The childcare cost mystery: is it time for Monsieur Poirot to visit the Treasury?


Monsieur PoirotWe are all aware that the cost of childcare is too expensive for many parents. Yet the Government says it spends £7billion a year on pre-school support? What is the money being spent on? If it’s not going to parents and it certainly isn’t going to providers, then where is it?

The case for affordable childcare has been an issue for the sector for almost a decade. And so it will continue unless we have a full and frank public discussion about why we want childcare and how much we want to spend on it. If not we will continue to ricochet between dodgy policy, ill-considered commentators and ad hoc temporary debates fuelled by a columnist with a bit of clout who also has to pay nursery fees.

The £7billion of expenditure by the government makes the UK the fifth highest spending rate in the developed world on child care. I remain baffled however. If parents are paying 27% of their income on fees and providers are supplementing the nursery grants by up to 50%, then where is the £7billion being spent? The figures just don’t add up. The fact is, no one seems to know exactly what the breakdown of this fabulous figure includes. It’s certainly not funding the nursery grant, nor is it assisting with the training of staff in childcare. It does not even supplement staff salaries in the PVI sector to bring them in line with their statutory colleagues. No one in the childcare sector is a millionaire so, what are we spending £7billion on?

The reasons to support childcare in modern Britain today appear to be:

  1. Government (past and present) says we need to work to stay out of poverty
  2. To work we need access to childcare.
  3. Women are a critical part of the workplace and need to be supported to work with accessible childcare.
  4. Fewer than one in ten women of working age are staying at home to look after their children and families.
  5. Cost of living requires both parents to work.
  6. 23% of children live in a household headed by a single parent
  7. There is a target to reduce child poverty which involves getting people back to work
  8. Government has accepted the research that good quality childcare benefits all children but especially our poorest children.
  9. The Government has invested in universal education for 3 and 4 year olds by providing 15 hours a week and targeted childcare for 40% of two year olds from deprived areas.
  10. The local authority has the responsibility to manage the childcare mixed market to ensure choice and availability for parents

Apparently this costs £7billion pounds?! Here I am puzzled.

Right now to support childcare, parents and providers can access:

  1. Tax credits (childcare element of working tax credit)
  2. Employer childcare vouchers
  3. Nursery Grants Funding
  4. Two year old funding

Can this cost £7billion? I doubt it. I suspect this figure includes universal and specific welfare benefits and other associated childcare costs such as inspection and regulation from government agencies. So, to really understand why childcare costs are so high we need to unpack this £7billion figure and examine the expenditure layer by layer, through different lenses, to confirm where this money is being allocated. Is the Government willing to allow apolitical analysis into current expenditure by industry practitioners? How keen are they to disentangle the disadvantages of the current system to ensure a better and more sustainable future for our children?

Perhaps Monsieur Poirot’s skills are required in the Treasury? His little grey cells may be the only means of solving the mystery as to why childcare remains so expensive at the current indicated price tag of £7billion per year of tax payers’ hard earned money.

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  1. #1 by Simona Mckenzie on January 14, 2013 - 5:10 pm

    Maybe Poirot solved the finances for Belgium’s childcare….our Sherlock Holmes would say ‘elementary’ when looking at the funding streams, grants, LAs funding and the miriads of incentives that go nowhere near children, families or providers

    I strongly believe if funding parents directly via a childcare voucher that cannot be spent on anything other than childcare, increase the c/vouchers and make them universal to all parents whether employed or unemployed
    Above all LAs funding needs to be strictly ringfenced and LAs made to publish where it is spent, penny for penny

    In addition the DfE needs to admit that the free entitlement is the ‘main cause’ why fees started to rise dramatically after 2008. If providers were properly funded for the 15hrs there would be no need to increase fees outside of these to remain sustainable

    • #2 by June O'Sullivan on January 20, 2013 - 9:35 pm

      I agree with you. Fundamentally, if we get the right funding for the “free” offer we can better support parents and keep the fees at fair cost for parents.

  2. #3 by Sue Chambers on January 14, 2013 - 4:10 pm

    You have hit the nail on the head. Where is this money going? I think, under the Freedom of Information Act, we deserve a breakdown of the figures.

  3. #4 by Paddock, Shirley on January 14, 2013 - 3:33 pm

    You are brilliant sometimes June – loved this blog ☺

    Shirley Paddock
    Early Years Development and Safeguarding Manager
    215 Lisson Grove
    London
    NW8 8LF
    Tel: 020 7641 3929
    Fax:020 7641 1932
    spaddock@westminster.gov.uk
    http://www.westminster.gov.uk/children

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