Radical welfare reforms should be followed-up by overhaul of childcare, a leading think-tank has said. High childcare costs should be tackled to ensure Government plans to make work pay reach their full potential, according to a new report from a leading independent think-tank.
The Centre for Social Justice (CSJ) report today highlights the scale of the bills for state childcare subsidies – from next year £2.3 billion annually or as much as £910 a month for a couple with two children.
The Government is starting to implement Universal Credit, which will make it easier for people to find work and keep more of their earnings. But the CSJ has said that the Government cannot stop there. It must bolster this move by reforming childcare, which is often unaffordable and can act as a barrier into employment.
Overall, 455,000 UK families are receiving state support towards their childcare costs and average payments amount to £232 a month. Despite the UK having the second highest level of childcare subsidy in the OECD, parents still struggle to find affordable childcare that meets their needs.
The report cites the example of how, without reform of childcare, a single parent with three children needing after-school care who would be 17p an hour worse off if they took a job. A single parent with two children would only be 2p an hour better off in work.
For some large families, the Government would find it cheaper to pay parents the minimum wage to stay at home and look after their children rather than pay childcare subsidy.
Christian Guy, Managing Director of the CSJ, said: “Finding suitable and affordable childcare in the UK is difficult and often hinders some of the poorest parents from working. We need to give people the tools to escape poverty – reforming childcare must be a political priority.
“Throwing more money at ballooning subsidies is unlikely to be the best use of public funds, what we need a sensible and thoughtful policy change.
“Helping parents to avoid the cost of childcare all together – for example, by fostering informal childcare networks, encouraging childminding circles and helping parents to work during school hours – would be hugely beneficial.
“Another challenge facing ministers is to drive down costs so that more parents are better off if they take a job.”
The CSJ calls for a pruning of the red tape covering the provision of childcare.
Regulations limiting the number of children a registered childminder can care for should be eased and schools should be given incentives to provide additional supervision of children before and after class.
The CSJ report concludes: “Work is the principal route out of poverty. But extortionate childcare costs are a major barrier in getting people into work and underline why this Government’s welfare reform is so essential. The next phase in this journey must be a more detailed review of high childcare costs.”
The report adds: “Supply side reforms are now crucial to reduce the cost of childcare for both parents and taxpayers particularly urgent in a time of such public and private debt.
“Such reforms would ensure that it is economically worthwhile for more parents entering employment on the national minimum wage to combine work with paying for childcare.
“The Government needs to support parents to achieve the fragile balance of working and raising their child, while controlling the costs for both parents and taxpayers.
“Models of childcare such as extended schools and childminding circles should be encouraged in order to increase the availability and flexibility of childcare provision, without surrendering on quality and outcomes.”
Key recommendations include:
- The affordable childcare commission should aim to lower childcare costs to below the breakeven cost of childcare in order to ensure that work always pays for parents that have to combine work with formal childcare.
- The Government should ask childcare providers for core and consistent information on all forms of provision, including costs, pricing and occupancy in order to better understand demand and gaps in provision in local areas.
- The Government should consider a modest relaxation of childcare ratios during peak hours. This would increase the flexibility of provision for parents and increase incomes for providers without putting children at significantly greater risk.
- Schools should be encouraged and incentivised to offer regular childcare and after-school activities on the basis that extended schools offer low-cost options for childcare while also improving educational outcomes for the children who attend.
- Schools should be encouraged and incentivised to provide extended service by communicating the benefits of improved outcomes for the children who attend; and allowing extended schools access to childcare subsidy where their provision supports parents into employment.
- National and local governments must shorten the process of becoming a childminder to encourage parents to do so.
- The Government should encourage childminding circles in order to raise demand and lower costs for out-of-hours care (before 8 am, after 6 pm) organised in conjunction with the breakfast or afterschool club, or with Jobcentre Plus.
- Jobcentre Plus should discuss the option of becoming a childminder with parents on income support as they approach the point at which their youngest child reaches five years old.