Government childcare plans will disproportionately benefit better-off families, report shows

The government’s planned £4bn investment in childcare will disproportionately benefit higher income families unless it is retargeted to help the most disadvantaged children, according to a new report.

Published by Coram Family and Childcare and Joseph Rowntree Foundation (JRF), the report found that a low earning parent takes home around £4 per hour worked after childcare costs and once the Universal Credit taper rate has been applied, effectively eroding more than half their earnings. This means a low earning single parent will find they are only £60 a month better off if they increase their working hours from four to five days. 

Research also found that the government’s plans will not improve the quality of childcare provision, despite evidence that children from disadvantaged backgrounds are starting school behind their better off peers and that high quality childcare can narrow the achievement gap. Currently, childcare is not of consistently high enough quality to make a real difference to children’s outcomes.

The report called for complete reform of the system including:

• Investment in and focus on improving quality of childcare, including better pay for professionals and higher levels of qualifications
• Government directly funding childcare places, as they do for school places
• A simple, affordable, means-tested payment system for parents
• 15 hours childcare per week for all two year olds and 30 hours for all three and four year olds to make sure all children get equal access to free early education
• Integration with wider support services
• Partnerships between parents and childcare professionals to help spread learning between the home and childcare setting

Megan Jarvie, Head of Coram Family and Childcare, said: ‘Disadvantaged children are falling behind before they even start school. A well designed and functioning childcare system can be a key tool in tackling this disadvantage. But instead, families are stuck in poverty and children are missing out on early education that could better prepare them for school.

‘We urgently need to rebalance the childcare and early years system to better serve the children who stand to benefit the most. We have set out a reformed system to better meet the needs of all families and children, and to level the playing field for disadvantaged children.’

Abby Jitendra, JRF Principal Policy Advisor for Care, Family and Relationships, said: ‘Families deserve childcare that’s high quality, affordable and easy to access. But the childcare system we have now is failing disadvantaged children – parents don’t take up the services they are entitled to because, in doing so, they’d lose out financially. The only option many have is to reduce the hours they work in order to stop being penalised.

‘A childcare system that works doesn’t just help parents, it improves our economy, our communities and our society. We know the UK government is up to this challenge otherwise it wouldn’t have proposed an expansion but their plans risk entrenching an even less fair system which would become very difficult to unravel.’

Image: Sandy Millar