The coalition risks following the wrong path on childcare reform

Global experience shows that increasing subsidies to parents, rather than investing in services directly, is a costly and ineffective approach.

As part of next week’s Budget, the Chancellor is expected to announce reforms to the funding of childcare. While action on childcare is welcome, it is likely the changes will see a greater proportion of childcare funding flowing via parents to purchase childcare, rather than invested in services free at the point of use. The experience of other countries with a similar market-led system is that rather than leading to cheaper care, pumping more money into the market via parents leads to greater cost inflation, with little change in affordability. If the government really wants to go big on childcare, it should invest more money in services, rather than benefits.

What is going to be announced? Since the 're-launch' of the coalition in January, there have been numerous hints in the media. Despite widely-reported disagreement between the coalition partners, it appears the government has settled on offering greater funding to better-off parents via some kind of tax relief, combined with additional money tied to Universal Credit for poorer families. Beyond the previously-announced extension of the free Early Years Entitlement to the 40 per cent of poorest two-year olds, there is little sign that the coalition is looking to expand the free offer, preferring instead to give money to parents.

While it is good that the government is looking at greater childcare funding, we have to ask whether this is the best use of extremely scarce resources. The coalition hopes that putting more money in the hands of parents will lead to greater purchasing power in the market for childcare, with increased competition and innovation among providers acting to keep prices low and stable. But will this actually be the case?

In order to answer that question, we should look to the country that has been most committed to this style of funding. Australia enacted wide-reaching reforms to childcare over the last two decades, combining a mixture of de-regulation and increases in childcare benefits, whilst at the same time effectively shutting off direct funding to childcare providers.

What happened to prices? The Australian Bureau of Statistics collects robust inflation data on the cost of childcare. Looking at how prices evolved before and after the reforms provides a stark picture of the dangers attached to the changes being considered here in the UK.

In the ten years before the 1997 reforms, the price of childcare rose on average by 5.2 per cent a year, around a fifth higher than the general rate of inflation. But in the decade after 1997 relative cost inflation rocketed, with childcare prices rising by 7.2 per cent annually, more than two and a half times wider inflation. In 2008, rather than reverse course, the Australian government doubled down on their inflationary approach, increasing the value of the tax rebate offered to families. If anything it appears this worsened childcare costs – In the year to March 2012 prices rose by almost 10 per cent.

What is it about childcare that leads to this outcome? Why doesn’t parental purchasing power manage to keep costs low? Simply put, the market for childcare does not function like most competitive markets. It is inherently localised, risky for those looking to set up a business and vulnerable to severe cost pressures from staff outlays and rent inflation. Like many other public goods, it is better to let the state pool these risks and offer long-term and sustainable funding to keep costs low, rather than leave it to the market.

Will this experience be repeated here in the UK? All the signs are that the UK, which already has internationally high childcare prices, is set for further inflationary pressure. The sector in general is unprofitable, with a quarter of childminders operating at a loss last year, meaning prices may need to rise just to keep many businesses afloat. And surveys of the UK market suggest that the qualifications profile of staff in the sector has risen in recent years, but with little change in real wages. Having a higher-skilled workforce in the sector is welcome, but is likely to exert cost pressures in the near-term. All this will be compounded by the changes that will be made next week.

Throwing more money into a system that is struggling to stay afloat, as the coalition is planning to do, may look good on paper, but without controls on prices there is a real risk that the instant benefit families feel after next weeks changes will soon be eroded by price rises. Providers will see their existing set of users have a greater ability to pay, and, because of the difficulty of turning a profit in the sector, will understandably look to raise prices. Far from being a gold rush for the sector, these changes are more likely to re-enforce the status quo. At a time when there is little money around, this risks being a highly wasteful use of public resources.

What the childcare sector and parents really needs is higher and more sustainable funding for providers, with a greater number of hours offered free or at low cost to parents. It would be wrong to claim this comes cheap. Indeed, countries that have followed such a route, like Denmark and Sweden, tend to spend a larger proportion of GDP on childcare and early years provision. But by controlling the cost to parents directly, and offering a longer-term and more predictable source of funding to providers, there are real efficiency gains to be made under such a system.

All three main political parties realise the importance of childcare, and accept there is a role for the public sector in making it affordable. This is welcome. But how we go about funding childcare, either via parents or through providers and price controls, needs to be rigorously debated. We currently have a mixed system in the UK, with some free places through the Early Years Entitlement and some subsidies via the benefits system. It appears the coalition favours the latter. It is important that we realise the dangers of such an approach, and look towards a much more sustainable future for UK childcare.

David Cameron is pictured during a visit to a London Early Years Foundation nursery in London. Photograph: Getty Images.

Spencer Thompson is economic analyst at IPPR

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Women-only train carriages are just a way of ensuring more spaces are male by default

We don’t need the “personal choice” to sit in a non-segregated carriage to become the new short skirt.

“A decent girl,” says bus driver Mukesh Singh, “won't roam around at 9 o'clock at night. A girl is far more responsible for rape than a boy.”

Singh is one of four men sentenced to death for the rape and fatal assault of Jyoti Singh Pandey on a Delhi bus in 2013. His defence was that she shouldn’t have been on the bus in the first place. Presumably he’d have said the same if she’d been on a train. In the eyes of a rapist, all space is male-owned by default.

I find myself thinking of this in light of shadow fire minister Chris Williamson’s suggestion that woman-only train carriages be introduced in order to combat sexual violence on public transport. It’s an idea originally proposed by Labour leader Jeremy Corbyn in 2015, only to be shelved following criticism from female MPs.

Now Williamson feels that a rise in sex attacks on public transport has made it worth considering again. Speaking to PoliticsHome, he argues that “complemented with having more guards on trains, it would be a way of combating these attacks”. He does not bother to mention who the perpetrators might be. Bears, vampires, monsters? Doesn’t really matter. As long as you keep the bait safely stored away in a sealed compartment, no one’s going to sniff it out and get tempted. Problem solved, right?

And that’s not the only benefit of a woman-only carriage. What better way to free up space for the people who matter than to designate one solitary carriage for the less important half of the human race?

Sure, women can still go in the free-for-all, male-violence-is-inevitable, frat-house carriages if they want to. But come on, ladies - wouldn’t that be asking for it? If something were to happen to you, wouldn’t people want to know why you hadn’t opted for the safer space?

It’s interesting, at a time when gender neutrality is supposed to be all the rage, that we’re seeing one form of sex segregated space promoted while another is withdrawn. The difference might, in some cases, seem subtle, but earlier sex segregation has been about enabling women to take up more space in the world – when they otherwise might have stayed at home – whereas today’s version seem more about reducing the amount of space women already occupy.

When feminists seek to defend female-only toilets, swimming sessions and changing rooms as a means of facilitating women’s freedom of movement, we’re told we’re being, at best, silly, at worst, bigoted. By contrast, when men propose female-only carriages as a means of accommodating male violence and sexual entitlement, women are supposed to be grateful (just look at the smack-downs Labour’s Stella Creasy received for her failure to be sufficiently overjoyed).

As long as over 80 per cent of violent crime is committed by men, there can be no such thing as a gender-neutral space. Any mixed space is a male-dominated space, which is something women have to deal with every day of their lives. Our freedoms are already limited. We spend an inordinate amount of time worrying about personal safety. Each time it is proposed that women don’t go there or don’t do that, just to be on the safe side, our world gets a little bit smaller. What’s more, removing the facilities we already use in order to go there or do that tends to have the exact same effect.

Regarding female-only carriages, Williamson claims “it would be a matter of personal choice whether someone wanted to make use of [them].” But what does that mean? Does any woman make the “personal choice” to put herself at risk of assault? All women want is the right to move freely without that constant low-level monologue – no, those men look fine, don’t be so paranoid, you can always do the key thing, if you’ve thought it’s going to happen that means it won’t …. We don’t need the “personal choice” to sit in a non-segregated carriage to become the new short skirt.

In 1975’s Against Our Will, Susan Brownmiller pointed out that the fact that a minority of men rape “provides a sufficient threat to keep all women in a constant state of intimidation”. Whether they want to or not, all men benefit from the actions of those Brownmiller calls “front-line masculine shock troops”. The violence of some men should not be used as an opportunity for all men to mark out yet more space as essentially theirs, but this is what happens whenever men “benevolently” tell us this bus, this train carriage, this item of clothing just isn’t safe enough for us.

“A decent girl,” says the future rapist, “wouldn’t have been in a mixed-sex carriage late at night.” It’s time to end this constant curtailment of women’s freedoms. A decent man would start by naming the problem – male violence – and dealing with that. 

Glosswitch is a feminist mother of three who works in publishing.