CEY1688

Written evidence submitted by Working Families

 

Working Families is the UK’s national charity for working parents and carers. Our mission is to remove the barriers that people with caring responsibilities face in the workplace.

This evidence submission is based on insights from our free legal advice service for parents and carers, discussions with our parent and carer panel, and ongoing policy work.

Summary

Sourcing affordable and accessible childcare is one the biggest barriers that parents face in balancing their work and caring commitments.

Childcare in England is expensive, and the current cost of living challenges are compounding this for many families. The current system of accessing financial support is complex, and with a £1.7 billion underspend on the tax-free childcare budget between 2017-20, support is clearly not being used effectively. Parents also do not feel that ministers are not doing enough to support parents with the cost and availability of childcare, as overwhelmingly demonstrated by a Mumsnet poll we supported in late 2021 in which 96% of parents wanted to see more government support.[1]

Early years providers and staff are facing a huge challenge. 35% of local authorities have already reported that the number of providers permanently closing in their local area has increased.[2] With inflationary pressures increasing costs and challenges for providers, it is likely that we will see further closures of early years providers impacting the ability of parents, notably from low-income households, to access services.

Our experience of supporting thousands of parents each year tells us that the current state of childcare provision is damaging to the financial resilience of families and disproportionately impacts the carer aspiration of women. A growing body of evidence is also showing that national productivity is hindered by this situation.

While we welcome the Government’s steps to support and invest in new Family Hubs, we are unclear on the progress of the Government’s commitment to invest “a new £1 billion fund to help create more high quality, affordable childcare”[3], and are calling on the government to increase investment in the system.

Recommendations

Working Families calls on the Education Select Committee to make the following recommendations:

1. The Department for Education, BEIS, DWP and the Government Equalities Office to launch a full review of childcare and early years education in the England with the ambition to provide better access and affordability. This review should also encompass UK wide parental leave and pay policies, and receive input from the devolved nations.

2. Increase the maximum amount of childcare costs paid under Universal Credit and move to upfront payments or vouchers for childcare so that parents on Universal Credit are not barred from accessing childcare.

3. The government should fund the full delivery costs for childcare providers delivering the 15 and 30 hours entitlements.

4. Ahead of the findings of a wider review Statutory Paternity Pay should be raised to ensure that new fathers are able to afford to take their leave, and Statutory Maternity Pay / Allowance should increase to match the Living Wage. 

5. Parents need to be better informed of the entitlements available to them.

Part 1: Childcare Entitlements

1.      How affordable and easy to understand is the current provision of childcare in England and what steps, if any, could be taken to improve it, especially in relation to families living within the most deprived areas in England?

Working Families regularly hears from parents struggling to afford and navigate England’s childcare and early years system. Our online guidance on childcare entitlements and support towards costs are amongst the most viewed pages on our website. Similarly, our legal advice service receives hundreds of enquiries related to childcare each quarter, with 64% of our benefit related inquiries relating to financial support for childcare and parental leave.  

“After I returned to work we found ourselves paying £1,200 a month for childcare. It’s just so expensive and it’s often felt like society relies on women sacrificing their carers to make it work”

Working Families’ Parent and Carer Panel member

A major Mumsnet poll of 20,000 parents, supported by Working Families, revealed that for a third of respondents their monthly childcare costs exceeded their rent or mortgage payments.[4] This rose to 38% for those parents working full-time, 38% for single parents, 40% for those under 30, 42% for parents receiving Universal Credit, and 47% of parents with a Black or ethnic minority background.

This experience is reflected in OECD’s estimates showing the UK’s childcare costs to be amongst the highest in the developed world at over 30% of the average wage.[5] Additional research from Fawcett Society suggests that with the average weekly cost for full-time childcare for a three or four-year-old ranging from £91.86 for a childminder to £101.58 at nursery, a lower income couple (on 60% of the average wage) will spend a quarter of their household earnings on childcare, even when entitlements are accounted for.[6] 

While government support for childcare costs for children between the ages of three and four is welcome, families require support with costs from much earlier on so they can balance work and caring commitments. There is a lack of financial support for most families’ childcare costs for younger children, particularly after the 39th week of claiming Statutory Maternity Pay – which is below two thirds of the average wage.   

Parents struggle with these early costs, and this is particularly true for lower income parents who lack savings and often have the least access to credit for upfront costs. The average price of a full-time nursery place for a child under two in 99% of local areas was higher than the maximum costs provided through Universal Credit and the benefits system.[7] The Mumsnet Survey also revealed that 29% of parents (and 52% of parents receiving Universal Credit) said that they had taken no holidays away from home to cover childcare. Alarmingly the same poll found that 34% of those with a household income below £20,000) said they had to cut back on essential items, including food and housing, as a direct result of childcare costs.[8]

“When my financial situation changed I found myself struggling with upfront costs for childcare and holiday clubs. I couldn’t access credit the way I used to. It was also really difficult to find childcare that fitted around shift work. We just need childcare to be in synch with work – it shouldn’t be this hard”

Working Families’ Parent and Carer Panel member

Aside from the costs of childcare, parents are not always aware of the entitlements available to them, as demonstrated by the underspend tax-free childcare (see question 3), or how taking on additional work might impact their entitlements as their Universal Credit payments are impacted. Frustration is also often expressed about additional costs associated with accessing entitlements and the fact that the entitlements are only accessible the term after an eligible child turns two or three years old.

The challenges around the affordability of childcare require long-term solutions which the Government should review in tandem with considering the adequacy and equity of the UK’s parental leave offer. Greater levels of investment will clearly be required.

In the shorter-term however, the Government should ensure that childcare providers are paid the full delivery costs to ensure that standards can be maintained and provision is not reduced in poorer localities.

Additionally, to help the poorest households the Government should increase the maximum amount of childcare costs paid under Universal Credit and move to upfront payments or vouchers for childcare so that parents on Universal Credit are not barred from accessing childcare.[9] 

2.      Are the current entitlements providing parents/carers with sufficient childcare, and to what extent are childcare costs affecting parents/carers from returning to work full-time?

In addition to issues related to the affordability of childcare, especially between Statutory Maternity Pay ending and the 15 and 30 hours entitlements beginning, parents and carers tell us that the availability of childcare is also an issue. Entitlements for free childcare hours are only available for 38 weeks of the year, and are only accessible the term after a child turns two or three.

“There are 13 weeks of school holidays when the nursery is closed and I only get 4 weeks holiday – some of which I lose if I need to take time off to look after my kids when they’re ill. In total that’s a nice week deficit across the year.”

Working Families’ Parent and Carer Panel member

Issues around childcare availability impact parents across social and occupational categories. Parents in cities such as London are, according to the Working Families 2022 Index, least able to rely on grandparent care. Shift workers also find it difficult to access wrap around or out of hours care.

The high costs and variable availability of childcare form major barriers to parents and carers returning to full time work. The Mumsnet poll found that 94% of parents who changed their working patterns after having children said childcare costs factored into that decision and 73% reported difficulties finding appropriate childcare, rising to 80% for single parents and parents of colour.[10]

Unsurprisingly, it is mother’s and women’s labour market engagement that is most impacted by insufficient government support towards childcare. The representative polling behind the 2022 Working Families Index found that mothers were twice as likely to report availability of childcare having a ‘big impact’ on their ability to work than fathers.

In the absence of affordable childcare mothers, especially single mothers, will often reduce their hours or go part-time. This is reflected recent figures from the ONS’ Labour Force Survey which reveal that 38% of working women work part-time and that women make up three quarters of part-time workers.[11]

While working part-time is often a positive choice, it can have implications for an individual’s carer development, and as a societal trend it has structural consequences in the form of the gender pay and pension gaps.

“Having reduced my hours to lessen the financial burden of childcare I found myself being overlooked at work and felt frustrated that my carer would not progress as I’d intended it to”

Working Families’ Parent and Carer Panel member

As well as reduced hours, insufficient childcare can also lead to women leaving the workforce. Labour Force Survey stats provide any idea of the scale of this with one and three quarter million of the UK’s almost nine million economically inactive working aged adults citing caring for family as their reason for not working.[12]

3.      Whether the current Tax-Free Childcare scheme, and support for childcare from the benefits and tax credit system, is working effectively or whether these subsidies could be better used within other childcare subsidies.

“The tax-free scheme helped when we found out about it, however we were disappointed that there were additional costs when we tried to access our 30 hours entitlements.”

Working Families’ Parent and Carer Panel member

In 2020 the Treasury released figures that showed in 2017-20 the Government forecast expenditure for tax free childcare was £2.1bn for the three years, yet actual expenditure was £385m, leaving £1.715bn in underspend. Tax-free childcare funding is not ring-fenced and ‘since its launch in 2017, the Government has passed £2.4bn of unspent money back to the Treasury’.[13]

January 2023

Working Families, c/o Buzzacott LLP, 130 Wood Street, London, EC2V 6DL   
tel 020 3833 2050 email office@workingfamilies.org.uk web www.workingfamilies.org.uk                                                                                                                 

Working Families is a charity registered in England and Wales (No 1099808) and Scotland (SC045339)
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