Opinion: A liberal approach to affordable childcare

Childcare CentreChildcare in the UK is expensive.

In 2011 the OECD reported the UK having the second highest costs of childcare for any OECD country in terms of average family incomes. According to the Daycare Trust, full-time nursery care costs parents an £11,000 per year on average and around £4,000 for care for two school-age children around the start and end of the school day.

Many parents have to choose between leaving work to care for their kids, sacrificing much needed income or continuing in work and struggling with the costs of childcare. If they’re lucky their household earnings are enough that either option doesn’t cause any considerable hardship.

But it’s not the cost of childcare that’s the problem – it’s the way we pay for it.

We’re expected to pay for childcare upfront. This is seemingly unique among all the things we pay for which cost similar or even lesser amounts of money. Cars can be bought on finance; houses have mortgages; electrical goods, home furnishings, etc. can all be paid on credit and repaid in instalments. Even university tuition gets a rather favourable loan and income-based repayments-contribution system.

In order to make childcare affordable it is to the latter example I believe we should turn. Parents should be able to access government-backed loans to pay for as much or as little childcare from the provider(s) of their choice and then be able to repay it over time, based on their income and/or wealth. This would help those parents who want to work but are forced out by the costs of childcare. It would also allow those who remain in work that extra flexibility should their work patterns change; for example, if they start working odd shifts and they need someone to care for the children between when they finish school and then parent gets home.

I believe this approach is better than offering either tax-breaks or free universal child care to all because it avoids or reduces the possibility of the state imposing a monopoly on care or imposing terms and conditions that reduce parental and provider choice, quality and carer wages.

A loan system entrusts parents with their due parental responsibility but removes the immediate financial burdens which constrain their choices. Choice would be enhanced through the attraction of many more highly qualified and better paid staff and providers to the market, catering to the extra flexibility provided to parents.

This is an affordable and attainable idea and which could easily garner public support; it is much less a leap (both financially and socially) than going from paying everything upfront and being constrained by costs to paying nothing but getting no improvement in choice or quality.

I believe offering parents affordable loans so they don’t have to pay everything upfront would be both a very popular and a Liberal reform to childcare.

* Richard Shaw is a Liberal Democrat activist in Sheffield, a member of the Sheffield Local Party executive and is standing for election to Sheffield City Council in May 2014.

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6 Comments

  • Nonconformistradical 1st Nov '13 - 3:11pm

    “In 2011 the OECD reported the UK having the second highest costs of childcare for any OECD country in terms of average family incomes”

    That’s the issue which should be addressed – the high cost. Thinking up alternative approaches to paying for child care does nothing to address the high cost.

  • Richard Shaw 1st Nov '13 - 5:33pm

    @Nonconformistradical

    Thanks for commenting. My post isn’t about making childcare cheaper, but making it affordable. Childcare is a highly responsible job for which we expect the highest standards and the staff are generally, like social care assistants, not paid according to their status and responsibilities. Childcare should probably be even more expensive than it is currently, if we are to give childcarers the wages and status they deserve and the appropriate quality of care for our children. However this is unattainable and unaffordable for parents at present as all the costs are upfront and would be easier to pay for (i.e. more affordable) in installments over time (just like with student loans).

  • I think the SMF once argued for the same.

  • This is never going to happen with all the private vested interests but I’d love us to adopt the French ‘école maternelle’ system of state provided nursery education from the age of 3 upwards. Parents can choose to use private providers if they wish, but I imagine the majority would use the state providers.

    The vast majority of schools already have pre-schools aligned to them in some manner, it would be a matter of formalising the funding of these bodies and providing any extra training as needed. As in France childcare outside of normal school hours (breakfast clubs and the like) could be paid for by parents if needed.

    As a parent I’m deeply worried that we’re currently subsidising a private industry through these bewildering tax breaks and childcare vouchers that are constantly being messed with by all parties for political points scoring. The only real beneficiaries are the childcare providers, who operate a local cartel by charging almost identical prices locally resulting in very little actual competition to keep costs down.

    I’d much rather have a state system where universal coverage is offered, I know there is a base level of quality and that the interests of the child’s development and well-being are the highest priority, not how much profit can be made.

    State education makes sense for primary and secondary school so I don’t understand why it wouldn’t be the case with pre-school provision

  • Claire Tyler 2nd Nov '13 - 10:47am

    I think that Richard makes a very interesting suggestion and frankly, given the current cost of childcare, all suggestions are welcome and deserve serious consideration. I can well understand why parents struggling to make ends meet might welcome not having to pay for childcare costs upfront but by paying instalments over time. However, where I would take issue with Richard is the statement that “it’s not the cost of childcare that is the problem – it’s the way we pay for it”.

    I recently chaired the party’s policy working group which produced the “Balanced Working Life” report. This looked at the challenges facing people on low and middle income trying to juggle working and caring commitment and was debated and adopted at Party Conference in September. Having heard evidence from a wide range of parents groups, practitioners, charities, think tanks and others in the childcare sector, we concluded that for most parents the four key factors that matter when thinking about childcare are affordability, accessibility, adequate provision and flexibility. We spent a lot of time looking at how to improve quality and encourage better paid and qualified childcare workers but the reality is that the quality versus affordability trade off is always going to be a really tricky one.

    For me it was crystal clear that for many people on low income cost was the biggest problem of all. So I think that expanding the provision of free childcare is going to be a vitally important part of the equation. I agree that the current array of tax breaks, vouchers, free hours entitlement etc can be confusing and would worry that introducing loans into this already complicated mix without significant simplification of the current system – could add to the confusion .

    That is why I am pleased that party policy is now to extend of the number of free childcare hours on a stepped basis, beginning with 10 hours of free care for babies between the ages of 1 and 2 and culminating in 25 hours for 4 to 5 year olds. This fills the current gap between the end of parental leave and the existing free entitlement for two year olds. In addition, we recommended the introduction of “childcare hubs” to encourage more flexible childcare arrangements that recognise that not all parents work the standard 9-5 day and helped knit together more formal childcare in daytime settings with more informal childcare in the evenings.

    I spoke about the costs of childcare – along with energy costs and the Living Wage – in the Lords on Thursday in a debate on the cost of living and hope that as a Party we will make reducing the costs of childcare a centre piece of our Party Manifesto in 2015.

  • Claire – thank you for your post I missed the childcare debate at conference so much appreciated. The childcare vouchers are inflating prices in our area, a recent conversation with our nursery went like this

    Me : How much is a full day of childcare?
    Nursery : A full day is £60
    Me : You’re kidding, that’s completely unaffordable!
    Nursery : Well if you get childcare vouchers from work they come out before tax so the ‘real’ cost to you is about £40
    Me: Er, well I guess that sounds just about affordable…

    I genuinely believe that the childcare vouchers are inflating cost, it simply wouldn’t make financial sense for my wife to work without them and I’m sure the nurseries would have to reduce their fees to get business .

    Also the ‘free’ provision of childcare at the moment only provides for 3 or so mornings of care and don’t apply at all over the school holidays, so you end up spending a fortune ‘topping up’ the fees at the extortionate high hourly rates. I hope the detailed proposals for the next manifesto will address these issues.

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