We have lost our way on childcare. No party has set out a vision for where we are trying to get as a country. Parties compete on who can invest more without any sense of an overall plan. The result is a fragmented, increasingly complex system that still expects parents to pay a higher price than in much of the rest of the developed world. There are few examples in public services of money alone making things better. It needs to be carefully marshalled to make a difference. A new Resolution Foundation report by leading childcare experts, Kitty Stewart of the LSE and Ludovica Gambaro of the Institute of Education, sets out a path for reform for the UK, offering the best ideas from abroad. Central to getting greater value for the £5.5bn we already invest in childcare as well as future investment is to do what other countries do better and attach tighter strings to public funding.
The first priority for reform has to be improving quality. If we want childcare to have a positive impact on children’s intellectual and social development, it has to be high quality and the best measure of quality is having graduate trained staff. The problem here is that government funding currently makes no allowance for the extra costs of more highly qualified staff. Instead of providing the same per child, per hour funding for the 15 hours of free childcare that the government offers parents of three and four-year-olds and some two-year-olds, regardless of the quality on offer, we should look to the tiered funding approach in New Zealand where higher quality providers receive a higher level of subsidy. Adopting this approach in the UK would create an incentive to hire better qualified staff in a market where competition alone has done little to raise standards. Before extending the free hours as Labour has proposed, they should consider how a more “strings attached” approach could improve the quality on offer.
Another area for reform is the way in which funding supports children from disadvantaged backgrounds. There is strong evidence that providing high quality childcare is more difficult if providers have a large proportion of children from less well-off homes. However, these children benefit disproportionately from high quality childcare. For this reason, the government introduced the early years pupil premium which will give providers an additional 50 pence an hour for each child from a disadvantaged background. But there are no conditions on how that money is spent and whether it is even spent on the child themselves. A better approach would be to follow Berlin’s lead, where the state government offers providers with more than two-fifths of children from migrant families additional funding to be able to employ more staff or specialist staff such as language teachers. If the £50m earmarked for the pupil premium were focused not on individual children but on nurseries with large numbers of disadvantaged children and dedicated to employing graduates, it would be more likely to pay dividends.
On affordability, we could be more like Australia. The UK government’s proposed tax-free childcare scheme will cover 20 per cent of childcare costs up to £10,000 a year. In Australia, families can get up to 50 per cent of their childcare costs paid up to the equivalent of just under £5000. Families in the UK who spend as much as £10,000 on childcare a year tend to be dual earning, professional families on a high income. The median amount spent on childcare in a year is under £2000. Tax-free childcare would do more for those who really need help by offering a higher subsidy up to a lower threshold. Australia also offers more generous support to out of work parents, easing the transition in and out of work that is increasingly a feature of employment for low income families. Put together, the subsidies on offer in Australia mean that all families spend no more than 10 per cent of their net income on childcare, compared to close to 20 per cent for middle income families in the UK.
As the election approaches, it is good to see childcare emerge as an important battleground between the parties. But alongside the welcome promise of more money, we need clearer strategies. Where are we trying to get and how will each party’s reforms get us there? No strategy will be perfect. No single country has achieved an ideal system. But, if new money is to result in better quality, more affordable childcare here, parties have to start demanding more for the public pound.
Vidhya Alakeson is deputy chief executive of The Resolution Foundation