Dalia Ben-Galim: The Coalition’s mid-term review was surprisingly silent on childcare

Dalia Ben-Galim is IPPR’s Associate Director for Family, Community and Work. She  joined IPPR after teaching social policy at Oxford University and carrying out research at the LSE. 

Despite the speculation, the government’s mid-term review was surprisingly silent on childcare. Rumours suggest that there is a Yellow-Blue battle raging in government about the new childcare support package with details yet to be agreed. Conservatives tend to favour tax relief and the talk is of new childcare tax allowances of up to £2000. But tax relief tends to be regressive, with the winners likely to be middle class families with two or more children with high childcare costs. With many poorer working families hurting from welfare changes, Nick Clegg is apparently trying to skew any new support towards those on low and middle incomes. Next week we will know if he has been successful.

Liz Truss, the Childcare Minister, sidesteps that part of the debate in her ConservativeHome blog from yesterday on childcare reform. Truss’ claims are consistent and well known; public funding for childcare is complex; child-to-adult ratios in England are stifling for childminders; and regulation is burdensome. But her initial emphasis on recent Dutch reforms seems to be wavering – perhaps influenced by IPPR’s report  pointing out their flaws – and has shifted towards the French system. This is to be welcomed as there is much to learn from French provision, but again it’s important to understand the limits of comparing childcare systems, given the different contexts.

The French have a long history of pro-natalist family policy with relatively generous paid parental leave and home care subsidies. This means that nearly two thirds of children aged under three are cared for by their parents. Licensed family childcare assistants only look after some 18 per cent of under-threes at home, and they typically care for one to three children at a time, although they can now look after four children by law. Only in crèches, which cater for 8 per cent of under-twos, is a higher 5:1 ratio permitted. In addition, 35 per cent of two-year-olds – usually children from low-income families – are in nursery schools (écoles maternelles), a figure which rises to 90 per cent for three-year-olds, where ratios are much higher. So the comparison with France does shed light on a different system from which the UK can learn, but it is misleading to infer from it that looser ratios for childminders have much if any impact on childcare costs, since the proportion of under 5s for whom they cater is small.

Indeed, on the much debated issue of ratios Truss seems to have shifted slightly. Previously her focus was on childminder ratios, but today’s article expands to adult-child ratios in all settings. Childminders are broadly opposed to Truss’ deregulation agenda seeing it as a threat to the status and quality of their profession. Many are worried that relaxing ratios would potentially send the wrong message to parents and could be a deterrent to prospective childminders who might want to enter the sector. So broadening out of ratios to the whole sector poses additional questions on quality and the extent to which inspection and regulation apply across all settings.

Workforce qualifications also play a significant role. Like many Nordic countries, the qualifications attained by the early years workforce in France are generally higher compared to the UK. Using ratios as an indicator for costs is therefore limited given the different levels and status of qualifications. The early years workforce has a critical impact on outcomes for children and the challenge of developing a highly-trained and well paid workforce is a question that remains urgent and cannot be left to market principles. Truss is right to focus on quality but it is a real stretch to suggest that slightly looser ratios will lead to lower prices and higher salaries (not least because in many European countries with different ratios to the UK pay rates are set by national regulation or collective bargaining).

IPPR’s work on the Netherlands showed that demand subsidies don’t bring down prices. The Australian experience adds further evidence showing that demand led funding resulted in a spiralling of costs for parents. In contrast, French nursery schools and the Nordic system are largely supply funded, generating sustainable provision of high quality. So instead of opting for regressive tax reliefs, the government should continue to invest in free or heavily subsidised early years provision, building on its extension of free nursery places for low income two-year-olds. We need to complete the supply of a universal under 5s childcare and early learning system, along Nordic lines. Supply funding gives stability and affordability to parents. This is what will generate the higher rates of maternal employment to which Truss rightly refers. Over the long term, boosting maternal employment rates can generate a net return to the Treasury.

Later this week the coalition’s quad will thrash out their ideas on how best to support parents but the debate on how to support children to develop and thrive should also focus on quality. Universal early years provision must remain the goal.