King's College London

The UK is a world leader, but it's not a positive. According to the OECD, the UK tops the rankings of developed nations when it comes to net childcare costs. And it's unlikely that the Budget will make much impact as it doesn't address the fundamental problems with the UK childcare model. Childcare covers a whole range of care, from early years to wraparound, special needs and holiday care. All are in crisis, but here I focus on early years care.

Early years childcare in the UK operates differently in the different nations – for example, Scotland has recently allocated more money to cutting bills for the lowest paid. Yet there are many broad similarities, such as subsidised schemes for three- and four-year-olds.

The issue of how to make good quality childcare in the UK affordable and available in all parts of the country has been debated for many years. It has become more urgent as more mums have stayed in the workplace, increasingly working full-time hours and, in particular, as the cost of living crisis has bitten deep into people's earnings. In the early 2000s there was a big investment in childcare – Sure Start centres, some of which provide affordable early learning and full day care for pre-school children – were introduced, followed by 15 hours’ free childcare for three- and four-year-olds for 38 weeks of the year. This was extended to disadvantaged two-year-olds in 2013, and in 2017 some working parents were able to claim 30 hours a week of free childcare during term time. There is also tax-free childcare whereby parents can claim back up to 20 per cent of costs through tax relief, but this has struggled to take off, although claimant numbers have been rising recently. And parents on Universal Credit can claim up to 85 per cent of their childcare costs for their first child.

Yet still the cost of childcare is prohibitive for many and there have been concerns that the significant increase in the number of women in their 30s and 40s dropping out of the workforce in the last year may be linked to childcare costs and availability.

One major problem is that the money the government provides for “free” childcare doesn’t cover the full cost of providing a child’s place at a childcare provider - and this is the major worry over this week's Budget announcement extending the 30 hours offer to younger children. That means childcare providers have to find the difference from elsewhere, for instance, by charging extra for younger children. Through Covid, childcare providers were hard hit, although many stayed open for most of the pandemic. They had to fight hard for support from the government, which tends to treat them more as private businesses rather than education providers or essential infrastructure, despite the links between early years care and children’s long-term educational performance.

The most recent government figures show that many parents have bypassed formal childcare altogether, often because of the expense. But what impact does that have long term? It means parents – usually women – taking lower paid, flexible, often insecure jobs to fit around what childcare they have available, moving to be near family, setting up as self-employed – but generally not making much money out of it –, taking career breaks and facing trouble getting back into the workforce at anywhere near the level of pay they had before having children. The impact is cumulative and for that reason the gender pension gap is much greater than the gender pay gap.

There are so many different factors that are just not taken into consideration or acknowledged because women have usually taken the hit and no-one has cared to notice them. It is left to individuals to manage the situation in a band aid approach to getting through the week. The whole thing is absolutely exhausting and pushes many parents to the brink in so many ways.

Organisations like the Women’s Budget Group have long argued that childcare – be that pre-school care or wraparound schools care – should be considered essential infrastructure, similar to roads and public transport. Ahead of this week's Budget the mood music suggested the Government have finally grasped that, if only due to political and economic expediency, given everyone from business leaders to Labour have been talking about it. Will the Budget announcement, which also includes upfront childcare fees for those on Universal Credit and a lifting of the cap on the amount they can claim back on nursery fees, make a difference? It certainly sounds good, but the fundamental problem is whether the money it provides for the 30 hours actually covers the full cost of places. It looks like it is significantly less than what is needed. Therefore, given that extending the 30 hours to one and two year olds will put nurseries in more of a financial hole and many have closed or are teetering on the brink, there are worries that things won't get that much better. It's no good having "free" childcare if there aren't many childcare providers left or able to offer it.

Another plank of the Budget was to change the ratios between staff and children for childcare providers. Campaigners argue that that would reduce safety and do little to bring down childcare bills. That is because any savings would need to be ploughed back in to cover rising costs, including staffing costs.

Other proposals include financial incentives for childminders, whose numbers have plummeted in recent years.

Childcare providers have been calling for more investment for years – the UK spends a very low proportion of its GDP on early years in comparison to countries like France. It tends to be the smaller providers, often in disadvantaged areas, that are going to the wall. Chains can cover the risk better by funding childcare in disadvantaged communities with profits from richer areas, but childcare needs to be considered an integral part of the community to ensure its sustainability. For this to happen it needs to be valued more and local government needs to have more control over spending as they know better what local needs are.

While any extra money is a good thing, the childcare system in the UK is too complicated, too bureaucratic and too wedded to the idea that childcare is a private parental issue rather than a public good. We need to see a proper assessment of the value of childcare and care generally – not just in broad monetary terms, but in terms of the lifetime impact on people's life chances. The UK simply cannot afford to keep kicking the care can further down the road.