Two approaches to improving access to affordable high-quality childcare Kayte Lawton, 27 th February 2013 Children England Annual Conference

Content The problems with childcare in the UK Explanations Market-based solutions Public service-based solutions Lessons for the UK

The problem with childcare in the UK Relatively expensive – for parents and the state Relatively under-qualified and low-paid workforce – impact on quality Relatively weak profits / surpluses

What explains these weaknesses? Regulation? Ratios, childminders etc. –More centralised but not uniformly more burdensome –Typically focused on a narrow set of issues –Slightly more restrictive ratios in some cases Reliance on cash benefits rather than services Public funding not spread evenly across families Complexity of funding arrangements

Cash vs services in family spending

Market-based solutions ‘Demand-side’ funding – tax relief, vouchers, tax credits Deregulation – less restrictive ratios, less regulation of childminders Most OECD countries opt mostly to directly fund providers Except the US, Canada, the Netherlands and Australia

Government’s proposals Workforce status and quality More places in high-quality settings Childminding agencies Changes to regulatory framework Plus - tax relief or vouchers, more support through Universal Credit?

Market solutions in the Netherlands Large growth in places, esp. childminders Low costs to parents – employers pay one third of fees Massive deadweight costs Bureaucratic funding system Quality appears to have fallen in some settings Provision falled in less densely population and more disadvantaged areas

Key questions for the UK Would market-based solutions and deregulation: Reduce costs to parents? Improve quality? Improve choice and the number of places? Affect parents’ confidence in the system?

An alternative model: Denmark The offer to parents National entitlement to full-time childcare from 6 months to six Municipalities ensure availability of places Cost to parents is capped at 25% of unit cost Very high take-up

Governance and quality National objectives rather than strict regulation Local governance and accountability Provider autonomy Strong parental involvement Highly skilled workforce

Wider welfare state and labour market Generous parental leave Universal child benefit, but frontloaded High replacement rates for out-of-work benefits Strong conditionality No equivalent of tax credits Widespread collective bargaining High levels of public sector employment

Lessons for the UK Affordability: national, comprehensive entitlement / single system of supply-side funding / capped parental fees Quality: high-quality workforce over statutory regulation / decentralised organisation and governance / parental involvement Broader package: services not benefits / parental leave / flexible working / political consensus / broad alliances

What next? We know roughly where we want to get to – how do we start making progress? How to achieve the right balance of quality, affordability, gender equality – with limited public money What governance reforms are needed? Where do we have to make trade-offs, both within childcare and in other spending areas?