Childcare needs bold solutions on funding
Derren Hayes
Tuesday, September 27, 2022
Just a few weeks into her premiership, Prime Minister Liz Truss has demonstrated she is not afraid to take bold but difficult decisions. Removing the cap on bankers’ bonuses, scrapping plans for a UK Bill of Rights and pledging to restart fracking for shale gas to name three.
The key policy announcement to freeze consumer energy bills for two years will prevent millions of families from having to choose between heating or eating this winter, although charities warn that the most disadvantaged groups will need more help to cope with the cost-of-living crisis.
The support for charities and businesses – a six-month bills freeze – while welcome will do little to allay concerns for organisations facing rises of 600 per cent.
Early years providers are more vulnerable than most to this crisis following a long-term shortage of staff, below-inflation funding increases for government-funded early education and a fall in income over the past two years due to the pandemic. The extent of the challenge it presents to the sector cannot be understated – associations refer to an “existential threat” that could “damage the infrastructure” of early education.
The government has pledged to review the support for firms and charities after six months with Business Secretary Jacob Rees-Mogg saying during interviews that charities supporting vulnerable people will be at the “front of the queue”. But without a firmer commitment early years providers will be left wondering if they can afford to keep a setting open, offer government-funded places or fill vacant jobs.
Solutions put forward so far – including tax breaks for businesses and changes to childcare ratios – will only tinker around the edges. What is needed is a fundamental rethink on how government-funded childcare is paid for. This does not need to involve redesigning the scheme nor vast amounts of extra money. A recent survey by the National Day Nurseries Association found that 95 per cent of providers delivering the funded childcare offer made a loss on it. How about putting all the unspent tax-free childcare funding, valued at £2.4bn last year, into raising rates for the government scheme?
A properly-funded government childcare scheme can help deliver Truss's pledges to boost economic growth, through supporting people into work, and level up opportunity by giving disadvantaged children in particular a good start. It would be a bold and popular decision and might even justify ministers calling it “free” childcare.
