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Are Other Nations Outpacing the UK in Childcare?

A blog by Ebyan Abdirahman, Research and Policy Officer at the Women's Budget Group

Ebyan Abdirahman

Parents whose children started or returned to nursery earlier this month might be astonished to learn that the Government increased funding rates for the so-called ‘free hours’ of childcare from September, because despite those increases most parents are only seeing their fees going up and up – if they can find a place for their children at all.

Early years education and childcare have been particularly high on the political agenda since Chancellor Jeremy Hunt announced a significant expansion of state-subsidised hours in his Spring Budget back in March. In recognition that funding rates for the current offer to parents have not covered the cost to nurseries and pre-schools of providing those hours since the last expansion in 2016, the Department for Education increased average funding rates this year.

Starting from this September, average funding per hour for three and four-year-olds increased from £5.29 to £5.62, while for two-year-olds, the average rate rose from £6.00 to £7.95 per hour. While a step in the right direction, the boost in funding still falls considerably short of what is genuinely required to cover the true cost of providing childcare and early education. The Women’s Budget Group (WBG) estimates that to truly cover the cost of provision in 2023/24, the Government should be looking at £8.54 per hour for three- and four-year-olds and £9.58 for two-year-olds.

The shortfall jeopardises the Government’s plans to expand early education and childcare by compromising the financial sustainability of childcare providers or forcing them to continue to charge high fees to parents for the hours not covered by Government funding.

Early education and childcare (EEC) set out the crucial foundation of a child’s educational journey and lifelong wellbeing. High quality EEC is a crucial element in the levelling-up agenda, as it not only improves children’s lifelong chances, especially those from disadvantaged backgrounds, but it can also help mothers stay in or return to better career opportunities and reduce poverty. Childcare is social infrastructure, as essential to our economic prosperity as roads, railways and telecoms.

It is therefore no wonder that several countries – facing similar economic conditions to the UK – have recently been seriously investing in their childcare systems as part of their post-pandemic economic strategies.

Canada has set its sights high with a $30 billion 5-year national early education and childcare programme. Inspired by Quebec’s resounding success, where affordable childcare for children up to five-years-old led to remarkable social and economic gains, the federal government is charting a path towards a nationwide and affordable childcare system. Increased women’s labour market participation and reduced poverty rates among single mothers are just a glimpse of the transformative power of accessible and affordable EEC for Canada.

Portugal is undertaking a bold experiment, aiming to have expanded free childcare for all children by 2024. The Portuguese Government is linking investment in universal free EEC to addressing poverty and recognising the broader economic benefits derived from providing all children with access to care and education in their early years.

Across the globe in New Zealand, they have honed in on boosting the quality of early education. State funding is conditional on staff qualifications, which ensures high quality care and education. The UK could take a leaf from New Zealand’s book by setting clear qualification standards for all EEC providers with the funding to match.

In the face of these bold plans from our global competitors, the UK risks falling far behind. Just to meet the actual costs to providers of delivering the promised ‘free’ hours to children and their parents, the UK government needs to increase funding for the planned expansion to at least £9.4 billion by 2025/26, a gap of £5.2bn.

But let’s dream bigger. Imagine a future where every child can enjoy free high-quality education and care, the first stage of their education journey, with the public investment to match our ambitions for families and for the economy. Practitioners working in early years deserve to be well paid and respected and parents deserve real choices about how to balance work and family life. That requires a far higher investment along with detailed planning with the sector to expand and train the professionals we need.

Parents will always feel emotional in September as the summer ends, but dropping their children off at nursery, while possibly tugging their heartstrings, shouldn’t strike fear into their hearts with the uncertainty of meeting the bills.

Let’s look to the leading countries on childcare and match their ambitions for investment in vital social infrastructure.

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