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12 September 2023

The SNP needs to set Scotland’s childcare sector free

Humza Yousaf should allow parents to choose how they spend childcare vouchers.

By Chris Deerin

One of the brighter moments in Scotland’s recent Programme for Government was Humza Yousaf’s commitment to a further expansion of childcare.

This has been a consistent SNP objective for many years, and it’s a welcome one. Good childcare eases the financial pressures on young families and allows women especially quicker re-entry to the workplace. It has obvious beneficial consequences for economic growth and productivity.

The First Minister announced that communities in six council areas would be given access to early-years provision and childcare from the age of nine months to the end of primary school. The government would look at giving parents and carers more flexibility in how they can use their funded hours, taking in childminders, family centres, nurseries and after-school clubs. Yousaf also promised a new online platform to help parents organise their childcare more easily, and said that childminder pay would be increased in the private and voluntary sectors to a minimum of £12 per hour from next April.

All to the good, and Scotland can reasonably claim to be at the forefront of efforts in the UK to improve and modernise this essential service. But problems remain, and they have been identified in a sharp new paper for my think tank Reform Scotland by Gordon Hector, head of policy and strategy at Dundee-based Urban Foresight, who previously worked for the Joseph Rowntree Foundation and was an adviser to the former Scottish Conservative leader Ruth Davidson.

Since the advent of devolution in 1999, there has been a gradual expansion of early-years support in Scotland. In 2000, a legal duty was placed on local authorities to offer nursery provision, enabling them to use external providers to meet demand. Eligible three- and four-year-olds were given an entitlement to 475 hours. In 2014, this entitlement was expanded to 600 hours, and more recently it was raised again so that children have access to 1,140 hours of tax-payer funded provision from the term after they turn three. Two-year-olds in receipt of certain benefits, or who are care-experienced, are also entitled to the provision. As Hector writes, “This is a generous entitlement and represents a major funding increase. Overall, total capacity is up and total costs to parents have reduced.”

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But, he argues, the nature of the payment mechanism has had unintended, negative consequences and has actually damaged the diversity and dynamism of the system. Because councils control much of the cash, and offer the free hours mostly through nurseries, provision of the most flexible forms of childcare has rapidly contracted. Since 2014, the number of childminders is down by 35 per cent, playgroups by 55 per cent and creches by 61 per cent.

In addition to this, the funding given by councils to private nurseries, which operate all year round and offer more flexible opening hours than their state equivalent, is below the true cost of providing care, especially for smaller outfits. As a result, the number of private nursery services has fallen by 4.5 per cent since 2018.

Because the government specifies that priority must be given to all three- and four-year-olds and some disadvantaged two-year-olds, there is little entitlement for most children under two, or for wraparound care for school-age children. As Hector says, this creates “wildly different incentives on parents at different ages. There is no real policy logic for… investing heavily in one age group instead of linking spending to the age groups and family backgrounds most likely to benefit.”

Despite good intentions, he adds, “Scotland is limiting the impact of a major investment by creating a lop-sided sector. At worst, childminding and the private and voluntary sectors will rapidly decline, ultimately reducing parents’ options and undermining the aims of the free hours expansion. This is the paradox of early learning and childcare funding in Scotland: it has simultaneously created a generous system and created the risk of a systemic collapse.”

Having reviewed the alternative options, his paper proposes giving parents vouchers to the value of the funding, worth around £5,000. While this would maintain existing levels of support, it would also improve diversity of provision in the childcare sector and simplify future steps towards more equal treatment of different ages.

“In practice,” writes Hector, “current policy has both helped parents and created the risk of systemic collapse. It has both increased capacity, and started moving firmly towards a model of term-time, council-led, nursery-based care.

“Either policymakers need to be honest about this fact. Or, we could stop pretending that policymakers are in any position to decide family priorities at all. There is no single ‘right’ childcare option – individual families will prize different combinations of cost, time, education styles, flexibility and their other commitments.”

The idea of vouchers, the passing of purchasing power from producer to consumer, has historically been opposed by the political left. But Yousaf has committed to delivering a flexible childcare system that works for families in all their modern diversity. If you will the ends you must also will the means. And so relinquishing central control and allowing parents the widest possible choice when it comes to managing their childcare is, surely, a no-brainer.

[See also: Paranoia takes root in rural England]

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