The childcare cost mystery: is it time for Monsieur Poirot to visit the Treasury?

January 14th 2013

We are all aware that the cost of childcare is too expensive for many parents. Yet the Government says it spends £7billion a year on pre-school support? What is the money being spent on? If it’s not going to parents and it certainly isn’t going to providers, then where is it?

The case for affordable childcare has been an issue for the sector for almost a decade. And so it will continue unless we have a full and frank public discussion about why we want childcare and how much we want to spend on it. If not we will continue to ricochet between dodgy policy, ill-considered commentators and ad hoc temporary debates fuelled by a columnist with a bit of clout who also has to pay nursery fees.

The £7billion of expenditure by the government makes the UK the fifth highest spending rate in the developed world on child care. I remain baffled however. If parents are paying 27% of their income on fees and providers are supplementing the nursery grants by up to 50%, then where is the £7billion being spent? The figures just don’t add up. The fact is, no one seems to know exactly what the breakdown of this fabulous figure includes. It’s certainly not funding the nursery grant, nor is it assisting with the training of staff in childcare. It does not even supplement staff salaries in the PVI sector to bring them in line with their statutory colleagues. No one in the childcare sector is a millionaire so, what are we spending £7billion on?

The reasons to support childcare in modern Britain today appear to be:

  1. Government (past and present) says we need to work to stay out of poverty
  2. To work we need access to childcare.
  3. Women are a critical part of the workplace and need to be supported to work with accessible childcare.
  4. Fewer than one in ten women of working age are staying at home to look after their children and families.
  5. Cost of living requires both parents to work.
  6. 23% of children live in a household headed by a single parent
  7. There is a target to reduce child poverty which involves getting people back to work
  8. Government has accepted the research that good quality childcare benefits all children but especially our poorest children.
  9. The Government has invested in universal education for 3 and 4 year olds by providing 15 hours a week and targeted childcare for 40% of two year olds from deprived areas.
  10. The local authority has the responsibility to manage the childcare mixed market to ensure choice and availability for parents

Apparently this costs £7billion pounds?! Here I am puzzled.

Right now to support childcare, parents and providers can access:

  1. Tax credits (childcare element of working tax credit)
  2. Employer childcare vouchers
  3. Nursery Grants Funding
  4. Two year old funding

Can this cost £7billion? I doubt it. I suspect this figure includes universal and specific welfare benefits and other associated childcare costs such as inspection and regulation from government agencies. So, to really understand why childcare costs are so high we need to unpack this £7billion figure and examine the expenditure layer by layer, through different lenses, to confirm where this money is being allocated. Is the Government willing to allow apolitical analysis into current expenditure by industry practitioners? How keen are they to disentangle the disadvantages of the current system to ensure a better and more sustainable future for our children?

Perhaps Monsieur Poirot’s skills are required in the Treasury? His little grey cells may be the only means of solving the mystery as to why childcare remains so expensive at the current indicated price tag of £7billion per year of tax payers’ hard earned money.