Yesterday’s Queen’s speech was not shy of commitments. Among them was doubling the free hours of childcare offered to parents of three and four year olds from 15 hours to 30 hours a week, from 2017. I doubt there will be much political argument over this particular announcement. Cross-party consensus is evidence of a shift in the policy debate. The Conservatives went further on childcare than Labour at the election, but now Yvette Cooper ha sannounced she would extend the free hours to two year olds if she wins the leadership contest. So we can truly say that childcare is no longer a yes or no policy debate – the question now is not so much whether to improve the offer for families, but how to do so.
Three things make this a big challenge. Firstly, it is an expansion of a system that is already struggling to meet demand. Most areas are currently under capacity for 15 hours, let alone 30, and it will be a considerable challenge for the childcaresector to increase its capacity. The sector will need sufficient funding for the hours it provides, and some providers would need up-front investment to expand their provision. The former is yet to be decided and latter is not on the table.
Secondly, it is currently underfunded and cross-subsidised by top-up fees paid by parents. Part of the under-supply may be because the rates paid to providers are simply too low. The Government have committed to consulting with the sector on the appropriate rates. These need to increase to meet provider costs if this expansion is to succeed without a drop in quality and drastic market distortions.
This leads us on to the third challenge: funding this expansion without hurting other parts of the education system. At £350m, it is likely that the cost of this proposal has been significantly underestimated, even without taking into account the need to pay higher rates to providers. If this sum isn’t enough, funds will have to be found elsewhere. The last spending review ring-fenced schools but no other areas within education. This leads to difficult questions about where the money will come from in a zero sum game.
Back in 2013, Liz Truss, then childcare minister, proposed an increase in ratios of children to staff – allowing more children to be looked after by each nursery worker or child minder – but dropped the proposals after a resounding disapproval from the sector. It is possible that the new Government could try a similar move to keep costs down for this extended offer, but this would mean sacrificing the quality of childcare in order to provide the new offer. This in turn would reduce the chances of parents taking it up, increase the gap between state and private provision, and have particularly damaging impacts on the poorest children.
This funding question is urgent in light of the forthcoming expansion, but even more so given that even if delivered this commitment will leave significant childcare needs unmet. Yvette Cooper is right – we should also go further by providing childcare support for two year olds. Rather than seeing childcare as a subsidy to parents, government’s focus should be on building institutions in communities that can support families. Growing childcare provision by direct funding ensures that nurseries can build a role as centres of community engagement and action, and offer wider support for families that need it.
There are other measures that should also come hand-in-hand if we want to boost maternal employment, such as protecting and extending parental leave, improving access to good quality flexible work and removing financial disincentives for second earners under the Universal Credit. The Government shouldn’t be anxious about adequately funding measures to support mothers to work. It pays dividends.
Childcare is an sound investment: fund it now and we’ll see the benefits for years to come, in terms of rising levels of maternal employment with additional tax revenues, falling child poverty and improved child development outcomes. The rationale is simple; delivering the policy less so. With the PM making this a priority and the Childcare bill set to make it law, the childcare ministers are returning to a new set of challenges. Now they need to deliver.
Giselle Cory is Senior Research Fellow at IPPR.