29 January 2024

Weekly briefing: A multiverse of madness


Tom Hollander revealed this week that he once accidentally received a payslip for a seven figure box office bonus intended for Spider-Man star Tom Holland. It raises the question, if a Hollywood super-agent can make such a huge administrative error, what hope is there for the UK government rolling out the biggest expansion of childcare in history?

Not much, it turns out. Funded childcare for two-year-olds is due to be available from April, but the scheme has been beset with problems. Some local authorities have not told providers how much money they will be allocated, and as a result nurseries are not able to guarantee places. At the same time, a technical glitch at HMRC left up to 25,000 families potentially unable to get the right tax code to benefit from the subsidy.

To be fair to the government, it very quickly came up with a temporary fix to the problem with tax codes, and has reassured parents that no child will miss out in the spring. But we shouldn’t underestimate the anxiety that uncertainty about childcare can cause for a family. I’ve heard from one father who still doesn’t know if he will be able to access the 15 hours of ‘free’ childcare he was relying on to offset the increases in his mortgage payments and energy bills.

And however deftly the first stage of the roll-out is handled, mistakes and delays are inevitable with such a big, bureaucratic public project. As a reminder, by 2027-28, the government will be spending £8bn a year to give working parents of children from nine months old 30 hours of taxpayer funded childcare. This vast expansion of the state is the centrepiece of Rishi Sunak’s offer on the cost-of-living – and it’s a terrible policy.

The existing scheme, of 30 hours of free childcare for children over three, has contributed to Britain having the highest childcare costs in the OECD. This is in part because the money nurseries get from the Treasury doesn’t cover their costs, so they cross-subsidise by hiking fees for other children or charging more for extras. Thousands of nurseries simply can’t make the sums add up – 4,000 closed in 2021/22 and nine in ten councils say they fear further closures, which will diminish supply and push up costs even more. The subsidy is both a handout to the rich and a perverse incentive for parents to keep their earnings below the £100,000 cliffedge at which they lose their entitlement. There’s plenty more to dislike about the policy, which I have written about more extensively here.

Massively extending a scheme that has so demonstrably failed is surely the definition of madness. Not only that, but by turning so many more parents into clients of the state, the government is erecting a petard on which to hoist itself. They will form a powerful lobby group arguing for ever more public money and ever more regulation in the name of child safety. Meanwhile, as with schools, providers will blame any decline in standards on a lack of funding.

One thing to be said for the plan is that Labour’s, which essentially amounts to school for one-year-olds, is far worse. There could hardly be a clearer illustration of Keith Joseph’s contention that the ‘middle ground’ is a leftward ratchet. Unless politicians boldly make the case for supply side reform, society drifts towards socialism. In the case of childcare that means scrapping curriculums and easing regulations on adult to child ratios, or ending up with something close to state-sponsored sovkhos for our kids.

Spider-Man said, ‘with great power comes great responsibility’. Raising the next generation is the greatest responsibility of all. The government should rethink its childcare policy, or unlike Tom Holland, we’ll all be poorer.

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Alys Denby is Editor of CapX.