There are not many policies which promise to boost economic growth, improve education attainment, reduce labour market pressures, and close the gender pay gap.
So, the focus on childcare from all political parties is not surprising.
There is also widespread recognition that the current childcare system isn’t sustainable, with soaring costs for squeezed parents, leading to a large percentage of young mothers - it’s nearly always mothers - having to quit their jobs or reduce their hours.
A consensus
The shadow secretary of state Bridget Phillipson had been strongly hinting for some months that Labour was going to make a major pledge on childcare a centrepiece of their election campaign – a universal offer to enable all parents of pre-school children to have access to free childcare, as opposed to the current limited subsidies.
Sensing political danger, and looking to loosen painfully tight labour markets, the Conservative Government pre-empted this announcement in the March Budget, announcing the largest ever expansion of free childcare, costing over £5 billion a year.
The government’s childcare policy
The government intend to extend the current offer of 30 free hours a week for three and four-year olds, when both parents are working, to one-and-two year olds. There will also be a substantial increase in the childcare element of universal credit.
While this is to be welcomed it is not without problems.
By failing to extend the offer to all children, regardless of whether their parents work or not, the Government risk widening the attainment gap at the start of school.
It shows that they are thinking almost entirely about the economic benefits of helping more parents back to work rather than the long-term developmental opportunities such an expansion presents.
No implementation plan
The biggest problem, though, is the lack of an implementation plan to go alongside the policy.
The roll-out is due to start in April next year with 15 free hours for all two-year olds, followed by further expansions in September 2024 and 2025.
This gives very little time for providers to increase capacity, nor does the DfE have a clear understanding of how many places are available in different parts of the country. We know from local reports that some areas already have significant shortages.
It looks like the funding levels chosen for each age were designed to incentivise providers to ensure they can offer places for the new influx of one-and-two year olds. £8 an hour for two year olds and £11 for under-twos seems a lot more generous than the £5.50 for three and four year olds even if staff ratios are tighter for younger children.
No pay and workforce development plan
But providers will struggle to find staff. Childcare is, for the most part, a minimum wage profession and, in a tight labour market, with supermarkets and restaurants increasing their pay levels it’s hard for nurseries to compete. The new proposed funding bands are based on current pay levels so do not offer the opportunity for more competitive salaries.
Without higher pay there is a real risk that there will simply not be enough capacity to deal with demand. Even if there is it will only be through hiring more untrained staff.
Already, by 2019, just over half of nursery staff had a level 3 equivalent qualification, down from 83% in 2015. It’s almost certainly less than half now. The use of low paid apprentices is becoming increasingly common. The net effect of all this is to significantly reduce the developmental benefits of childcare.
It doesn’t need to be this way. For not much more money the department could allow for higher pay and enforce it by insisting on “fair pay” levels for any provider in receipt of state funding. This would prevent for-profit providers simply pocketing extra funding. A workforce plan could be developed to require and provide training for existing staff.
A new approach to childcare delivery
These would be quick fixes and are definitely worth doing given the government’s timescale. But ultimately a new approach to the delivery of childcare is needed.
The nursery sector is a mess, with a mix of struggling individual private and non-profit providers and private equity backed chains that are using state funding to pay off substantial debts.
It is the latter group that are becoming increasingly dominant, and they have little incentive to focus on low-income areas, where parents cannot afford top-up fees for additional hours and expensive extras.
Local authorities should be encouraged and funded to develop “nursery trusts” built around the highest quality non-profit, school, or maintained nurseries.
They could take over smaller providers over time and add their own additional sites.
Not only would this ensure provision in areas that need it the most, but it would also create larger organisations that are better able to train their own staff and offer progression routes to the most talented childcare workers.
The lack of progression in smaller settings is a major reason for low staff retention.
Manifestos 2024
Hopefully childcare will continue to be a priority for both parties, and the manifestos in development, at the moment, will go beyond the existing proposals to offer a system that can be genuinely transformative rather than focusing purely on additional free hours.
Sam Freedman is a Senior Fellow at the Institute of Government