Government and Institutions

Government subsidies have made our childcare sector even more dysfunctional

The House of Commons Education Committee has been hearing about childcare and early years provision from various sector groups. The news isn’t good.

Despite the huge amounts of taxpayers’ money now being pumped into childcare, it’s not working out the way politicians hoped. For one thing, as Liz Bayrum of the Professional Association for Childcare and Early Years warns, the nursery sector is losing some of its best staff because wages cannot be increased.

They cannot be increased because a high proportion of nursery funding now comes from the government under its ‘free’ childcare offer, which from last September has offered working parents 30 hours a week ‘free’ childcare for 3- and 4-year-olds. And of course the amount the government pays per child-hour is necessarily going to be capped each year.

Local authorities could in principle top up this funding, but this is very difficult in current financial circumstances.

I have pointed out in an earlier blog that arbitrary prices of this sort inevitably mean that some providers find it tough to cover costs, which have been rising as a result of tighter government staffing regulations and the ever-increasing National Living Wage.

This has led to a decline in the number of childcare providers. It has also led to unfair cross-subsidisation by those parents who are not entitled to free childcare or are ‘topping up’ their entitlement. Policy has also added to the scarcity of providers in some areas. There is evidence of consequent ‘rationing’ of nursery places by criteria such as receipt of the Early Years Pupil Premium, having siblings at the same nursery and parental willingness to pay for extras such as meals and trips.

Now Sir Kevan Collins of the Education Endowment Foundation claims that the system is advantaging middle-class parents at the expense of disadvantaged children in another way.

In principle, in addition to the general provision for 3-and-4-year-olds, we also provide ‘free’ early years education for disadvantaged 2-year-olds, something which has long been held (though possibly erroneously) to improve their later school performance and life chances. But required staffing ratios for very small children are much higher than for older children, and thus it is more costly to provide for them. Although a higher rate is paid for 2-year-olds, it appears not to fully cover the extra costs. Thus nurseries are responding by offering fewer places for two-year-olds, concentrating instead on the slightly more profitable older pre-schoolers, many of whose parents could well afford to pay full childcare costs.

Taking a different angle, Barbara Merrick, of the British Association for Early Childhood Education, argues that government policies to encourage parents back into work are artificially boosting the use of excessive hours of childcare. She argues that more than 35 hours a week in childcare can have adverse effects on small children.

As Ryan Bourne and I pointed out some time ago, government childcare and early years education has become a confused mass of often contradictory objectives – reducing childhood poverty through getting lone parents back into work, improving life-chances for disadvantaged children, reducing childcare costs for families, improving the quality and availability of childcare, creating a career structure for nursery teachers and so on – with no serious attempt to measure its overall success.

The Commons Education Committee needs to get its collective head round this and come up with something better, simpler and ideally less expensive.

1 thought on “Government subsidies have made our childcare sector even more dysfunctional”

  1. Posted 22/06/2018 at 12:40 | Permalink

    Addendum to this: the childcare case shows what can happen when you provide something’free’ and then have to put a price cap on it.
    A similar case is care homes. However there the adverse consequences have taken a different form. Giulia Giupponi and Stephen Machin report on the consequences of introducing the National Living Wage ( Here wages and employment did not fall over the period they consider, but more worryingly there was a significant reduction in quality of service as shown by the reports of the regulator.

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