Could free universal childcare work in the UK?

By: Sarah Willis, Freelance finance and business writer
Published: Thursday, July 3, 2014 - 09:26 GMT Jump to Comments

The recovery is taking hold, GDP is on the up. All is square with the world. Except... it's not. The cost of living crisis – the major theme of Labour's pre-election campaign – is still with us. Ordinary people's disposable income is still disproportionately squeezed by the major planks of housing, energy and childcare.

Building on a previous Labour proposal for free childcare for all pre-school children - the 'Scandinavian' model - the children's charity 4Children has gone one further and suggested universal childcare for all children up to 14 years of age – including anti-social hours.

Sounds expensive. Particularly in a time of perpetual austerity. But could it work? Should it work?

The problem with childcare

Let's tackle that 'should' first. Expensive welfare provisions like these aren't proposed lightly. What problem are we trying to solve?

It's widely acknowledged that the UK has some of the most expensive childcare in the world. The Family and Childcare Trust says families pay on average £7,500 annually on childcare, compared to £7,200 on average for a mortgage. A 2012 OECD report found that spending on childcare eats 27% of net family income, higher than in any OECD country except Switzerland.

Aside from being just another cost that keeps going up – alongside energy and housing – that eats into disposable income, meaning fewer toys for Timmy, and Dad giving up single malts for blends, this has serious ramifications for the wider economy.

According to the Resolution Foundation, the UK economy is missing at least a million women from the workplace. The most logical explanation for the lack of women in the workplace is childcare. Faced with ballooning childcare costs, it works out better for most women to stay at home and look after the children – particularly given the necessity for part-time work in order to fit around the school timetable.

Those women are not contributing their labour to the economy, nor their tax receipts. They represent a drain on the state through no fault of their own. This is particularly true of lower income and single parent families where their primary income is benefits. The cost of childcare plays a major part in making work cost more than benefits. Unless the family has a sympathetic and available grandparent, it just doesn't pay to get a job.

Why universal childcare

The government already has a system in place for helping families afford childcare, so why make it universal?

Firstly, the current system is fundamentally flawed. As with all tax relief and tax based welfare, the most benefit goes to those who need it least. Secondly, it's failing at its own goals. As Yvonne Roberts put it in The Guardian: “The Childcare Act 2006 placed a statutory duty on local authorities to provide sufficient childcare “as far as is practicable”. [But] millions of children are denied care because more than half of local authorities … are not meeting their legal obligations.”

Further, there is significant evidence from other countries that the demand led funding model currently adopted actually results in increased costs for parents, rather than reduced. In other words, continuing down the current road costs the nation more than adopting a supply model.

Finally, as is well known, the quality of early years care and education is directly correlated with success and happiness (or lack thereof) in later life. As with universal education, universal childcare would guarantee a minimum standard for all – something the current system simply doesn't achieve.

Is universal childcare affordable?

OK, so universal childcare would be a good thing. But so would free bags of apples for every family. Is this pie-in-the-sky stuff? Surely it can't be affordable?

According to the IPPR, taken in the medium to long term, universal free childcare is not only affordable, but profitable. The think-tank calculates that over four years, “universal childcare pays a return to the government of £20,050 … tax revenue minus the cost of childcare for every woman who returns to full-time employment.”

This is not to mention the profit wrought in the long long-term by the impact of higher quality care and lower familial financial stress on the child and their adult contribution to the economy i.e. happier children grow up to make better workers.

It's important to underline 4Children's proposal that universal childcare be provided for children up to 14. It's easy enough to see that many of the benefits outlined here fall by the wayside if provision is only for pre-schoolers. As soon as the kids are packed off to school, Mum has to work part-time again so she can pick them up at 3.30.

Lengthening the school day would achieve the same effect, as has been suggested before. But when teachers are already suffering from 60 hour weeks, do we really want to put more strain on them? Let's not confuse educators with carers.

The case for universal childcare is clear. It could have a transformative effect both economically and on the quality of British life. And if the IPPR's figures are correct, it's more than affordable. What we need now is a government prepared to look – and spend – beyond the election cycle.

Sarah Willis is a freelance finance and business writer working out of Brighton

The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of The Information Daily, its parent company or any associated businesses.



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