Our £7 billion childcare system needs fundamental reform to offer better life chances for all children

27th Jan 2016

The Government is making welcome investment in childcare. But, says Helen Barnard, we could be getting better value and quality to help those on the lowest incomes.

This Government is serious about childcare. The current Childcare Bill shows that commitment and recognises some of the most important issues: making childcare more affordable, raising quality, and improving provision for families with disabled children. In the current fiscal climate, the fact that the Government found an additional £1 billion to invest is significant (despite recent tightening of the conditions for receiving more hours of free childcare (£)). Likewise, the Scottish Government has made childcare a high priority, matching Westminster’s commitment on free hours and looking for its own ways of improving provision.

That’s the good news. But to make a long-term, sustained difference, more needs to be done to ensure the quality of the childcare on offer. Childcare and early education play two roles in preventing and reducing poverty. High-quality early education and early family support can protect children against the negative impacts of poverty and improve their development, contributing to better educational and employment outcomes later in their lives. This is especially powerful alongside good parenting and a positive home learning environment. At the same time, affordable childcare that matches parents’ hours of work or education can reduce pressure on families’ incomes and help parents to work, train or look for a job. This can reduce poverty in the short and longer term.

So what could an effective childcare system that supports parents in work and provides quality early-years support for children look like?

  • Flexible childcare from the age of one, during working hours, 48 weeks a year;
  • fifteen hours of free childcare;
  • fees linked to incomes for all additional hours – free for those on the lowest incomes in work, training or looking for jobs; not more than 10 per cent of disposable income for those on low to middle incomes;
  • qualified staff, paid decently in all types of childcare providers;
  • a cap on total childcare costs to ensure providers receive the right funding but the cost to the taxpayer is kept under control.

Currently, the UK system effectively prevents very low-quality childcare, but childcare needs to be very high quality to deliver developmental benefits. Most children do not experience childcare of the required level. Children living in high-unemployment areas are also less likely to be able access childcare that covers their parents’ working hours. State support for childcare costs is not effectively targeted at low-income parents, leaving some struggling to afford childcare, and gives poor value for money.

From 2017/18, the majority of childcare providers’ income will come from the state. However, the current system provides little accountability for this funding, with very limited ability to ensure it provides childcare that benefits children’s development, or support parents’ employment. 

Proposals developed by the Family and Childcare Trust for JRF envisage a reformed early years and childcare system:

  • a much stronger focus on delivering high-quality care, primarily through a move towards a more qualified early years workforce who are paid in line with their counterparts in schools;
  • linking childcare providers much more closely to early intervention networks and improving their support for home learning, helping families to access services and give children the best start at home;
  • investing in a social enterprise programme to develop business models that are proven to deliver quality and flexibility in less affluent areas.

The report recommends keeping the mixed market of private, voluntary and maintained sector providers, with child-minders and centre-based care both playing important roles. But it proposes funding services directly (rather than by giving cash subsidies to parents) to deliver a more reliable and flexible offer to families.

A ten-year plan to achieve this includes increasing public funding for childcare from 0.48 per cent to 0.85 per cent of GDP over ten years, linked to greatly increased requirements for quality and a cap on costs. The report sets out a roadmap to reach this – with smaller steps that can be taken to improve the current system as well as recommendations for fundamental reform.

Taken together, the proposals represent a major investment but our evidence suggests it will bring big dividends for children, families, our economy and our society.