Children: Affordable Childcare

Baroness Jenkin of Kennington Excerpts

Thursday 9th January 2014 Lords Chamber

[Baroness Jenkin of Kennington (Con)]

My Lords, I thank the noble Baroness, Lady Massey, who speaks with so much experience and expertise, for providing us with the opportunity to debate this important topic. In thinking about this debate, like the noble Baroness I inevitably cast my mind back to my own experiences, 20 years ago, and to how we coped and managed with two small children. My sister, who lived nearby, stayed at home and was a fantastic support. My sons had two loving and committed grandmothers who lived close enough to help and did more than their fair share. The children went to a great nursery and later I was lucky enough to have a flexible job. Housing costs were considerably lower, with a decent family home costing three times a salary. Many parents today have to work longer hours for what I, at least, took for granted. I now appreciate more than I did at the time how easy I had it compared to many parents today but even then I felt guilty, and at times stressed and under pressure.

A quick trawl through the Mumsnet forums on this subject shows no change and no agreement. From the comments of stay-at-home parents who feel that they have to justify their choice to working parents who feel guilty for working long hours to keep on top of their careers, it is clear that whatever it is, there is no silver bullet or one-size-fits-all solution. However, without flexibility, affordability and good-quality childcare what is really quite a short period of one’s life can, instead of being a fulfilling and exciting time filled with love and adventure, become a stressful and miserable experience for both parents and children. Needs change for babies and pre-schoolers, of course, compared with school-age children. Families are different and, obviously, childcare needs should be as flexible as possible to cater to the many individual circumstances and challenges that families face. All these families need to be supported in the choices that they make and I welcome the introduction of flexible parental leave so that parents, not government, can decide how to manage their lives when they have a baby.

Whether it is the ability to find a childminder, a nursery in the right location with available places, a work-based creche or a school that can offer after-hours care, we know that too many parents cannot get that mix of childcare that they need. It is lack of flexibility that can lock many parents out of the workplace. This is why affordable and accessible childcare is so important in our society, not just for the well-being and success of future generations but for the well-being and success of parents. Data suggest that more than half of stay-at-home mothers, one-third of the total, would prefer to be in paid employment, but in the UK one-quarter of women who go on maternity leave do not return to work, resulting in a significant cost to companies in recruiting and training their replacements, as well as the loss of knowledge, skills and expertise.

Let us look for a moment at the costs. The UK has reached Nordic levels of public expenditure on childcare but has come nowhere near reaching Nordic levels of coverage among low earners. Public childcare subsidies, at 1.1% of GDP, are among the highest in the world, yet the average cost of childcare is still 28% of household income. In Sweden, where they also spend 1.1% of GDP, childcare costs are 6% of household income while in Germany, where they spend 0.4% of GDP, the out-of-pocket cost of childcare is 14% of household income. As I read those figures, even though I know I have checked them, I still find them very hard to come to terms with.

So we spend more than the OECD average on childcare, yet British parents are still paying some of the highest costs in Europe. Clearly, neither taxpayer nor parent is getting value for money. The limited options available to parents for such high costs are due in large part to overcomplex funding systems and unnecessary bureaucracy, which are stopping childcare providers from growing and flourishing, thus preventing many parents and children from taking advantage of the excellent childcare that exists across the country. Let us take a quick look at the most common options available to parents— childminders, nurseries and school nurseries.

Childminders are popular, flexible and local. Many parents prefer home-based care, especially for the younger children. They also suit parents who work shifts; I used one myself when my elder son was small, and it worked well. Despite this, though, as the noble Baroness has pointed out, the number of childminders has almost halved over the past decade, to the point where just 1% of funded early-year places are provided by childminders. This appears to be due to two issues: difficulty in accessing funding and the mass of paperwork involved in registration. Childminders have to register with Ofsted. They have to spend about £80 on a medical check, £100 on a preregistration course, up to £100 on paediatric first aid training and more on public liability, car and home insurance, a website, professional membership, DBS checks, buying equipment, toys and books and sorting out marketing and accountancy. The whole process costs around £800, clearly contributing to high costs for users of the service.

Since September, any good or outstanding childminder can automatically offer funded places for two to four year-olds. Previously, fewer than 4,000 childminders were accessing funding but now 32,000 are automatically eligible. To help to reduce the bureaucracy, childminder agencies are being set up to help with admin and to simplify the process. They could spread the costs, reduce the hassle and use economies of scale to make it cheaper, and for parents they should make it easier to find an employer childminder. In France, where creches familiales have similar functions to agencies, they have five times as many childminders per person than England. I welcome the new childcare business grant scheme that has been introduced to boost the provision of childcare and to incentivise entrepreneurship. It will encourage and support the starting up of new childcare businesses by providing a flat-rate start-up grant of up to £500.

Nurseries, which provide about one-quarter of all childcare, are equally essential, providing a valued and trusted service to parents. Their funding should be simple and accessible. Any good or outstanding nursery will be able to access money just like childminders, without jumping through further bureaucratic hoops. Through this measure, the Government estimate that about 80% of nurseries would automatically get funding. They should be encouraged to expand and grow, just like any other business. Planning rules should be more straightforward so that premises can be converted without requiring additional planning permission, allowing nurseries to grow and flourish.

School nurseries are perhaps an underappreciated part of childcare yet they make up one-third of the national childcare market, with some 800,000 early-year places. However, the hours that they offer can be inflexible; most do only 9 am to 3 pm, if parents are lucky. An extra four hours a day would change many parents’ options. More school nurseries could look to the model of a mixture of funded and fee-paying care, which in turn helps local government funding to go further. Such schools can generate income from the nursery and by good, flexible timing of their sessions they can fill the spaces.

Of course, availability is not the only problem that many families face when looking for suitable childcare. Even when many families find the perfect solution for them, they are locked out of the market due to the high cost. Parents are locked out of the workplace and children are left out of sociable learning environments.

The average annual cost of a part-time nursery place for a young child is now more than £5,000. At an hourly rate, this is about two-thirds of the minimum wage. Even as the economy is picking up, with nursery costs in some parts of the UK rising more than twice as fast as family incomes, childcare is a big item on tight family budgets.

Every three and four year-old gets 15 hours of free childcare a week. This is now much more flexible so that parents can take it in blocks. Funding has been increased for low-income two year-olds and just one month after launching the scheme, 92,000 children benefitted, reaching an estimated 70% of the deprived children who most need help. On top of this basic entitlement, low-income working families can get help for up to 70% of their additional childcare costs.

Are we missing other innovative ideas? Should the Government revisit some of yesteryear’s solutions for inspiration? In World War II, shipyards in the United States established pioneering company-sponsored childcare centres. They were in operation 24 hours a day, had a nurse on site for any ill children and provided hot meals during the day. They were opened to ensure the company had the workforce to build ships and were closed after the war ended, but could this large-scale, open-all-hours creche be a possible option?

In the past, communities came together to look after children if their parents were not available. Could the Government look at childcare collectives put together by volunteers? Sweden, for example, has a long history of parental co-operatives run by many pre-schools. They are organised and staffed by the parents who use the service. The idea has echoes of the big society agenda where regulatory barriers are removed to encourage voluntary groups and communities to take action. This might also provide an opportunity for another resource we may not be using effectively.

We hear much about loneliness in old age. Could we not look to lonely older people, some of whom are already grandparents and some whom would love to be, to assist in supervising after-school homework clubs and other after-school clubs? Obviously they would need some training and checking, but need it really be prohibitively bureaucratic and expensive?

I welcome the fact that the Government are committed to ensuring that all families in the UK, of whatever size or income level, have access to a variety of flexible childcare options. We are improving the quality of childcare options by clarifying standards and taking the focus off of red tape and paperwork so that childcare professionals can focus on the children. Surely we can all agree with the Minister’s aspiration, included in a recent speech to the Family and Childcare Trust, which was referred to by the noble Baroness:

“Our vision is of childcare where families want it, at the time they need it, provided by people they trust, at a cost they can afford”.

For the sake of parents and children everywhere, let us hope that this vision can be realised.