Annabel Denham

The misguided experiment of British childcare

Matt Cardy/Getty Images

Everybody agrees that childcare in Britain is an unholy mess. According to a new study, tens of thousands of parents are desperate for ‘radical change’. And yesterday, after a petition bemoaning childcare costs received 112,907 signatures, Labour’s Catherine McKinnell kicked off a Westminster Hall debate to address funding and affordability.

Her answer, inevitably, was more state spending — on nurseries, parents, even an independent review. But the awkward truth is that more state interference makes childcare more expensive.

We already pour £6 billion of taxpayer money into the sector each year, and the results are miserable. The quality is often poor, staff retention a perennial battle, and closures common. In the 11 months to June 2021, 370 child care providers closed. While female participation in the workforce is often cited as reason for government intervention (think gender pay gap reporting), there’s limited evidence that interventions we’ve made so far actually assist women back into work after maternity leave. But this doesn’t stop us from spending lots of taxpayers money, regardless of the outcome.

MPs were at pains to stress yesterday that a full-time place at nursery costs, on average, £14,000, vastly more than many parents can afford. Yet the voices explaining how and why successive governments have pumped up demand through subsidies while limiting supply with formalisation and regulation were very quiet indeed.

Let’s start with the subsidies. Since 2010, government has offered all parents, regardless of means, 15 ‘free’ hours of childcare per week for children over the age of three. But as it does with elder care, government pays below the market rate. That leads to cross-subsidisation – from self-funders in care homes, or non-subsidy children in nurseries.

The result is that parents with younger children, or those requiring special or comprehensive care, are charged hefty fees in an effort to recoup costs.

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