Pre-election childcare sweeteners!

March 2023, Jeremy Hunt’s budget said: “So today I announce that in eligible households where all adults are working at least 16 hours, we will introduce 30 hours of free childcare not just for 3-and-4-year-olds, but for every single child over the age of 9 months.”

At the time, in March 2023, the Conservatives were polling about 20 points behind Labour. Various parts of Hunt’s budget were being announced early in the day, prior to his speech. As I drove to nursery to drop my daughter off on the day Jeremy Hunt was delivering his budget I listened to the radio. One of the main announcements included the policy of extending the ‘free’ nursery provision available to working parents.

My initial thought was: “well played Mr Hunt” - what a well thought out election bribe for young families across the country. My second thought was, “get in”, this will save me about £6,000 a year.

The joy I thought my pocket and wallet would feel was short lived, very short lived. By the time Mr Hunt got to the end of his budget speech he explained how the policy would be phased in slowly over several months and years. Sigh. We would not benefit it at all.

For context, the UK spends about 6 times more on 3-5 years old as it does on 0-2 years old. In Sweden they spend twice as much on 0-2 years old as they do on 3–5-year-olds. Why? And what are the long-term outcomes of this? It is interesting we have such different approaches. Most research shows that families pay between a quarter to third of their income on childcare – that cannot be sustainable or optimal, surely?

I personally think it is important to have a policy landscape that supports mothers back into the workplace following the birth of a child – or at least gives them the choice and flexibility to easily return to the workplace. I think families spending a third of their income on childcare does not support that ambition. In fact, one of the driving forces of this blog is to make that point, repeatedly. Giving mother the option to get back into the workplace sooner I believe has a massively good impact on mothers, fathers, children, society and the economy.

I think the support we give to parents at the initial part of their child’s life is crucial. It is an essential part of getting, and keeping, parents in the workforce, particularly women. It helps give mothers an opportunity and supports them to reach their full potential as a parent but also in their careers. I think giving father longer paternity leave is part of the policy landscape that would enable this. The policies we make to support young parents impacts every single one of us. The child, the mother, the father but also the outcome for your society and our economy.

Do I think the policy, announced by Mr Hunt, is a way of achieving better outcomes, yeah, I guess so, kind of. But I think it is also quite flawed. There is no doubt that parents using about a third of their disposable income on childcare is not good – this financial burden on families disproportionately keeps mothers out of the workplace – most families follow societal gender norms with the mother doing more of the caregiving - it creates long-term child penalties for mothers and solidifies the gender pay gap. Missing opportunities in the workplace and opportunities to build their human capital and are penalised for it.

Of course, it is always important to remember no one piece of policy ever exists in isolation, there is always a cocktail of policies and variables that produce societal outcomes. That is a true of 30 free hours of childcare as it is about the Rwanda policies of Rishi Sunak’s government. For example, what does the actual supply of childcare have on the impact on the cost of the childcare provision? Does Hunt’s policy impact that? The government has about 8 different schemes across different government departments supporting parents. Costly and confusing for the parents and the state to deliver. All these policies will have sperate and interconnecting impacts on choices and behaviour.

The extension of 30 free hours of childcare will, no doubt, have a positive impact in the short term. It will help reduce the burden of childcare on mothers and help them get back into the workplace, if they want to. But I believe the policy is massively flawed in the long run. Most reports and research suggest that families with two working parents are spending between a quarter to a third of their disposable income on childcare provision. The recent impact inflation has had on this spending for parents will have had a significant impact on family’s standard of living.

The problems that face UK parents is that parents have already demonstrated they are willing to pay big amounts of their income for childcare. Without a change in the policy landscape or a dramatic increase in supply then the next few years will see us slowly move back into a position where the costs of childcare returns to gobbling high proportions of family’s income. This will result in having to layer on more tinkering to address the issue in the short term.

Labour has a huge majority and chance to reshape how we support families at this time of their life. They have a chance use this majority to be bold. Tinkering with the number of ‘free’ hours available to parents won’t be enough. The policy landscape needs to radically simplify the schemes available to support parents. They need policies that increase supply and increase the quality of supply in the market. Incentivise graduates to enter this profession. Can we make child benefit taper, giving bigger payments in the early part of child life and reducing as they get older – or at least give parents an option to have the money earlier – give parents choice to make decision to fit their circumstances. Labour have promised to review parent leave in the first year of government, any policies they create in the parental leave space should consider how it dovetails to support parents in the second, third and fourth year of their child’s life.

Labour have said in their manifesto:

“As an initial step, Labour will open an additional 3,000 nurseries through upgrading space in primary schools, to deliver the extension of government funded hours families are entitled to. Supporting children in the early part of their life also means giving parents the flexibility they need to care for their children. Labour will review the parental leave system, so it best supports working families, within our first year in government”

This reads nice in a manifesto –what it means, we will have to see. It is our job to make sure we see generational progress in their first term.