On hearing that Jeremy Hunt plans to extend the offer of 30 free childcare hours to children under three, many parents will have breathed a collective sigh of relief. The prominence of childcare in his budget is evidence of how far opinion has shifted. Though a vital part of the economy, childcare has long been treated as a domestic issue. Parents have been expected to conjure up an additional salary for the luxury of being able to go to work. Provision is patchy, complicated and ruinously expensive.
Mr Hunt’s recognition of these facts was a welcome change in tone. But his offer, which would only come into full effect after the next election, treats childcare as a means to a single end: getting parents into work. Childcare isn’t just an economic growth issue. Early years education plays a crucial role in targeting inequalities and closing attainment gaps. For this reason, quality matters as much as availability. Mr Hunt, like his predecessors, sees childcare primarily as a labour market tool. The risk is that simply expanding the number of free hours without reforming the childcare system will drive down quality. Moreover, limiting free hours to families where both parents work will cut out those who could also benefit, such as parents who are looking for jobs.
The government has made £4.1bn available to fund this expansion and raise the hourly rate of childcare workers. This money, which will also cover after-school clubs, is unlikely to stretch far enough. The sector has seen its funding cut by 13% in real terms since 2017, and already struggles to provide existing free hours for three- and four-year-olds. Research obtained via freedom of information requests shows the subsidy for existing free hours is only two-thirds of what the government estimates is needed. The answer, for many nurseries, has been to cross-subsidise free places by charging parents extortionate fees for younger children. If those children are also entitled to free hours, nurseries won’t be able to do this, so those that were already struggling may decide to increase the price of unfunded hours or other fees.
Worse, some may close. Thousands of nurseries have already shut. Mr Hunt has pledged to boost the number of nursery places, but all that has been announced is a pilot giving childminders a £600 incentive payment. In a recent interview, he said it was not up to government to calculate the number of nurseries needed because “we’re not Stalinist Russia”. But without careful planning, particularly for how to retain staff, the government may end up pouring money into a system where for-profit providers cream off additional funding and squeeze worker wages. Under Mr Hunt’s proposals, the hourly rate for those who work with three- and four-year-olds will only increase in line with inflation. In an industry where the average salary is about £15,000, this is small change.
Doubling the number of free hours appears to create a new arm of the welfare state. But rather than a Beveridgean moment, where high quality and affordable childcare is made universally available, the result of Mr Hunt’s current proposals will be a patchy system more akin to the piecemeal reforms that predated the welfare state. Without a detailed workforce plan and adequate funding to ensure good outcomes for children, particularly those from disadvantaged backgrounds, these reforms will at best be a missed opportunity – and could even make things worse.
