Childcare: Affordability and Availability

Siobhan Baillie Excerpts

Tuesday 21st February 2023 Westminster Hall

[Siobhan Baillie (Stroud) (Con)]

It is a pleasure to serve under your chairmanship, Ms Fovargue. I have been talking about childcare and coming up with proposals for some time now, but I will try to find new things to talk about because the Minister is probably sick of hearing from me.

The childcare juggle is extremely stressful. It is not just about the day-to-day management of children and organising what is going to happen, but about costs, as we have heard today. We are in second mortgage territory for many families and it is not sustainable. I have not just been gabbing on about this; I have put some effort into trying to provide evidence for the Government to look at and have worked with the fantastic super-brains at Onward to come up with recommendations in a report. The top recommendations are: supporting parents through a new system of childcare credits and providing more flexibility and choice; considering early years, and especially thinking about what the Princess of Wales is so fantastically doing and bringing a focus to; front-loading child benefit payments; expanding family hubs; and introducing some provider-side reforms, including boosting childminder agencies.

It is difficult to try to work through all the complex reasons why we have some of the highest childcare costs in the world—if not the highest, behind only Japan. We have looked into various reasons. First, the level of public subsidy is fairly low. As a share of GDP, the UK spends 0.56% compared with 0.7% across the OECD. Secondly, we have an extremely complex system comprising eight separate schemes. It is confusing for parents, costly to administer and leads to irregular outcomes. Thirdly, the principal offer of 15 to 30 free hours is underfunded, as we have heard, which means either that providers are cross-subsidised by charging parents higher fees for extra hours or that they simply close the doors altogether.

The Government must be given credit for coming up with the scheme for free hours, and it is a tribute to them that people want to extend it into other areas. We can all agree that childcare support should kick in earlier. It is barking mad that parents have to wait until a child is three. The support should be there earlier if that is what the family chooses. I am cautious about expanding free hours schemes without fixing the existing scheme and making sure that the hours are funded properly. Unless the Government do both, I worry about that being sustainable for the childcare sector—we have heard about that from my hon. Friend the Member for North Swindon (Justin Tomlinson)—or for parents. We need something that they can rely on, and we need to make sure that it is fair for the taxpayer as well.

Together with Onward, I have proposed clear provider-side reforms to stimulate the childcare sector and make sure the early years experts have our full support and can motor ahead. If, as we expect, the UK finances are not exactly as we would want them to be at the spring Budget, I want to make sure the Chancellor of the Exchequer does not feel that childcare can be put in the “too expensive to tackle at all” box. There are options for him.

I am keen, as the Minister knows, to think about lots of different options for parents. It is fair that there is a lot of flexibility in the market, and we need to build in more flexibility and bring down costs. I have not previously raised in a debate the option of home child carers. I have made a strong case for stimulating the childminder market, because we have lost 50% of childminders in the last decade—the Minister knows my arguments on that—but home child carers are an interesting class. We take our children to a childminder’s house, but home child carers can come into our homes. They can work on a part-time basis, and they can do wraparound care. For people such as nurses, who work in shifts, it becomes a really good option.

I want to thank Rachel from Koru Kids, who is the most fantastic entrepreneur and a really great brain. She has recognised that there are Ofsted regulations and barriers to bringing more home child carers into the market, but when she goes out to the market and says, “Would you like to be one of these?” she is flooded with applicants. I believe that, working with Ofsted, we can make changes to the regulations that do not undermine children’s safety and security but that bring more home child carers into the market. I want the Minister to look closely at that, alongside my other proposals, and I am happy to provide her with a note on it.

--- Later in debate ---

[Helen Hayes (Dulwich and West Norwood) (Lab)]

Under the circumstances, it is a relief as well as pleasure to see you in the Chair, Ms Fovargue. I congratulate my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) on securing this important debate and on her excellent speech. The availability and affordability of childcare is a pressing issue for families right across our country.

I am grateful to all hon. Members who contributed to the debate. There has been a great deal of consensus. The hon. Member for North Swindon (Justin Tomlinson) highlighted the challenges facing families with children with special educational needs and disabilities in accessing childcare that is suitable for their needs. The hon. Member for Westmorland and Lonsdale (Tim Farron) highlighted the challenges in rural areas. The hon. Member for Stroud (Siobhan Baillie) pointed to the lack of subsidy for childcare for children under the age of two—a critical challenge for many families. My hon. Friend the Member for Walthamstow (Stella Creasy) spoke passionately about the need for fundamental reform of our childcare system.

The hon. Member for Leigh (James Grundy) highlighted the economic harm in his constituency caused by a lack of available affordable childcare. The hon. Member for Upper Bann (Carla Lockhart) highlighted the extortionate costs in her constituency. Finally, my hon. Friend the Member for Ilford South (Sam Tarry) highlighted the importance of high-quality early years education in closing the disadvantage gap for the poorest children.

Childcare is vital social and economic infrastructure. It helps parents to work, it delivers early education to the youngest children and it underpins the growth of our economy. However, under this Government we have seen the cost of childcare rise, increasing numbers of providers closing their doors and an increasingly complex funding system for parents to navigate, resulting in low take-up of both subsidised places for two-year-olds and tax-free childcare.

The UK has the most expensive childcare in the OECD. The latest release from Coram reports that the average cost of 25 hours a week in a nursery in England for a child under two is over £140. The average cost for the same amount of time with a childminder is over £124. The average cost for a child aged two and above is more than £135 at a nursery and £122 with a childminder. I emphasise that these costs are averages, so actual costs can be significantly higher, particularly in London.

Analysis by the TUC estimates that the cost of childcare for a child under the age of two has increased by £2,000 a year on average since 2010. A survey of 27,000 parents by Pregnant Then Screwed found that three in five reported that their childcare costs are now the same as, or more than, their domestic costs, rising to three in four for lone parents.

A recent survey by Mumsnet illustrates the extraordinary challenges faced by many parents, with almost 20% of respondents saying that they have given up work or are considering giving up work due to the costs of childcare. Also, 38% of respondents said they were working at home or considering working at home without childcare, and 43% said they could not afford the monthly costs of childcare without help from family, taking on debt or dipping into their savings. Finally, one in four resorted to informal arrangements, such as childcare swaps, to save money.

The Women’s Budget Group estimates that 1.7 million women are being held back from taking on more hours at work by the cost of childcare, and recent data from the Office for National Statistics has shown that for the first time in decades the number of women leaving the workforce to look after family members is increasing; it was up by 12.6% last year over the previous year. The unaffordability of childcare is also placing strain on grandparents, many more of whom are now giving up work or reducing their hours not simply to enjoy spending time with their grandchildren but effectively to step in to provide formalised childcare. The CBI agrees, stating that childcare in the UK is in crisis, which contributes to labour market shortages, exacerbates the cost of living crisis, dampens economic output, slows down social mobility and increases gender inequality.

The Government’s funding model is undoubtedly part of the problem. Parents can access help with childcare costs from a wide range of sources. The subsidy for two-year-olds is means-tested, but some of the subsidy for three and four-year-olds is applicable only to working households. Some funding is provided through the benefit system and some through the tax system. There is significant unclaimed funding for childcare because the system is so complicated and confusing for parents to navigate. The recent report on the issue by the Work and Pensions Committee highlights serious flaws with the universal credit childcare costs element, which in February 2022 was only claimed by 13% of potentially eligible families. The amount of funding claimed through tax-free childcare is far lower than the amount that was previously spent through childcare vouchers.

The system does not work for childcare providers either. The Government have admitted that they do not pay providers what it costs them to provide the so-called “free” two-year-old places and the places for three and four-year-olds. They have effectively created a cross-subsidy model for childcare, which is driving up the cost for parents of under-twos and leaves childcare providers struggling in areas of deprivation, where parents of very young children simply cannot afford to pay higher rates.

Providers are facing rising energy costs, wage bills and food costs, and many find it hard to recruit the staff they need. That led to a tsunami of nursery closures last year. During the summer term of 2022, from April to July, 65% more nurseries closed than in the same period in 2021. The situation is set to get far worse following the withdrawal of support for energy costs at the end of next month.

I pay tribute to everyone who works in childcare and early years education. They are highly skilled professionals to whom we entrust the most precious people in our lives, yet they are under-recognised for the work they do. Working with very young children should be a rewarding vocation and a lifelong career. It should offer staff the opportunity to develop expertise and specialisms, and to progress accordingly. Yet all too often, there is no opportunity for development or progression, and nurseries report that they end up competing with better-paid roles in retail or distribution.

The lack of workforce development contributes to a situation that is particularly challenging for parents of children with special educational needs and disabilities. A recent survey of parents with disabled children found that 87% of mothers could not work as much as they would like to because of a lack of suitable childcare. After nearly 13 years of Conservative Government, our childcare system is failing families, failing children, failing providers and failing our economy. It is holding back parents from succeeding and progressing at work.

What is the Government’s response to this situation, which is of such central importance to our economy and family life? Silence. There was not a singular mention in the Chancellor’s Budget statement in November of the affordability and availability of childcare. When parents, providers, the TUC and the CBI all agree, yet the Government continue to do nothing, it is the Government who are completely out of touch.

Labour recognises the fundamental importance of childcare to parents, children and our economy. We also recognise that childcare costs do not stop when a child starts school. That is why we have announced our plan to introduce fully funded breakfast clubs for every primary school in the country, supporting parents to work and helping to address food poverty. We will make sure that every child, wherever they are in the country, starts school ready to learn. We will address disadvantage and prevent it from becoming embedded for a lifetime.

Breakfast clubs are just the first step on the road. We are committed to building a childcare system that supports children and families from the end of parental leave until the end of primary school, as part of the vital infrastructure that underpins our economy. The Government must step up and act to deliver childcare that works for children—

[Siobhan Baillie]

This is a point of genuine interest, not a political point. Has Labour costed those policies? I am having lots of conversations with Ministers about this issue. I am really interested in the points that the hon. Member is putting forward, but I have not seen any costings, such as for full universal childcare from nine months. Have they put any numbers behind that?