EXCERPTS
ARWA, a researcher at Oxford University, spends her working life seeking out the causes of blood-borne diseases. But now she is in search of child care for her baby—and it is proving even more elusive. Her nine months of maternity leave are about to run out, and despite booking a nursery place soon after becoming pregnant she was too late to beat her chosen nurseries’ two-year waiting lists. For now, her parents are helping out. “Many of my friends don’t have anyone else to rely on,” she says. “There’s simply not enough child care to go around.”
Britain’s new government has come up with what it believes is the solution. On May 27th it announced a plan to give working parents of children aged three and four the right to claim 30 hours of free nursery care per child per week, for 38 weeks a year—double the current 15-hour allowance. (Parents of children aged two would remain entitled to means-tested support.) The new initiative is expected to cost £350m ($540m) a year.
The price of child care has been soaring: it now costs an average of £110 to buy 25 hours at nursery for a two-year-old, over a third more than five years ago. The expense weighs heavily on parents and on the economy. For women, who still do the bulk of babyminding, pricey nurseries make returning to work less worthwhile. After tax, the average woman in full-time employment takes home £19,000 a year. The typical cost of keeping two pre-school children in care is £11,700, according to the Family and Childcare Trust, a charity. A mother of two would therefore work full-time to earn £7,300. Many conclude that it is not worth it, and postpone or cancel their return to work. British mothers spend an average of 35 hours a week looking after their children, twice the amount of time spent by women in Finland, where state-provided child care is free.
The new plans would make child care cheaper for most families. But they would not address another problem: the shortage of places. In spite of a fast-growing population, the number of nursery places in Britain remained unchanged between 2006 and 2014, and has only just started to pick up. Growth has been stunted because nurseries are hard to run at a profit. The National Day Nurseries Association (NDNA) says that 40% of its members expect only to break even or to make a loss this year. One reason is rising rents, particularly in London, which push up nurseries’ costs. And there is little that nurseries can cut back on: most of their employees already earn little more than the minimum wage.
But another reason is that the government underpays nurseries for the 15 hours a week that they must provide free of charge. The shortfall amounts to £800 per child per year, according to the NDNA. In February a House of Lords committee recommended that the government increase its funding of the free spaces. If the new 30-hour allowance is funded at the same miserly rate, the shortage of places could be exacerbated.
That could harm social mobility, at which Britain already does badly. A child born poor in Australia or Canada, which have similar levels of income inequality, is twice as likely to escape poverty as a poor British child. On starting school aged five, the vocabulary of a British child from the poorest quintile is 19 months behind that of the richest. Wider access to early education could help to narrow this gap.
More public investment in child care could even save the taxpayer money in the long run, argues Giselle Cory of IPPR, a think-tank. She and her colleagues calculate that a 5% increase in maternal employment would generate £750m a year in benefit savings and tax revenues. “Getting both parents in full-time work is the most effective way for a family to rise out of in-work poverty,” she says. Unless nursery places become more plentiful, as well as cheaper, many families will remain on the waiting lists.
-reprinted from The Economist