Access and affordability - achieving maximum impact from childcare investment
Note from seminar held at ippr on 22 February 2006
The Institute for Public Policy Research (ippr) and our partners, Bright Horizons Family Solutions, the London Development Agency, and the National Childminding Association, hosted ahigh-levelroundtable to examine public investment in childcare.
Significant public investment in childcare is taking place and we have a 10-year national strategy for childcare for the first time. However, serious concerns have emerged about whether public investment is delivering high quality childcare for those who stand to benefit from it most.This seminar explored these concerns, and in particular, addressed how we can ensure access for children from low-income families, disabled children and children from certain minority ethnic groups who are currently missing out. The seminar will help to inform a pamphlet that will be published by ippr in 2006.
Presentations
Kate Stanley, ippr
Kate presented ippr analysis to date of the accessibility and affordability of childcare, and set out some possible policy responses. Her presentation can be viewed at
Carey Oppenheim, Policy Consultant
Carey drew on her work with the Association of Local Government and 12 local authorities to outline how the issues of accessibility and affordability are playing out at a local level. Her presentation can be viewed at
Denise Burke, London Development Agency
Denise described the work of the only major supply side pilot designed to tackle these challenges. Her presentation can be viewed at
Discussion
1. Affordability
1.1 We need to consider what a goal to reduce childcare costs met by parents would mean over the longer term. Daycare Trust have suggested that parents should pay no more than 60 per cent of childcare costs. Nor do we yet have a clear shared understanding of what high quality childcare would cost. This is a problem for parents too who often do not know what a given childcare place will actually cost them.
1.2 In the past it was understood that lone parents preferred to use informal childcare, but as formal childcare has been made more affordable to them, take-up by lone parents of formal childcare has grown. This example would suggest that childcare decisions are due to affordability at least as much as preferences.
1.3 Childcare for children aged under three is expensive because care for younger children is more intensive and they do not qualify for any amount of free provision.
1.4 It was argued that prices could be kept down if business rates were capped down. It was pointed out that private sector childcare providers are at a relative disadvantage to other types of providers in respect of how they are treated in relation to business rates.
1.5 Only 10 per cent access to the full 70 per cent of tax credit available. Tax credits are being used to fund unregistered care.
2. Accessibility
2.1 Children with disabilities or special educational needs may be unable to spend a full day in formal childcare. They may require patchwork provision of formal and informal care, and one-on-one support. This can prove expensive for the parents of disabled children and more needs to be done therefore to support the extra costs associated with accessing suitable childcare for disabled children.
2.3 Many parents are in atypical employment, working part-time, shift work and flexible hours. Care which is only available nine to five, five days per week does not meet their needs. But many providers face difficulties in providing care at atypical times due to expense and lack of available premises.
2.4 Take up is related to disadvantage as well as ethnicity. For example, childcare on one housing estate in the London borough of Barking and Dagenham is accessed predominantly by Black African families. Demand among the predominantly white working class residents of the estate is low. Is there a gap between parental expectations and what professionals what to provide?
2.5 The focus should not just be on disadvantaged groups. Childcare must be affordable and accessible for all parents, including the middle classes, if we wish to enable them to work.
2.6 It is important to consider issues of access in relation to different age groups. Affordability is a particular issue for under twos.
3. Government spending
3.1 It was recognised that it is important to ensure that public spending on childcare is used efficiently. More has been spent on supporting the supply of childcare in recent years – this has been necessary to create a national framework and increase the number of places. Currently £800 million is being spent every year on the childcare element of the Working Tax Credit, and £2.7 billion on free provision for three and four year olds.
3.2 Four times the amount is being on the universal offer than on tax credits (this is partly to do with the low take up of tax credits).
3.3 It was suggested that there is need for both demand and supply side funding but the correct balance must be found. There is a need to demonstrate best way to spend the marginal pound.
3.4 It was suggested that the Scandinavian example does not prove that supply side funding works best because they have a much higher level of spending on childcare. If you throw enough money at a problem it will go away – whichever way you throw it.
3.5 It was argued that not only do we need to spend money on childcare differently, we also need to spend more in total if affordable, quality childcare for all that need it or would benefit, is to be a realistic goal. It is too expensive for most parents now and costs are set to rise with increases in quality. There is therefore a need for greater Government financial support for childcare.
4. Demand side funding and policies
4.1 Arguments were presented for further shifting the balance of funding towards demand side policies. Demand side funding can be targeted at the poorest families and avoids the ‘sharp elbows’ of the middle classes gaining all the advantage. Also, demand side funding in the form of the tax credit is Annually Managed Expenditure and in that sense unlimited. It was also suggested that demand rather than supply side funding is more effective at ensuring sustainability of supply. Tax credits are also a tool to boost employment and reduce poverty. Problems with take-up are being overcome and there has been a sharp increase in numbers in receipt of the childcare tax credit.
4.2 It was accepted that more needed to be done to improve the transparency of the tax credits by providing parents with information and advice on their entitlement. It was argued that the theory of tax credits made a great deal of sense but that practice was very far from this.
4.3 It was pointed out that tax credits are not the only option for demand side spending. Demand side policies can improve affordability if they are designed appropriately. For example, subsidies for the provision of childcare for individual children could be paid directly to providers rather than parents in the way that occurs with the universal offer. How might this be extended? This approach would support parental choice whilst providing suppliers with more sustainable income. Another option would be to link the childcare tax credit to earnings rather than household income.
5. Supply side funding and policies
5.1 The majority of participants supported an increased emphasis on supply-side funding. It was felt that tax credits do not work in practice because they are only available to a limited number of families and take up is low because they are difficult to access.
5.2 Supply side funding is necessary to improve the quality of childcare, including the training and raised wages for the childcare workforce. Supply side subsidies would need to be matched by a cap on the prices that providers could charge.
5.3 The London Development Agency pilot – the Childcare Affordability Programme – will be valuable for learning lessons on supply side funding initiatives, but it is limited in size so researchers and policy makers should avoid putting too much pressure on it to produce results.
6. Child outcomes
6.1 Need to consider the ‘appropriateness’ of provision. Free places for three and four year olds for limited hours per week produce good child outcomes. But what is appropriate provision for younger children? Childminders can deliver high quality childcare for under twos.
6.2 It was noted that a notion of universal provision. Mixing of socio-economic groups is important for child outcomes. US experience would suggest that a non-mixed approach is not effective.
7. The politics of childcare
8.1 Universal provision that caters for both lower and middle socio-economic groups is also important for political sustainability. Provision for middle classes less likely to be removed and more likely to attract public support.
8.2 ‘Choice’ is popular with parents. It is therefore important to maintain an element of individual choice in any childcare strategy if it is to win popular support. However, currently, there is a ‘myth of parental choice’. The complexity of the tax credits system and the lack of information available on the quality of childcare providers diminishes the empowerment of parents.
8.3 Need to be aware of fragile political consensus on childcare – or lack of – at a local authority level. Means if childcare funding is not ring-fenced within education budget – spending on childcare is at risk. The forthcoming elections may have an impact on spending on childcare.