26 September 2018

Labour’s proposals will only deepen Britain’s childcare affordability crisis


The pronouncements that have come from Labour politicians at their annual conference this week have certainly been wide-ranging. There have been calls for the nationalisation of industries, the expropriation of shares, every teacher to be a socialist, and a general strike. One of the less eyebrow-raising policies announced during Jeremy Corbyn’s speech today was a promise of more free childcare.

Labour wants to extent current commitments on free hours of childcare for all three to four-year-olds, with 15 free hours for all two-year-olds, rising to 30 free hours by the end of the parliament. The proposals will also phase-in subsidised provision on top of free entitlements while pumping in an additional £4.8bn into early years provision. There are also plans to increase the graduate workforce three-fold and require childcare staff to achieve higher level qualifications. In addition, the proposals will require stricter rules about child-to-staff ratios.

The logic behind these proposals is that childcare needs to be cheaper and of a higher quality to reduce the financial burden placed on parents and allow them to return to work while also giving children from poorer backgrounds better life chances.

Corbyn is right that childcare needs reforming. However, his proposals will only make things worse.

Childcare is expensive in the UK when compared to other countries. Prices have increased at a much higher pace than inflation and wages since 2009. Households in the UK are spending a higher proportion of their net income on full-time child care than in other advanced economies, including Australia, Canada, and the United States.The average household in the UK which uses childcare spends 33.8 per cent of their income on it.

In Germany, the average household which uses childcare spends 9.7 per cent of their income on it. The situation is even better in Sweden, where the figure is just 4.4 per cent.

The high cost of childcare also has an impact on the employment prospect of parents. For example, a British Chambers of Commerce survey found that 9 per cent of business leaders have had an employee leave their job due to childcare costs.

The survey also found that 28 per cent of business leaders have had employees reduce their working hours as a result of the high cost of childcare. This not only impacts the ability of households to earn extra money and so improve their living standards, but it also has a negative impact on the economy.

The reason why childcare is so expensive in the UK is because government plays far too active a roll. Child-to-staff ratios in the UK are much higher than in many other countries such as Germany, Switzerland, and Norway. In Denmark, Spain, and Sweden there are no mandated ratios for childcare.

The British government also requires childcare staff to hold an NVQ Level 2. Supervisors require a higher level NVQ. Other advanced economies allow a far greater degree of latitude in this regard.

The academic research shows that regulations relating to qualification requirements and staff-to-child ratios have a have pushed up the price of childcare. For example, a study in the US found that increasing the staff-to-child ratio by one child can reduce fees by between 9 and 20 per cent. Requiring teachers to have a high school diploma results in an increase in childcare costs of between 22 and 46 per cent.

Labour’s plans requiring staff to have a degree and higher level qualifications will reduce the number of workers qualified to undertake this work. Stricter rules regarding ratios will mean that childcare providers will have to hire more staff. This means that costs will increase for providers which will be reflected in higher prices for childcare. This burden will be passed onto parents using childcare outside of the new provisions and also onto taxpayers who are already paying approximately £7 billion on childcare each year.

Not only will Corbyn’s proposals actually raise the cost of childcare, they would also see many childcare providers going out of business. Requiring providers to have certain qualifications and a minimum number of staff will be neither practical nor affordable for many, especially childminders.

It is far from clear that Corbyn’s proposals would lead to more parents returning to work. Nor would it increase outcomes for children from poorer backgrounds.

The evidence is mixed about the impact of free childcare provision and the labour participation of mothers. A review of the academic literature by the IEA found mixed results concerning mothers going into work or working longer hours.

Tackling inequality and improving the life chances of children from poorer backgrounds is a noble aim. However, again the research would appear to suggest that extending free childcare would not achieve this. A study found no positive long term impact on the attainment levels or development of children as a result of free childcare.

The proposals are also incredibly patronising and elitist. To suggest that somebody will be better at caring for young children if they have a degree is insulting to millions of parents who may not have a degree themselves and have brought up children with love and care. Similarly, many parents are more than happy to leave their children with their grandparents or the next door neighbour, the vast majority of whom will not hold a NVQ Level 3 in childcare.

The idea that the government knows better than parents or people who have been taking care of children for decades is hardly surprising coming from Marxist ideologues who want to increase the size of the state. It is a disastrous assumption on which to make policy.

Childcare is unaffordable in the UK, and is in desperate need of reform. However, Corbyn’s plans will simply exacerbate the problem. We need to get the Nanny State out of the nursery by scrapping child-to-staff ratios and removing educational barriers which would prevent suitable people working in the childcare sector.

Ben Ramanauskas is a Researcher at The Taxpayers' Alliance.