Why is childcare so expensive? We ask an expert
The UK has some of the highest childcare costs in the world, increasingly forcing women out of the workplace. I asked Christine Farquharson, from the Institute of Fiscal Studies, why.
Being a woman in her 30s, I’d rank childcare costs before bloating, but after climate in the list of “routinely discussed horrors”. It’s hard to make sense of.
Looking after young children is expensive. In the UK, we have a childcare ratio of one adult to a maximum of three under-twos. If you divide the minimum wage – £9.50 an hour for over-23s – by three, you’re looking at north of £3 an hour per child. It’s labour-intensive, and that makes it expensive. Then add rent, energy, etc.
And other countries don’t have those ratios?
They do, but the ratios for younger children – one- and two-year-olds – aren’t as tight.
Surely then, it’s a case of getting rid of the ratios. Wait, did I just solve the crisis? Go, me! Elect me!
At this point you’re probably on track to be our sixth secretary of state for education in five months! Ratios merit investigation. But childcare providers already struggle to get staff, and talking about having four kids instead of three makes that person on minimum wage’s job 33% harder.
In your recent report on childcare, you identified a broad range of costs, from £45 a week to £350. Why the variation?
Some families are paying an arm and a leg. But they are disproportionately middle- to high-earners, where both parents are working full-time in London and the south-east, and using formal childcare intensively for very young children. Strip away those factors, and a lot of families aren’t using formal childcare for their one- and two-year-olds much. That’s not to say those families wouldn’t like to, if it were cheaper, but only 16% of families say they’re struggling with fees.
Couldn’t there be a sliding scale, so the highest earners pay more while the squeezed 16% get a bit of relief?
Well, it’s possible …
Related: How long can humans live? We ask an expert
Wahey, solved it again! So why is childcare rising faster than inflation?
One thing that comes up a lot is the unintended consequences of policy. What you’re talking about is specific to one- and two-year-olds in part-time nursery places. If you’re a parent of a three- or four-year-old, your costs have gone down dramatically because, since 2017, you started to get access to 30 hours a week of funded childcare. But is the funding enough? If it isn’t, providers will say, “I’m going to put up rates on children who aren’t under the government umbrella.”
What a mess! One-year-olds subsiding three-year-olds! Also, childcare staff really need to be paid more. At least there’s political momentum now.
It’s on the agenda. The 2017 and 2019 manifestos of Labour and the Liberal Democrats had commitments. But the introduction of the 30-hour entitlement has come at the cost of a much less generous tax-free childcare scheme, and much less spending through the benefit system, squeezing low-income working parents. And the more the government says, “We’re going to deliver funded childcare,” the more it starts to feel like a new branch of the welfare state. That would be a political lightning rod.
This is why I could never be a politician – the grubbiness of trade-offs.
Oh, come on – you’ve just done all sorts of issue-solving!
