loveMONEY election manifesto: subsidise childcare far more heavily

Here’s why our manifesto includes a call to dramatically increase the state subsidy for childcare.

What if there was a single policy that the next Government could introduce that would help parents work, help limit benefit dependency and reduce child poverty?

A policy that could boost children’s life chances and aspirations? One that could help every family with young children enjoy more financial stability?

One that would improve outcomes for all children, but especially those living in the poorest UK homes.

One that, moreover, that has helped make other European countries far more progressive and equal than the UK.

Well, there is such a policy. Providing greater state subsidy for childcare.

Hang on, don’t we do that already?

Well, yes, we do. There is a ‘free entitlement’ to 15 hours of childcare for all three- and four-year-olds, which is extended to two-year-olds in the 40% most disadvantaged families as well.

From September this year, that will rise to 30 hours a week for the approximately 390,000 families of three- and four-year-olds living in two-earner or single working parent homes.

Along with that and the tax credit system for low-income parents, childcare vouchers and the new tax-free childcare accounts, the state currently spends around £6.5 billion on childcare.

That sounds like a lot, we know. And yet the cost of care remains as significant cost for parents and is often a barrier that prevents at least one from seeking work.

Research from the Family and Childcare Trust shows that part-time childcare for a family with two children – one in part-time nursery care and the other using after-school clubs - now routinely costs more than the average UK mortgage bill.

In 2015 the Family and Childcare Trust warned that some parents simply can’t afford to work and pay childcare bills that routinely top £11,000 a year.

The country loses out on these parents’ skills and their falling out of work increases the chances they will require increased state help in the future.

Right, but 30 hours free will fix all that, won’t it?

No. The current 15 funded hours are not fully funded and many nurseries struggle to afford to offer that provision at the rates the Government pays. Last year the Department for Education agreed to pay a higher hourly rate for the funded hours.

However, many providers say it is still not enough and that many nurseries will find it impossible to provide 30 hours to parents.

Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA), said: “While increased funding is undoubtedly welcome, it is important not to confuse "more money" with 'enough money'.

“For many providers, the difference between the cost of delivering 'free entitlement' places and the funding received from Government remains significant, and unless this gap is closed - as opposed to narrowed - the problems facing the sector will remain.”

I argue that we must offer the full 30 hours to children from age 2 and up, and that we must pay properly out of the public purse so that there is no dip in quality.

Yes there should be some limit to the provision – we cannot have a situation where a fabulously wealthy parent claims their £60,000 Norland nanny’s salary via the taxpayer.

However, we should be heavily subsidising the nursery sector so it can provide cost effective, high quality care. Our children deserve no less.

Plan for your child's future: view your investment options (capital at risk)

That does not mean rash promises

What we cannot afford is an ‘arms race’ of politicians promising to hike the subsidised hours without agreeing to actually pay more.

The country’s three largest childcare representative organisations have written an open letter to all political parties urging them not to pledge promises that the sector cannot deliver.

National Day Nurseries Association (NDNA), the Pre-school Learning Alliance and the Professional Association for Childcare and Early Years (PACEY) have joined forces to speak out against a potential bidding war similar to the 2015 general election over hours of ‘free’ childcare.

Their letter reads: “In 2015 there was a pre-election arms race on childcare policy, with political parties looking to outbid each other on their offer to parents. Two years on, the pledge of 30 hours free childcare for working parents is putting the quality and viability of early years provision at risk.

“Politicians rightly recognise that childcare has a dual benefit of better educational outcomes for children and support for parents to work and train. However, chronic underfunding remains and per child investment in under-fives is half that of primary school children.”

We need to invest in more training for nursery staff as well as more and better funded hours.

Subsidies can benefit families and the economy

It is all very well suggesting that parents chose to have children and so should shoulder the care.

But by making it harder for parents to work we risk limiting their income for the remainder of their lives.

Recent research from the VoucherCodesPro.co.uk website shows that British mothers take an average pay cut of £11,000 a year in order to work around their children, sometimes because they need more flexible hours and sometimes because they cannot afford childcare and so scale back their hours.

What’s more, good childcare provision improves outcomes for children, helping them grow up to become educated, contributing members of society.

And, to state the obvious, the more we can encourage parents back into work, the more tax they will pay back into the system.

Plan for your child's future: view your investment options (capital at risk)

It’s a moral issue

Even without the economic benefits to an active workforce and good early years’ education, our society has a duty to care for its youngest members.

Research by Birkbeck, University of London, and Oxford University’s Professor Edward Melhuish has shown that access to good quality pre-school education from the age of two can provide benefits that can still be seen by the teenage years.

That is particularly true for disadvantaged children but it also makes a significant difference to middle-class children too.

Children benefit from good quality pre-school education and it smooths out inequalities, giving all children a better start in life.

We live in a time where the state’s budget is constrained by the country’s deficit yet many economists argue that investment in our infrastructure and training will pay off.

And nowhere is that investment better spent than on protecting women from falling out of employment and securing the future of our nation’s children.

What do you think? Should we invest more in childcare? What should the limits be? Have your say using the comments below. You can also read more about the financial changes we want to see in our loveMONEY manifesto.

Read more pledges from our election manifesto:

Let's combine NI and Income Tax to make a more honest system

Scrap the State Pension triple lock

Introduce an inflation-linked product to finally help savers