Britain’s expensive childcare has united Left and Right
Industry leaders warn the system is teetering on the brink amid a growing gap in funding, finds Eir Nolsøe
Charity worker Nina Nutting, 40, has completed a master’s in law while working from home for four days a week in London. She wants a full-time job to create a better life for herself and her five-year-old son.
But “every time I try to get a new job, there’s always a barrier of childcare”, she says. Her son’s weekly after-school club closes at 4.30pm – well before normal work hours end.
The council’s other options are so oversubscribed that on two other days of the week she would have no care at all.
“Finding childcare for me to go back to work full-time has just been really difficult,” she says. She has worked out that she would need a pay increase of at least £10,000 a year to make it financially viable to return to full employment.
Nutting’s dilemma is one many parents will recognise. Only 40pc of women with a child under the age of 15 are in full-time work in the UK – far below the OECD average of 53pc and nearly half of the rate in countries like Sweden and Portugal. Meanwhile, three quarters of UK businesses are struggling to fill vacancies amid labour shortages according to the CBI.
Childcare costs eat up more than a fifth of an average-earning couple’s income, the third highest share among OECD countries.
Despite this, costs keep rising. The price of a part-time nursery place for a child under two increased by 59pc between 2010 and 2021, which is around twice as fast as inflation.
Industry leaders warn the system is “teetering on the brink”. Politicians on both the Right and Left have been calling for urgent solutions, but with a gaping hole in the public finances, parents like Nutting worry that help is still far off.
“Any government that is serious about growth will be looking to childcare for two reasons,” says Adam Hawksbee, the deputy director of centre-Right think tank Onward.
“One, in the short term, to get more people into the labour market; but the other one is that our fertility rate is massively dropping, and we are on the wrong side of a demographic time bomb.”
The fertility rate was 1.61 children per woman last year in England and Wales. While it’s slightly higher than during the pandemic, it is otherwise at an all-time low.
A central issue for parents is that the costs are unevenly distributed depending on the child’s age. There’s much less support for those below the age of three, according to Christine Farquharson, a senior research economist at the Institute for Fiscal Studies. This means that parents often face the highest costs immediately when they have to make a decision about whether to return to work.
“We know particularly for women this is a really big contributor to the gender wage gap. What we see is that mothers take a step back from the labour market, and then it takes them quite a while to get back,” she says.
The impacts range from skills becoming outdated to missing out on pay rises, promotions and pension payments. This is especially true for those only returning part-time, Farquharson says.
“When you start to add that all up, it’s not so much that you’re missing out on the earnings from choosing not to work for one or two years. It’s really those long-term implications for what that does to your career path.”
Liz Truss, the then prime minister, had included childcare reforms in her short-lived “growth plan”, which promised to improve access to affordable, flexible childcare. She had reportedly been considering completely scrapping rules around the minimum number of nursery staff required to look after children.
The idea of relaxing or scrapping the ratios of staff to children and general deregulation is favoured by some economists.
“I think relaxing the ratios will help and we can trust childcare providers to do that in the right way,” says Mark Lehain, head of education at the Centre for Policy Studies, a Right-leaning think tank. “But also, we could look at other things around freeing up where childcare providers can operate, and how they can operate.”
However, Hawksbee points out that UK staff tend to have lower levels of education and training than in some neighbouring countries. Relaxing ratios would first require investment in that area, he says.
The idea has also been criticised as unworkable by industry leaders in the childcare sector. Liz Bayram, the chief executive of the Professional Association for Childcare and Early Years, dismisses it as an “urban myth”. Many operate below the ratio to provide quality care and they also need cover when a staff member is sick. The sector is so starved of cash that wages are too low to attract new workers, she says.
“We’ve got a sector that survived the pandemic, barely, and has not recovered,” she says.
“If we’re not careful and make some intervention that has a long-term plan in mind, what we’re going to end up with is limited childcare. So when families do need it, there’s not going to be enough there for them to benefit from.”
It remains to be seen whether new prime minister Rishi Sunak will present his own reforms or if childcare drops off the agenda. He was widely criticised by the sector for failing to include it in his last Spring Statement as chancellor. After the fallout of the mini-Budget, Sunak needs to find an estimated £50bn through tax rises and spending cuts to plug a hole in public finances.
Pressure is growing on politicians to make a change. Last month, more than 15,000 protesters took part in marches organised by charity Pregnant then Screwed, which is calling for reforms to the childcare sector and parental leave.
‘Women’s economic empowerment hinges on a system that works for us,
‘Any government that is serious about growth will be looking to reform childcare’
and the Government needs to start taking this, us, seriously,” says Joeli Brearley, chief executive of the charity. “We are calling for an end to the shambolic support system that is failing mothers and families everywhere.”
However, childcare industry leaders worry that, rather than an injection of funding, they will see cuts or realterms freezes.
For parents like Nutting, this means the aspiration of returning fully to work will remain out of reach.
“It’s frustrating because I do want to work full-time, “she says. “I don’t like the fact that I’m working and receiving Universal Credit. I get upset that I can’t give my son the lifestyle that I want him to have. It’s very disheartening.”