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Tuesday 29 January 2019

The real cost of childcare    

Britain has the most expensive childcare in the world, but that’s not its only problem

By Kitty Stewart

“There is no more sombre enemy of good art than the pram in the hall.” In 1938 Cyril Connolly lamented his own lack of career success as a critic and writer. One of his problems, he said, was clear – parenthood.

You can hear echoes of that way of thinking about children in the way our politicians talk about childcare. Just listen to how Britons talk about the country being held back by its provision for new parents. It just does not work for families managing careers. The latest figures for London put a part-time nursery place for a toddler at £184 per week. Even with a 20 per cent government subsidy, that’s still a hefty chunk of an average pay package.


Little wonder that many couples decide it is not worth both working, especially if a second child comes along. And parents who take time out lose opportunities they will never get back. She (usually she) will pay throughout her life and into retirement – and the country loses a great chunk of talent. Why can’t Britain fix this? Other countries seem to do better.

There has been some interest in the approach in Quebec, which rolled out a radical programme offering universal childcare for $5 (roughly £3) per child per day. The effects on maternal employment were dramatic. Now 85 per cent of women aged 20-44 work – one of the highest rates in the world – and economists estimate that the cost to the government has been zero, as increased tax revenues have more than paid for it.

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Day care students on field trip in Montreal

But there is a snag. Studies of child development see Quebec as a warning: researchers found negative effects on children’s well-being, with more illness, anxiety and aggression among children of this generation than other Canadian children. The problem that was forgotten is that childcare is not just about enabling women to work – it is also about children.

The rapid rollout and high take-up meant that new places were provided not in the highest-quality settings but in lower-quality for-profit centres. This provided childcare on the cheap, but at a cost for children’s lives. If a government has more money to invest and an eye on the future, spending it on pushing down the price parents pay for childcare might not be the best idea after all.

Part of what Quebec showed is that childcare that works for parents and children is expensive. Maybe, because children are little, we underestimate that. How hard can it be to look after a baby or two? What skills do you really need? Surely anyone can do it with a bit of patience and a soft spot for a cute child?

In fact, we know that practices in childcare settings vary enormously and that what goes on makes a huge difference to both children’s experience and their development. The nature of interactions between adults and children has proved to be key – children need staff who are warm, sensitive and responsive to their needs, stimulating their curiosity, moving their play on to the next step. High staff-child ratios are part of what enables this, but so are qualifications, pay and conditions.

In Britain, childcare has traditionally been something teenage girls are offered as an option when they haven’t done well in school at the age of 16; that or hairdressing – “hair or care?”

Thanks largely to the childcare strategy launched by the Labour government in 1998, we now have a national play-based curriculum for the early years, a system of central government inspection, minimum qualification requirements at the level of the childcare setting, and – until the austerity years – government funding to support investment in improving staff qualifications.

But too much of the sector remains low paid and poorly qualified compared with many of the UK’s European neighbours.

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Trainee nursery worker in Germany

So, if the quality isn’t great, why do Britons pay so much? The UK does not spend as much as some other countries on childcare subsidies, but a fundamental problem for the country is that the underlying cost of buying care is unusually high.

Part of the issue is that Britain suffers from badly designed policies that drive up costs. Parents have access to some subsidies, which they can take to a range of providers – but the providers face few financial constraints. Norway, by contrast, regulates the profits of private providers. Australia and the Netherlands cap the amount that can be reimbursed per hour, effectively capping fees. The UK does little of that, so what government help there is goes straight into juicing prices.

What new parents in Britain may miss as they contemplate prospective nursery costs is that the period of eye-watering bills is really fairly short. Most children in the UK start school relatively young, entering reception class the September after they turn four. By contrast, school starts at six in Germany and Norway, at seven in Finland and Sweden.

In addition, in the UK, the government has rolled out other subsidies – 30 free hours a week for three and four-year-olds with working parents. So the period for which parents predominantly foot the bill has been further reduced – we’re talking about two to two and a half years between the end of parental leave and funded three-year-old places kicking in, not four to six years as in some other countries.

Part of the reason for the high cost of childcare for babies and toddlers in the UK is precisely this short time span. Staff-to-child ratios are necessarily higher for smaller children, so if British nurseries are charging only for under-threes, parents will have to eat all that cost all at once.

In countries where nurseries have a broader mix of ages, you can overcharge the parents of five-year-olds and undercharge the parents of younger children, so the high costs of caring for infants get smoothed out over a few years.

Still, that is little consolation for a new parent facing a cash squeeze. It is worth trying to fix it. But because there are underlying reasons why British childcare is so expensive, fixing it would mean Britain would need to become one of the higher early-years spending nations in Europe. That would be money well spent.

We can make it possible for parents to work and improve the development of our children. We just can’t do it on the cheap.

Kitty Stewart is Associate Professor of Social Policy and Associate Director of the Centre for Analysis of Social Exclusion at the London School of Economics