King's College London

The Fawcett Society’s recent poll for Equal Pay Day found over a third of women would like to work more paid hours, but a lack of affordable childcare is a major barrier. A world-class childcare system would allow adults to make truly free, informed choices about parenthood and work, while providing children with a strong foundation for their futures during the most critical stage of development. Yet the UK system falls short: a complex picture of childcare entitlements – including government-funded hours, tax-free childcare, and Universal Credit – do not sufficiently cover many parents’ fees. Furthermore, early years professionals earn on average less than the National Living Wage, and years of insufficient funding has destabilised providers’ finances, placing the quality of childcare at risk.

The issue is, of course, highly gendered. Women’s paid and unpaid labour props up society and our economic systems – as the majority of the childcare workforce, and as partners and mothers continuing to hold the biggest share of domestic and child-raising responsibility. Without affordable and accessible childcare, women face a gender pay gap amid a worsening cost-of-living crisis, while people of all genders face impossible and unfair decisions surrounding work and parenthood. Reform is urgently needed.

Looking to other countries can provide a useful starting point. Many studies have focussed on the childcare systems of Nordic countries, where generous policies accompany greater female participation in the labour force and lower gender pay gaps. However, the Nordic models of tax and spending are very different from those in the UK. Instead, in our July 2022 report, the Fawcett Society investigated childcare in five comparable “liberal welfare states” – Australia, Canada, Japan, New Zealand, and Switzerland. For each country, we reviewed current childcare policy and explored its relationship to women’s labour market and child development outcomes.

We found that several countries are introducing large-scale reforms to childcare policy. Canada is implementing universal low-cost childcare, planning huge investment and a reduction in parent fees to $10 per day on average. This seismic change was built on decades of campaigning, and catalysed by pandemic lockdowns and centre closures highlighting the critical and fragile nature of services. The principles of change began in Quebec, which has had low-cost universal childcare since the late 1990s, with dramatic increases in women’s labour force participation rates. Japan saw similarly large-scale reform in 2019 – to incentivise its residents to have children amid falling birth rates, the country introduced free childcare for three-to-five-year-olds and zero-to-two-year-olds from low-income families. Australia and Switzerland are also making change on a smaller scale by increasing subsidies for parents.

By contrast, until recently the UK government was proposing to worsen staff-child ratios as a means of cutting costs. This would have meant fewer staff per child in settings which are already struggling for resources, with childcare organisations highlighting funding levels below the cost of delivery and a worker retention crisis. Staff wages for childcare workers in the UK are very low – the lowest of the countries we compared and less than the National Living Wage on average. Changing ratios would put extra strain on an under-resourced, under-compensated workforce, of which women form the vast majority – 96 per cent. Moreover, sufficient staff-child ratios are necessary for supporting children at a critical developmental stage, with effects of early experiences impacting lives for years to come.

For parents, childcare is unaffordable in the UK, seeing the highest fees of the countries we compared and proportionally higher costs for lower income families. Funded hours are available for three-to-four-year-olds, and two-year-olds from low-income families, but are unavailable for younger children and only cover term time – while countries like New Zealand offer year-round free childcare. Tax-free childcare sees low take-up, and the childcare element of Universal Credit is paid via reimbursement, leaving parents out of pocket or unable to access childcare – however, in Australia, Canada, and New Zealand, subsidies go straight to the childcare provider. Affordability is crucial: international evidence demonstrates that it increases women's labour market participation significantly, while 1.7 million women in the UK are unable to take on more work due to childcare issues.[ix] Affordable childcare would also allow women to make truly free choices about the division of caring responsibilities – an essential step in closing the gender pay gap.

To achieve this while maintaining high-quality services, we need substantial investment, but UK public spending on childcare is just 0.6 per cent of GDP, the lowest of the countries we reviewed, bar Switzerland. Investment in childcare provides large economic returns, through unlocking the potential of women shut out of the labour market. For England to have a world-class childcare system that benefits both parents and children – allowing parents to work, and children to build the foundations for their future – we urgently need wholesale reforms which address quality, affordability, and fair pay and conditions for the early years workforce. We must value the work that women do.