2017 Pre-budget briefing: Childcare

Key Points

• The childcare system in England is not fit for purpose and is failing to meet the needs of parents, children and the economy.

• Affordability is a key issue. Childcare costs are around 30% of the income of dual-earner couples on median incomes and around 20% for 1.5 earner couples.

• High-quality childcare has the greatest benefit for disadvantaged children. However, there are significant socio-economic gradients in access to high-quality education and care, with the result that those children who would benefit most not having access to such care.

• Supply is not keeping pace with demand. Only half of local authorities in England have enough childcare for parents who work full-time.

• Policy under the current minority Conservative Government, the 2015-17 and the Coalition do not address the fundamental supply, affordability and quality issues in the sector.

• The recent increase in the free entitlement to 30 hours for working parents and the introduction of ‘tax-free’ childcare excludes children from the most disadvantaged households. These regressive changes, with increased support going to better off households, are likely to result in the widening of the achievement gap. Planned increased support in Universal Credit will benefit only some parents, leaving many with poor work incentives. Moreover, any support under UC does not compensate for increasing childcare costs and a lack of adequate supply.

• Urgent action is required to overhaul the childcare system. This requires adequate funding for providers, as well as better training for the workforce and increased support for second earners.

See our full briefing here.