Britain has the highest childcare costs in the developed world – a typical two-earner family in the UK spends around 30% of their household income on nurseries and childminders, twice as much as in France and three times higher than in Germany or Japan. This is despite the state subsidising childcare to the tune of £7.1 billion annually.
Unaffordable childcare has disastrous social and economic consequences, as women leave the workforce to avoid extortionate childcare costs; this is a hammer blow to equality and national productivity.
This CPS briefing paper puts forward a threefold solution that would deliver for families and the economy while bringing the country in line with its European neighbours. The added bonus: implementing them would not burden the taxpayer with any additional cost.
First, the Government must cut the excessive levels of red tape around early childcare years and relax ratios. England has the most stringent ratio regulations in the developed world, driving up costs for nurseries and thus parents. By simply relaxing child-staff ratios to French levels, we could cut childcare costs in half without undermining safety.
Second, the Government should reassess the compulsory nature of the Early Years Foundation Stage. The EYFS is unusual internationally for being mandated for children below the age of compulsory education. We should assess whether EYFS ought to be scrapped, made voluntary, or restricted in scope; parents ought to have the right to choose the type of childcare they want for their child.
Finally, it should seek to actively increase cheaper, informal childcare and childminders. The UK’s unique amount of regulation on early years childcare has resulted in a rapid decline in the number of childminders – often a much cheaper alternative. Numbers have halved in the last decade from 103,000 in 1996 to 34,800 in 2019 and subsequently driven up costs. Reducing red tape in the sector and pushing these numbers back up would enable parents to return to work and allow nurseries to be more innovative and responsive in what they offer.
During a worsening cost of living crisis, minimising childcare costs could go a long way. Preventing the average cost of a full-time nursery from rising above the average monthly mortgage payment would go a long way with families struggling across the country.
Elizabeth is a researcher at the Centre for Policy Studies. She was previously a Policy and Regulatory Affairs Advisor for the News Media Association and prior to that, she worked for UK Finance as a Government and Regulatory Affairs intern.
