The coalition's childcare figures don't add up

Without greater long-term investment, the relaxation of ratios is extremely unlikely to lead to the savings promised by ministers.

When the coalition announced its intended relaxation of childcare ratios, one of the central planks of their argument was that it would lead to lower prices for parents. With childcare cost inflation currently running at over twice the rate of inflation, reducing prices is an understandable goal of policy. But many academics and those in the childcare sector were understandably dubious over this claim. Yes, relaxing the number of children each childcare worker can care for may reduce the ‘per-child’ cost to the provider, but it is not at all clear that the gain from this increase in productivity will necessarily flow into lower prices for parents. Perhaps more importantly, it is not clear whether quality of care would improve either. This is concerning given that quality increases were a stated aim of the policy

Last Friday, the Department for Education responded to a freedom of information request, which asked them to show how they came to this conclusion. The DfE’s modelling claims that the increase in ratios could lead to a remarkably large reduction in prices from 12 and up to 28 per cent. Let’s explore some of the assumptions behind this figure:

  • It assumes that childcare providers will actually make use of the larger ratios available to them: It is far from clear that childcare providers even want to increase ratios. Original survey evidence carried out by IPPR found that almost three quarters (74 per cent) of childminders won’t increase the number of children they care for following an increase in ratios. Almost four fifths of this group thinks the increase in ratios will reduce the quality of their services. A similar survey by the National Children’s Bureau, covering the whole of the sector, found that 95 per cent of respondents were concerned about increasing ratios.  If so many providers are not willing to take up the coalition’s offer, the DfE’s modelling is largely redundant.
  • The DfE’s upper estimate of 28 per cent assumes no increase in the pay of most existing workers: In order to make use of the increased ratios for children aged over three, the example nursery used in the DfE’s modelling needs to replace two of its non-graduate staff with two early years graduates. Having paid for their increased salary, the entirety of the extra revenue is given to parents in lower prices. What this means is that the wages of everyone else working in the setting don’t budge, with those looking after children aged two and under asked to care for more children but with no extra pay.
  • The DfE assumes high ratios for younger children but with no increase in the qualifications of their carers: Forthcoming IPPR research shows that while relaxing ratios for over threes may be a sensible idea, higher ratios are problematic for younger children, who require much more intensive care. While one way to mitigate the impact of higher ratios on young children would be to increase the skills of their carers, the modelling assumes that the extra graduates employed focus all of their caring time on over-threes, in order to unlock the higher ratio for that group. So while the higher ratios may lead to lower prices, parents of under threes should understandably be concerned about the resulting impact on quality.
  • The DfE fails to point out that some of the savings may be retained by nurseries to boost profits rather than passed on to parents: Neither the 28 per cent nor the 12 per cent figure imply any channelling of extra revenue into the profits of providers. This is very unlikely to happen because the sector is so unprofitable. Last year over a quarter of British nurseries made a loss. The idea that nurseries will not use new flexibilities to boost their often meagre profits looks a heroic assumption, and has worrying implications for the future stability of the childcare market.

Industry website Nursery World has pointed out several other flaws in the methodology, including the assumptions that there are no empty places in settings, when in fact 20 per cent of places are vacant, and that workers need time to plan and manage delivery.

The coalition clearly thinks that relaxing ratios, combined with tweaking the package of benefits offered to parents to buy childcare, is going to solve the childcare affordability problem affecting families across the countries. But neither are a quick fix. Without more long-term investment in the skills and capacity of the sector to increase places and quality, and reduce prices, the 28 per cent figure announced last week is extremely unlikely to be achieved.

Spencer Thompson is Research Fellow at IPPR

David Cameron during a visit to a London Early Years Foundation nursery on January 11, 2010 in London. Photograph: Getty Images.

Spencer Thompson is economic analyst at IPPR

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This week, a top tip to save on washing powder (just don’t stand too near the window)

I write this, at 3.04pm on a sticky Thursday afternoon, in the state in which Adam, before his shame, strolled in the Garden of Eden.

Well, in the end I didn’t have to go to Ikea (see last week’s column). I got out of it on the grounds that I was obviously on the verge of a tantrum, always distressing to witness in a man in his early-to-mid-fifties, and because I am going to Switzerland.

“Why Switzerland?” I hear you ask. For the usual reason: because someone is paying for me. I don’t think I’m going to be earning any money there, but at least I’ll be getting a flight to Zurich and a scenic train ride to Bellinzona, which I learn is virtually in Italy, and has three castles that, according to one website, are considered to be “amongst the finest examples of medieval fortification in Switzerland”.

I’m not sure what I’m meant to be doing there. It’s all about a literary festival generally devoted to literature in translation, and specifically this year to London-based writers. The organiser, who rejoices in the first name of Nausikaa, says that all I have to do is “attend a short meeting . . . and be part of the festival”. Does this mean I can go off on a stroll around an Alp and when someone asks me what I’m doing, I can say “Oh, I’m part of the festival”? Or do I have to stay within the fortifications, wearing a lanyard or something?

It’s all rather worrying, if I think about it too hard, but then I can plausibly claim to be from London and, moreover, it’ll give me a couple of days in which to shake off my creditors, who are making the city a bit hot for me at the moment.

And gosh, as I write, the city is hot. When I worked at British Telecom in the late Eighties, there was a rudimentary interoffice communication system on which people could relay one-line messages from their own computer terminal to another’s, or everyone else’s at once. (This was cutting-edge tech at the time.) The snag with this – or the opportunity, if you will – was that if you were not at your desk and someone mischievous, such as Gideon from Accounts (he didn’t work in Accounts; I’m protecting his true identity), walked past he would pause briefly to type in the message “I’m naked” on your machine and fire it off to everyone in the building.

For some reason, the news that either Geoff, the senior team leader, or Helen, the unloved HR manager, was working in the nude – even if we knew, deep down, that they weren’t, and that this was another one of Gideon’s jeux d’esprit – never failed to break the monotony.

It always amused us, though we were once treated to a terrifying mise en abîme moment when a message, again pertaining to personal nudity, came from Gideon’s very own terminal, and, for one awful moment, for it was a very warm day, about 200 white-collar employees of BT’s Ebury Bridge Road direct marketing division suddenly entertained the appalling possibility, and the vision it summoned, that Gideon had indeed removed every stitch of his clothing, and fired off his status quo update while genuinely in the nip. He was, after all, entirely capable of it. (We still meet up from time to time, we BT stalwarts, and Gideon is largely unchanged, except that he’s now a history lecturer.)

I digress in this fashion in order to build up to the declaration – whose veracity you can judge for yourselves – that as I write this, at 3.04pm on a sticky Thursday afternoon, I, too, am in the state in which Adam, before his shame, strolled in the Garden of Eden.

There are practical reasons for this. For one thing, it is punishingly hot, and I am beginning, even after a morning shower, to smell like a tin of oxtail soup (to borrow an unforgettable phrase first coined by Julie Burchill). I am also anxious not to transfer any of this odour to any of my clothes, for I will be needing them in Switzerland, and I am running low on washing powder, as well as money to buy more washing powder.

For another thing, I am fairly sure that I am alone in the Hovel. I am not certain. To be certain, I would have to call out my housemate’s name, and that would only be the beginning of our problems. “Yes, I’m here,” she would reply from her room. “Why?” “Um . . .” You see?

So here I lie on my bed, laptop in lap, every window as wide open as can be, and looking for all the world like a hog roast with glasses.

If I step too near the window I could get arrested. At least they don’t mind that kind of thing in Switzerland: they strip off at the drop of a hat. Oh no, wait, that’s Germany.

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 22 September 2016 issue of the New Statesman, The New Times