,000 for each childminder they register that starts trading (as Ofsted currently receives), unlocking new premises and reforming business rates to boost staff pay within the sector.
  6. Incentivise graduates into the early years workforce by extending the Early Career Framework to early years educators, and boost training opportunities for existing practitioners through a centralised CPD system.

Problem

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.

Recommendations

  1. Create a new system of Childcare Credits for children aged 1-4, paid monthly in advance, to radically simplify the market and empower parents. Low income families would be supported with an Additional Childcare Credit.
  2. Parents should have the option to front-load Child Benefit payments when a child is younger, in exchange for lower payments when the child is older. This would be capped at maximum of a third of the whole entitlement over the first three years of a child’s life.
  3. Reform parental leave by abolishing separate maternity and paternity leave in favour of a single parental leave scheme. Parents would have a shared entitlement to 12 months leave from work, which they could draw down however they wanted.
  4. Expand Family Hubs to enable easier access and better outcomes for families, as well as smarter use of local authority budgets and resources. To ensure better data collection surrounding early childhood outcomes, Unique Pupil Numbers should be assigned at birth.
  5. Introduce a number of provider side reforms, including boosting childminding agencies by giving them £1,000 for each childminder they register that starts trading (as Ofsted currently receives), unlocking new premises and reforming business rates to boost staff pay within the sector.
  6. Incentivise graduates into the early years workforce by extending the Early Career Framework to early years educators, and boost training opportunities for existing practitioners through a centralised CPD system.

Our childcare system is out of step with other developed countries

Public subsidy is lower

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.

Parents spend more

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.

Teachers are less qualified

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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