CEY1469

Written evidence submitted by the Centre for Progressive Policy

The Centre for Progressive Policy (CPP) is an economic thinktank focused on delivering inclusive economic growth. We identify a lack of accessible, affordable childcare as a key barrier to growth and particularly to women’s full participation in the labour market.

A failing childcare system is costing the UK billions in lost earnings. The childcare system could play a powerful role in supporting women in the labour market; there is a strong link between the availability of childcare and women’s employment at the local level. Unfortunately, existing policy has proven inadequate at delivering a childcare system that works for working parents and childcare providers.

The economic thinktank, the Centre for Progressive Policy, conducted a deep dive into women’s participation in the labour market between October 2021 and March 2022 and published two major reports, available here:

https://www.progressive-policy.net/publications/what-women-want

https://www.progressive-policy.net/publications/women-in-the-labour-market-2

One report looked specifically at how inadequacies in the childcare systems act as a barrier to women’s participation in the labour market. CPP found that if women had access to adequate childcare services, and were able to work the hours they wanted, they would increase their earnings by between £7.6bn and £10.9bn per annum - generating up to £28.2bn in economic output per annum. This represents only the short-term gains of tackling under-employment and does not include longer term benefits such as increasing the career progression and lifetime earnings of women and the impact this has on family incomes.

CPP is currently conducting fresh polling of working mothers and analysis of the economic impact of limited access to childcare.

CPP recommendations:

1. Increase the amount of subsidised care that children aged three and four are entitled to so that subsidised care can be provided through the holidays. We recommend that the number of available hours for free childcare for three to four-year-olds should rise from 570 hours per year to 720 hours per year allowing for the 15 hours per week during 48 weeks of the year.
2. Expand childcare subsidies to cover children under the age of two. We recommend introducing a further subsidy to cover 760 hours of care during the first two years of a child’s life.
3. Fairer funding for subsidised care: CPP recommends that the existing funding formula should be replaced with an audit system conducted by local authorities to determine a more accurate cost of hourly care for subsidised places, that can be met by the government.
4. Improve the availability of after-school and holiday care for older children: We recommend the establishment of a central government fund to invest in after-school and holiday clubs for children to pursue extra-curricular activities.
5. Coordinate action across the childcare sector to better develop and disseminate good practice and increase the capacity of local provision: We recommend the creation of a What Works Network for childcare, with a focus on investigating good practice and supporting the creation of more childcare places.
6. Establish a body responsible for monitoring the quality of skills within the childcare workforce: We recommend that a new organisation, Skills for Childcare, be established with a remit to monitor the state of the childcare workforce and coordinate action to support staff development at every level.
7. Expand support and entitlements surrounding flexible working and ensure that workers and employers can pursue mutually beneficial arrangements: We recommend that every worker who requests a flexible working arrangement should be entitled to a 20-day trial to establish feasibility

Barriers to accessing childcare

CPP polling shows that mothers want more support for childcare, not only in terms of access to provision, but from their employers too. Mothers revealed the top three ways in which the government could support them in employment, with:

• 54% prioritising extension of free childcare entitlements from 38 to 52 weeks

• 53% prioritising enhanced flexibility from employers for those with children aged under 10

• 49% prioritising greater availability of before and after school care

Cost

High costs are discouraging a large proportion of mothers from accessing more hours of professional childcare. The average cost of childcare in the UK is over twice the OECD average. A bespoke survey of working mums conducted by CPP found that 58% of mothers ranked lower hourly costs as one of their top three factors that would encourage them to access more professional childcare. Crucially, the appeal of lower hourly costs resonated across the income spectrum.

Availability, particularly of wrap-around care.

Alongside cost, the availability of childcare in the UK is a major barrier, with inadequate provision of wrap-around care – care provided before and after school hours - being a key concern among mothers CPP’s survey revealed 38% of mothers felt greater provision of wrap-around care would encourage them to access more professional childcare, the second highest ranked factor. An estimated 25% of mothers with children aged 11 to 15 claimed that the availability of childcare had decreased in the past two years, while 26% of mothers with primary school children said the same. In contrast only 8% of those with school-aged children (aged 5 to 15) said that the availability of childcare had increased.

The OECD estimates that in England, fewer than one in five local authorities have sufficient childcare available for children aged 12 to 14 to meet demand.[1] The cost of such care is estimated to be £2,400 a year to cover term time.[2] Without specific subsidies for school-aged children and barriers around access and affordability, many parents must adapt their working patterns around the school day making improved access to care for school-aged children critical to delivering a care system that reflects the working demands placed on women.

Low awareness of entitlements

Low levels of awareness of subsidy entitlements is also an issue. While there have been improvements in awareness over the last decade, those with lower household incomes are still likely to be less aware of entitlements than those with higher incomes. This can contribute to a two-tier childcare system, with those most in need being the least likely to access their entitlements. Almost one in three (32%) mothers whose household incomes were less than £7,000 per annum were unaware of the 570 hours of free childcare for three to four-year-olds. Meanwhile just under 20% of those whose incomes ranged from £7,000 to £34,000 were also unaware of the entitlement, compared to just 8% among those whose household incomes ranged from £83,000 to £100,000 per annum. More efforts are needed to ensure those with the lowest incomes are aware of and can access subsidised childcare entitlements.

The childcare workforce is in crisis

Insufficient funding has eroded working conditions within the childcare sector, which has become reliant on low-paid and insecure labour. It has been estimated that the average wage across the early years workforce is just £7.42 an hour in England, compared to £12.57 among the general population.[3] Low wages have resulted in an estimated 45% of the workforce reliant on in-work benefits, with other childcare workers having to take on second jobs to make ends meet.[4] Given that the workforce is predominantly composed of women, this demonstrates yet another way in which women have been let down by the lack of funding made available for childcare.

Adverse working conditions have long undermined the stability of the childcare workforce. Prior to the Covid-19 pandemic, survey evidence suggested that nurseries struggled to retain staff, with a turnover rate of 24%, significantly higher than the UK average of 15% to 18%. However, replacing staff had proven difficult with a vacancy rate of 7.6% for nurseries, while 77% reported serious issues employing appropriately trained staff.[5] Further evidence has shown that early years workers are more likely to remain with the same employer for shorter periods compared to other occupational groups, with many leaving the sector for better paid and more appealing occupations in the retail and hospitality sectors.[6] This has left the sector in a difficult position where raising wages intensifies funding pressures, but low wages are creating a worker shortage.

Despite various initiatives aimed at improving access to childcare, inadequate funding and resourcing has left the sector struggling to meet demand, undermining the benefits of policies that are meant to help working mothers. Among advanced OECD economies, the UK spends the second least amount on childcare, less than 0.1% of GDP. For every child aged three or four who receives 15 hours of care each week, providers lose £335 a year due to discrepancies between the funding they receive and the cost of delivery. Efforts to curb costs have worsened working conditions, resulting in an average turnover rate of 24%.

The UK’s failing childcare system has a disproportionate impact on women

A separate report by CPP explored the unequal gendered division of unpaid care, including childcare and care of other adults. CPP found that one in four women (26%) who provide regular unpaid care for a child have had to reduce their hours at work. One in five women (20%) providing regular unpaid care for a child have been prevented from taking on more hours, despite wanting to. CPP estimates that the amount of unpaid childcare carried out by women in the UK is worth an estimated £382bn per year. Women spend around double the amount of time providing unpaid childcare as men.

In the UK, the uneven distribution of unpaid care is contributing to persistent gender inequalities. This is despite higher levels of labour market participation among women here compared to other advanced economies. For those providing unpaid care, there is an opportunity cost that limits the time they have available to participate in the formal labour market and negatively impacts their earnings potential. As a consequence, women are far more likely to be in part-time work than men, facing potentially lower pay and more precarious working conditions.

This work drew on the results of a bespoke survey which revealed substantial underemployment among mothers. It is clear there are significant economic gains to be made from reducing the amount of unpaid care that women provide, and supporting women to take a greater control over their working lives.

January 2023