Compared with other countries, in the UK there are complicated and inefficient mechanisms for the public funding of childcare.
In recognition of the continued pressures on family finances, Ed Miliband has today made a speech about childcare policy, fleshing out the announcements made at party conference.
The proposals, if enacted, have the potential to make a difference to families. In the long-term, however, real reform of childcare is needed if we are to address some of the problems in the current system.
To its credit, the Labour Party has done much to improve access to affordable childcare in the UK, through its 1998 and 2004 childcare strategies and the Childcare Act 2006. Proposals which were seen as being bold in 1997 are now accepted by all the main political parties.
Perhaps one figure illustrates how much progress has been made. In 1992 there were just 56,000 nursery places in England and Wales. Today there are 1.6 million places.
Labour introduced free part-time early education for all three and four year olds. It started the process of extending free early education to younger children when in 2004 it made funding available to provide part-time free early education to vulnerable two year olds. The coalition has continued its support for this initiative.
The first Sure Start children’s centres were also set up in 1999, offering childcare and a range of integrated services to support children and their families. Today there are over 3,000 Sure Start centres in England, providing services that make a difference to the lives of young children – although the future direction of this service remains uncertain.
The previous government also increased its financial support to parents to help them pay childcare costs. It brought in employer-supported vouchers and since October 1999 tax credits have contained a childcare element, now worth up to £175 per week for one child in childcare and £300 per week for two or more children in childcare.
Despite these achievements, childcare is still unaffordable for many families and its costs a barrier to parents returning to work. Those just above the tax credit threshold are hit hardest. Twenty five hours of nursery care costs an average of £107 per week in England – nearly a quarter of annual earnings.
As a consequence, maternal employment levels for those with children under five – particularly for the least well qualified – are low compared with other OECD nations.
Too much childcare is poor quality and may do little to narrow gaps between the least advantaged children and their peers. There are gaps in provision for school-age children.
Childcare often does not work for parents who have atypical work patterns, for example those whose hours of work fluctuate from week to week.
The Labour Party has recognised some of these problems, as have the Lib Dems in a policy document launched at their conference. Labour has promised 25 hours of free nursery provision for three and four year olds, conditional on parents being in work. This announcement aims to make part-time work a real option and will be funded by increasing the banking levy.
Parents of children of primary school-age will also have a legal guarantee of wrap-around childcare before and after school.
Yet there are issues that are not addressed in today’s speech. Too much nursery provision is of poor quality. Labour has not stated its policy on Sure Start, which is now suffering as a result of funding cuts and lack of direction from central government.
Too much nursery provision is of poor quality, but it is only high quality early education that makes a difference to children’s development.
Compared with other countries, in the UK there are complicated and inefficient mechanisms for public subsidy for childcare – through tax credits, free nursery provision, childcare voucher, the new £1,200 voucher and schemes operated by Job Centre Plus and colleges.
Many experts now think that the UK should be looking to the best practice overseas and switch to supply-side funding of nurseries, childminders and school-based provision.
In Norway, private and public sector providers receive money from government to provide early education and childcare. Low income parents receive this for free or at low cost. Those on higher wages pay income-contingent fees. Providers are properly regulated and are obliged to ensure high quality to receive their payment. It is a much more efficient system and it guarantees quality.
This sort of bold reform may be needed to address the UK’s childcare challenges.
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