The childcare system in the UK seems to be beset with problems. Barely a day goes by without a news story about the high costs of pre-school care, or its ridiculously long waiting lists. Similarly, nurseries all over the country are going out of business, or being bought up by private equity.
But as I and my colleagues at Civitas argue in a new report published this week, government policy on childcare suffers from another major problem, one which underpins all of the others. That problem is that nobody is clear what childcare policy is actually for.
For some years, the UK’s approach to childcare has been heavy subsidies of formal childcare (that is, childcare from a registered provider, rather than ‘informal’ care by nannies, babysitters, or other family members like grandparents). Beginning in 1998 with a small amount of free formal care for 4-year-olds, both the amount of care available and the pool of eligible children have steadily expanded ever since. Last year, the Conservatives promised that by September 2025, all children of working parents will be entitled to 30 hours of care per week from the age of nine months. The other major political parties have all promised more than that: Labour’s shadow education secretary Bridget Phillipson has said that her reforms to childcare would resemble ‘the birth of the NHS’.
Politicians and policymakers often talk as though this policy is a labour market intervention, designed to boost the employment rate of mothers; or an educational one, designed to support children’s development. More recently, we occasionally see childcare subsidies discussed as a tool to address the cost-of-living crisis, alleviating financial pressure on young families.
However, there is no explicit consensus on which of these is the primary goal of government policy on childcare, and rarely is it acknowledged that these distinct objectives might be at odds with each other.
This matters because the state is spending a huge amount of money and effort on subsidising and regulating childcare. The budget for ‘free hours’ and tax-free childcare (another discount for formal childcare) is currently around £4bn, and this is set to double with the expansion promised last year. If there is no explicit agreement on what the purpose of all this spending is, then how can we possibly say whether it is effective or not? And if, as Bridget Philipson suggested, we are going to create a ‘new NHS’, shouldn’t we begin by having absolute clarity on what it is meant to achieve?
In Civitas’s new report, we argue that fuzzy thinking on the objectives of childcare policy has resulted in intervention that is wildly ineffective and inefficient. Despite years of state-subsidised childcare, there has been remarkably little change in maternal employment rates, or in the proportion of children using childcare. If the purpose of childcare policy was to increase employment rates, narrow the gender pay gap, or improve children’s educational outcomes, there may be any number of ways we could do this much more effectively for the same money.
As well as this, surveys repeatedly show that most parents want to spend more, not less, time with their children; and evidence that childcare actually benefits children – especially the youngest children, to whom subsidised childcare is increasingly targeted – is weak. We may be able to increase the maternal employment rate – but is this worthwhile, if it’s not what mothers themselves want? And we may be able to increase the number of children in childcare – but what is the point of this if there isn’t a clear benefit to those children?
The key problem that childcare policy ought to solve, we argue, is that pre-school children need full-time adult supervision, and that many parents cannot afford to provide this, whether by stopping paid work in order to do it themselves, or by paying someone else to do it. Our current economic system requires almost everybody to have a regular income to survive day-to-day: there is no space in this model for the unpaid work of raising children, though it is vital to wider society. Essentially, we are faced with a free-rider problem: non-parents benefit from children being raised, but parents alone face the very high costs of raising them.
This is a market failure which the state should intervene to fix, but the current system is not set up to do this efficiently. In our report, we make several suggestions for how parents could be more effectively supported, including through cash benefits, tax reform, and changes to childcare regulation. Falling fertility around the world means that this could well become one of the issues that shapes the next century. To address it, we will need to think bigger – and with greater clarity – than we have done until now.
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