Ed Balls has pledged an extension of state childcare provision at its annual conference in Brighton. But does the policy add up, financially or educationally?
Crikey, bankers really are funding a lot of Labour policies, aren’t they? Jobs for young people funded by a bankers’ bonus tax is already a core policy. And now today, the shadow chancellor Ed Balls has pledged that an increased bank levy would help fund Labour’s 10-hour extension to the early years free entitlement for all 3 and 4 year olds to 25 hours a week.
Finally, Labour has some recognisable policies. But is today’s childcare pledge by Ed Balls really the best approach?
The evidence is clear that increasing childcare provision has strong public and private benefits: namely, increased opportunities for women in particular to get jobs and improved educational attainment, especially for deprived children. But this policy has three problems, on top of the reliance on extra government cash.
First, since it relies on public funding, its reach is limited. Only families with three and four year olds get this new support. Many parents with pre-school aged children of different ages won’t get anything extra, and arguably they need it more. Deprived parents with children under the age of two, for instance, currently cannot access any free childcare hours, just support through the tax credit system.
Perpetually drawing on public funds means only incremental progress towards a universal, high- quality pre-school system. But we need this system now; not after years of a little bit more money here and there.
Second, the funding does not necessarily direct resource at the age group where extra support would yield the highest returns to quality. The respected Effective Provision of Pre-School Education study showed no difference in the benefit to cognitive development of 25 hours childcare compared to 15 hours. But US and UK evidence shows the importance of high-quality care for children of a younger age, many of whom still do not receive any free childcare.
The third problem is whether childcare providers can deliver this new enhanced offer. Already, many local authorities do not provide ample funding to childcare settings to deliver the 15 hours for 3 and 4 year olds. As such, this partially weakens the financial stability of nurseries and often means parents can only access subsidised, rather than entirely free, places. Without reforms to how free entitlement funding reaches front-line providers, this new offer could be detrimental to nurseries, affecting the supply and stability of places.
A quicker and more responsible route to universal childcare is the SMF’s idea for low-cost public loans. Taking its inspiration from student loans, under this scheme, all parents with children under the age of five can receive government-backed loans to help them pay for their childcare. These loans are then repaid on an income-contingent basis. This scheme would significantly reduce parents’ monthly bill for childcare, making it universally affordable for parents with children of all ages under five.
All parents would benefit, not just some. Polling suggests this idea would strengthen demand for childcare, meaning extra revenue for the sector so nurseries can boost quality and flexibility. And loans would create a direct relationship between parents and nurseries, eliminating the problem faced with the free entitlement where money does not reach the front line.
Ryan Shorthouse is a researcher at the Social Market Foundation
