The UK is unique among developed nations in that childcare in the UK suffers from both high private childcare costs for families and high public cost – which effectively means parents are charged for childcare twice over. A typical two-earner family in the UK can expect to spend around 30% of its household income on childcare.
It is vital that we solve this issue urgently. The economic burden faced by families often means both parents going back to work often doesn’t make economic sense. Almost inevitably, this means the mother is the one who ends up staying at home. Women pay for this time out of work for the rest of their lives. Twenty years after the birth of their first child, a woman’s hourly wage will on average be a third lower than the hourly wage of a man when adjusting for similar levels of education.
It also impacts wider society. We are facing a looming demographic disaster as British birth rates have been steadily declining over the last couple of decades. Younger people are feeling increasingly insecure about their future and are anxious about the potential financial cost that having a child would entail. The fact that many people do not feel financially secure enough to start a family, or have a smaller family than they might otherwise wish for, is not only a personal tragedy for those families but a huge demographic challenge. Official statistics show that by 2050 more than 30% of the population will be over 60, placing a greater burden on the economy as the elderly are more likely to need medical assistance as well as drawing pensions. A further decline in birth rates would see fewer people paying taxes and a smaller revenue base supporting a greater portion of the population.
A significant part of the problem is just how much red tape is wrapped around early years childcare, in a way that is unique. Most notably, England has arguably the strictest staff-to-child ratios in the developed world. Currently in England one adult is required for every three babies, four toddlers, or eight children over the age of three.
This is despite there being little evidence that such strict ratios improve the quality of childcare provision. There is, however, ample evidence that the current ratio rules are responsible for driving up staffing costs and consequently the financial burden for families. Nurseries are forced to charge higher prices as a result of the high level of staffing costs mandated by the ratio rules, in terms of both staff numbers and the necessary qualifications.
Ratio rules are so restrictive that technically speaking, if one parent is running 15 minutes late to pick up their child, and the nursery has hit the maximum ratio, other parents would be forced to wait outside before they can drop off their child. This has led to some nurseries hiring extra staff to avoid this kind of scenario, which of course puts up prices for all parents.
Childminders in England are also subject to the same overly restrictive ratios as more formal providers such as nurseries, with a 1:3 ratio being required for childminders looking after under-fives. This number includes the childminder’s own children or any other children for whom they are responsible. This makes them a far more expensive option for parents than they ought to be as childminders are able provide more value for money for the parents given they do not carry the overheads that nurseries do.
All of this is unnecessary and wrong.
As long as health and safety standards are maintained, ratios ought to be more flexible and parents ought to be free to choose cheaper, higher ratios if they so wish.
As recent research produced by the Centre for Policy Studies shows, the potential gains from relaxing ratio rules, even slightly, are enormous. One study from the US found that relaxing the staff-to-child by just one infant reduces the cost of child care by up to 20%. Applying those findings to England suggests that simply by relaxing child- staff ratios to French levels we could cut childcare costs in half.
The very fact that a deregulation down to the level of famously interventionist France can feel transformational ought to speak volumes about how difficult our childcare system makes it for families in the UK.
This is one area that the government can and should easily reduce the cost burden on parents. Crucially, this would not be a case of deregulation gone too far: they would simply be a matter of bringing the UK into line with other European countries.
