How can we get childcare to be cheaper and better?

May 18, 2012

The PM is making a speech today about driving down the cost of childcare.

It’s a big issue. In Britain a typical working family can expect to spend more than a quarter (27%) of their net household income on childcare, one of the highest rates in any developed country. I have friends who spend more on childcare for their one toddler than they do on rent. No wonder some mothers wonder if it’s worth going back to work.

That’s despite the fact that government expenditure on childcare and pre-school education as a percentage of GDP is the second highest in the OECD. At 1.1%, we equal Sweden.

Amongst other things, our government spends money on: Early Years Education; Employer Supported Childcare Vouchers; the Childcare Element of the Working Tax Credit; Child Tax Credit; Child Benefit and Sure Start Children’s Centres. Apart from anything else, this can make it pretty complicated for parents to understand what’s available.

The UK also seems to have the worst of both worlds, as our high public expenditure does not mean that parents themselves are paying less, as it does in countries such as Sweden, France and Australia.

What’s going on?

Firstly we’ve made childcare incredibly expensive by very heavily regulating it, often in quite crude ways. The goal of government has been to drive up quality. That’s a laudable aim. But in practice, it’s been done in such a way as to increase costs and reduce flexibility. The cost-effectiveness trade off hasn’t always been made in a scientific way.

For example, the UK regulates the ratio of staff to children in nurseries and childminders, and the ratios are more demanding than any equivalent country. That is particularly true for the cheaper and more flexible types of care, like childminding.

Research by the Department of Education in 2000 into nursery school ratios found that “like nursery class ratios, nursery school ratios appear to have been informally arrived at, with no research or formal review process, and no subsequent evaluation or review.”

It sounds like the government is now going to look again at these ratios. As a first step, perhaps government could at least allow childminders to care for the same number of children as people in nurseries?

Secondly, government has been very wary of putting money in people’s hands, so that they can choose what suits them. Whitehall knows best, and spending has been tied to particular types of care, particularly the more expensive and heavily regulated. Government has pushed people towards using nurseries, not childminders.

Funding has been tied to heavy regulation. For example, while in theory government allows people childminders to deliver the early years free childcare entitlement, in practice, regulation makes this impossible. Only 3% of children access their Early Years Entitlement at a childminders. One reason suggested for this is that childminders not only have to meet the Ofsted inspection requirements and follow the Early Years Foundation Stage curriculum, but also need to be members of a childminding network, and become accredited in order to deliver early years education.

Government attempts to heavily regulate informal childcare have led to ludicrous contortions. It is legal to pay for an unregistered carer to come to your own home, have unregistered care between the hours of 6pm and 2am, or for less than two hours a day, yet it is illegal to have your child go to the home of the carer for over two hours a day. Perhaps the most confusing aspect of regulation is that of care ‘between friends’. It is currently illegal for a person to provide childcare for a friend in exchange for money without being registered, but legal for them to do it for free (although ‘an occasional gift such as a box of chocolates, a bunch of flowers, or a bottle of wine’ is allowed). It is legal for a friend to provide childcare in exchange for services (such as reciprocal childcare, gardening etc) but illegal for someone who is not your friend to do this.

This has led us to the bizarre situation where Ofsted has to have a definition of friends (“people who hold each other with mutual affection and regard”, apparently) in order to enforce their own regulations.

Comment, as they say, is superfluous.

Someone caring for fewer than four children should be able to operate without any kind of formal registration – parents should be free to pay an adult that they trust to look after their child if they so choose.

But what about quality? A lot of academics and professionals working in this area worry that we can’t trust parents to do the right thing if we give them more discretion about how to spend the money.

Quality is really important. The Effective Provision of Pre-school Education (EPPE) study seems to show that pretty convincingly. But have regulations always increased quality at a sensible cost?

EPPE found that while higher quality staff made a difference:

“higher staff qualifications (proportion of staff hours at qualified teacher status) have a positive influence on young children’s social/behavioural outcomes.”

Crude changes in staff-child ratios didn’t:

“There were no significant relationships between ratios and young children’s social/behavioural developmental gains over the pre-school period.”

I am not at all surprised by this. It fits exactly with what we know about teaching older children. Teacher quality is really important. But class sizes are not. (Eric Hanushek at Stanford has been pointing this out for a decade or two, and politicians are finally starting to catch on.)

If regulation increases the cost of childcare without proportionately improving its quality it doesn’t just cost the parents, but will also ultimately cost children – particularly if it means their parents can’t afford to work.

You could also make a more liberal argument that parents are best placed to judge such trade-offs for themselves, given the variety of very different situations that people find themselves in.

I think government needs to think much harder about what really does increase the quality of childcare and early education. Because of the work of people like James Heckman, (his famous curve is below) politicians increasingly think of early years education as a potential magic bullet.

But potential seems to be the key word. A number of government “early intervention” schemes aiming to improve children’s readiness for school seem to be a flop.

The most recent national evaluation of Sure Start noted that:

“No differences emerged between the [Surestart and non Surestart] groups on 7 measures of cognitive and social development from the Foundation Stage Profile completed by teachers… It is disappointing that no effects were discerned for “school readiness” as measured by the Foundation Stage Profile.”

And the National Audit Office also found that the free Early Years Entitlement for three and four year olds has had no discernible impact on Key Stage One results:

“Children’s level of development at age five has improved, but National Key Stage One results at age seven show almost no improvement since 2007. Although the relationship between the entitlement and Key Stage One results is not straightforward, the Department intended the entitlement to have lasting effects on child development throughout primary school and beyond. It is not yet clear, however, that the entitlement is leading to longer-term educational benefits”

In a speech the other day the PM said that he was “hugely attracted to the idea of making child care tax allowable”. A tax allowance, rather than subsidy tied to regulation would give people a lot more freedom over how to spend their money.

If that’s going to be the government’s new approach, perhaps the role of government in trying to drive up the quality of childcare should change too. For those who are paying for their own childcare, the role of government should be restricting to providing measures of quality, where appropriate. And for those who the government are providing for, perhaps we need new and better schemes.

This article originally appeared on The Daily Telegraph’s website


Neil O'Brien

Neil O'Brien
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