A perfect storm for families and childcare?
Thursday, May 19, 2022
The cost-of-living crisis combines significant challenges for household budgets and for businesses’ finances alike.
Everyone is taking a new close look at all income and expenditure and making informed choices about essential and desirable actions to bring in revenues and to control the scope, scale, and timing of expenditure. If they aren’t, then they should be.
Ballooning inflation, escalating energy costs, growing labour costs, and their effects on the cost of goods and services all add up to changing costs for almost everything.
In the childcare sector we have been concerned with the squeeze on our income and outgoings for years. We have been juggling the various changes in government funding programmes and their associated rates, whilst reconciling the rules and regulations for charges for non-funded commercial services.
This has all been alongside the ebbs and flows of parental demand and need, affected by their employment and economic circumstances. And all of this has occurred during a period of significant national minimum wage inflation, pension requirements, Brexit, and of course a pandemic. No wonder we are exhausted.
So what storm is brewing now you ask? Recently, there have been no- or low-cost suggestions made to reduce the financial burden on families by relaxing health and safety rules. Which for cars may mean removing annual MOT requirements, and for childcare providers allowing them to care for more children per adult worker.
It is true that costs charged to parents for childcare are rising. That, for childcare providers, is not necessarily a bad thing (as long as they are within the rules), if these charges are required to cover costs, provide quality, and support business sustainability. Which they are. It doesn’t fit well with any family taking that careful look at what money is coming in and what is going out and staring at the often-stark realities of balancing work and family life.
But I wonder if these higher charges may motivate more and more providers and families to take another look at the maze that is other support for childcare costs, things like Tax-Free Childcare (TFC) and Universal Credit (UC). Because they are there and available to claim for up to £2-4000k a child on TFC and 85 per cent of costs through UC. Not enough providers are promoting it, and much lower than expected families are taking up TFC, as reported by MPs. That might be one opportunity for us all to reconsider.
Changes to adult to child ratios will not, in my view, have any effect on family childcare bills but they could help the financial challenges of childcare providers. But at what other costs?
How will quality be affected, and how will that manifest in Ofsted inspection judgements, and children’s learning outcomes?
What would an already stretched workforce, coping with the after-effects of the pandemic, and helping children and families to recover and dare I say it ‘catch up’ make of it? How many will throw in the towel if given extra pressures? Relaxing qualification requirements (either temporarily or in the longer-term) could also help bring more people in. It isn’t that simple though.
Anyone running a business, or indeed visiting a café or a shop can see that everyone seems to be chasing a depleted workforce. Competition in the job-market is fierce. Let us all learn from experience, one well-intentioned but clumsy move was requiring GCSE level maths in the sector a few years ago. Our warnings were correct, it reduced the number of people entering this wonderful sector. So that would be a welcome U-turn.
I have a warning. The factors affecting demand and that tricky balancing act for families changing their requirements in response to the pandemic, and scrutinising their new arrangements, will fuel a groundswell of complaints from families.
They may become increasingly unhappy with the sufficiency of their local childcare market, the ways in which funded places are delivered and accessible, the tangle of process and rules surrounding various offers, and the charges levied by providers in addition.
Such dialogue will be economically driven, and increasingly politically motivated as we approach the next general election. We are in for a period of intense debate, discussion and engagement in the childcare sector set against a backdrop of everyone wanting to do the right thing. Local councils and providers will indeed want to do whatever they can, sometimes to their own detriment. It would be better if we could provide some additional help where it is needed.
James Hempsall is director of Hempsall’s Consultancy