17 May 2022

Flexible, less bureaucratic childcare is vital to helping families with the cost of living

By Saqib Bhatti MP

Becoming a new parent has been one of the most rewarding experiences of my life. Every day with my 11-month-old is a voyage of discovery.

When I meet other parents there are two topics that always elicit a knowing look. The first is when I say they ‘grow up way too quickly’. Every parent knows the bittersweet feeling that this evokes. The second is when I reflect on the punitive costs of childcare.

I have yet to meet another parent who does not think we need to do more to reduce the cost of childcare. The facts speak for themselves. British parents face higher childcare costs, as a share of household income, than any other country in the OECD. Parents now fork out an average of £13,718 a year per child in nursery fees. This makes childcare the most expensive bill in many households before even the mortgage or rent. With inflation at the highest levels for decades and household incomes being squeezed, it is critical that we address the cost of childcare.

There is a deeper loss caused by the punitive costs of childcare and it is why I, as a Conservative who believes in championing families, think we have a moral imperative to ease the strain on hardworking parents. For many families the cost of childcare can be out of reach, and the result is often that one parent can’t afford to work while their children are still young. More often than not that parent is the mother. Women pay for their time out of work for the rest of their lives and it is the single biggest cause of gender inequality in this country. Twenty years after the birth of their first child, a woman’s hourly wage will be a third lower on average than the hourly wage of a man with a similar level of education and qualifications.

Reducing the cost of childcare and giving mothers the choice to re-enter the workforce when they see fit also unleashes a productivity dividend. According to the OECD if you have the same levels of men and women in work, it will increase UK GDP by 10% by 2030.

Meanwhile a British Chambers of Commerce survey on the cost of childcare found that 28% of firms saw employers reduce their working hours, 12% reported lower productivity and 9% saw staff leave their jobs. When it comes to childcare, unlocking choice is good for the economy, it is good for families, and it is good for equalising access to opportunities for women in the workforce. In other words, addressing childcare costs is central to levelling up.

The good news is that it doesn’t have to be this way. A report this week by Centre for Policy Studies shows that the childcare sector has some of the tightest regulations in the world and cutting these regulations could lower costs for millions of hardworking families. In England, we have some of the strictest staff-to-child ratios in the world. Whilst in England a single member of nursery staff may look after no more than four two-year-olds, in Europe ratios are much more liberal and in many cases the quality of childcare is as good as what we offer here if not better. In the US, where ratios vary by state researchers consistently find that loosening ratios by just one child across age groups is associated with prices that are 9-20% lower.

The Government is now consulting on increasing the ratio from 1:4 to 1:5 for two-year-olds. There has been much opposition to this kind of change in the past, but while we make the economic arguments and appeal to the mind we must also appeal to hearts and reassure parents that making this change would be safe.

Another issue is that childcare providers are also bound by the Early Years Foundation Stage (EYFS) and this often proves burdensome.

The EYFS consists of a range of welfare and safeguarding requirements and a set of Learning and Development goals, and must be followed by all those providing care for children younger than five. Ofsted monitors childcare providers’ adherence, and requires detailed and comprehensive written records and other evidence (including photographs) of a child’s progress, with regular detailed feedback (written and oral) to parents.

Even childminders caring for young children in their own homes are subject to all of the provisions of the EYFS. Enforcing the EYFS curriculum across the board has put costs up for providers while driving large numbers of childminders out of business, and reduced choice for parents.

Breaking down these bureaucratic barriers is not about forcing childcare providers to do anything against their will, but is about giving them flexibility. If providers really believe laxer ratios will undermine children’s safety and outcomes, they are free to keep their current ones. Similarly, if parents would rather send their child to a provider that adheres to the EYFS curriculum, they can choose one that does.

Pursuing this agenda of removing barriers will increase flexibility in the market and give parents greater choice while reducing costs. It also has the benefits of boosting productivity and will go a long way in helping to put women on a more equal footing in the labour market. By bringing down the cost of childcare, it is the Conservatives that will be the true party of hardworking families.

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Saqib Bhatti MBE is MP for Meriden.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.