Deregulate childcare to make it affordable

Scrap offers of universal free care – we need to make it cheaper and easier for parents to work

Before I had children, I had no idea how complicated childcare could be. I blithely assumed that continuing to work would be relatively straightforward. Eight years later, having deployed almost every childcare option possible, spent countless hours painstakingly working out costs, interviewing people and wondering whether it’s worth it just to be able to go to work myself, I’m no longer under any illusions: it’s a complex nightmare that’s enough to put you off having children at all.

And I’m one of the lucky ones. I’ve lost count of the number of female friends financially down every month after paying for childcare, or whose career has been penalised by having children, or who have simply stopped working because it doesn’t make sense, emotionally or financially.

I’m talking about this as if it’s a women’s issue, which it shouldn’t be, but basically still is. We’re the ones who give birth, and we’re the ones who tend to earn less than men – the median gender pay gap is 8.6 per cent; it jumps to 17.9 per cent once you factor in part-time workers.

The Government claims to care about this stuff – last year it made it compulsory for companies of over 250 people to publish their gender pay gap, and in 2017, it launched a taxpayer-funded scheme that allowed families where both parents work and each earn up to £100,000 to claim 30 hours of free childcare a week for three to four-year-olds in an attempt to get more women back to work.

But the scheme is in trouble. The Government funding doesn’t cover the full costs for most nurseries, which means they either have to charge top-up fees, putting them out of reach of some parents, or they close altogether, as they can’t pay their staff a proper wage on Government funding alone. The solution, a group of MPS has decided, is for middle-class parents to lose their free hours, because the scheme is “entrenching inequality”.

Now, there are manifestly problems with the scheme as it stands. There’s the fact that the 30 hours are available for only 38 weeks of the year, and most working parents can’t take 14 weeks of annual leave. The fact that provision of care for under-threes has suffered as a result. The fact that it’s not enough to pay nursery workers a decent salary, even though childcare is already one of the least well-paid professions – average pay is £17,000 a year. Not to mention that the funding only kicks in once your child is three – and most parents return to work when their child is one, or lose their jobs.

But the way to tackle the problem is not by penalising one group of working mothers (and yes, I know £100,000 is a lot of money, but many parents claiming the free hours won’t be earning anything like as much). Nearly £6billion of taxpayers’ money goes on early years spending, and yet we still pay some of the highest childcare costs in Europe. How can we make it easier and cheaper for all parents to work?

There are two ways to address the situation. The first is to emulate the example of the Nordic countries – Iceland, Finland, Norway and Sweden – where affordable childcare is part of the social benefit system, three in four women work and gender pay gaps are negligible. But that requires higher taxation, which not everybody in our traditionally liberal, low-tax economy might like.

The second is to rip up the existing system and start again. Scrap universal offers of “free care” – which yes, do disproportionately subsidise the well-off – and deregulate the childcare sector to bring costs down. Allow working parents to offset a reasonable percentage of childcare costs against tax – but allow them to spend that money on whatever childcare works for them, whether it’s a nanny, nursery or granny care. Stop requiring higher staff/child ratios than in the rest of Europe, or carers to have certain qualification levels. We parents can spot the difference between a well-run nursery where children are happy, and one where staff don’t care and children are miserable. Deregulation would give more parents the opportunity to access the former, rather than having to plump for the latter because of cost.

We purport to allow adults – especially women – choice in how they live their lives. Some women may not want to return to work after having children. Fine. Others do want to. Fine. Give us freedom to choose what works for us, and it’ll be better for everyone.