By Rosie Fogden, Head of Research & Analysis, Centre for Progressive Policy
Childcare in the UK is expensive. So expensive, in fact, that it puts us near the top of the table among OECD countries. This is perhaps unsurprising, given the UK government spends the joint lowest level on childcare compared to other developed countries.
Three-quarters of mothers who pay for childcare say that it doesn’t make financial sense for them to go to work, according to campaign group Pregnant then Screwed. It is now routine to hear examples of families whose monthly childcare bill is higher than their rent or mortgage. And as childcare providers feel the squeeze of a combination of underfunding, rising costs and staff shortages, the costs to parents are only projected to increase.
It is immensely frustrating that the government has for so long appeared to turn a blind eye to this issue, despite its widespread impact on working parents, predominantly women. But new evidence of the economic costs of the UK’s failing childcare system could be a wake-up call.
Economics thinktank the Centre for Progressive Policy (CPP) surveyed 2,500 mums with at least one child aged 10 or under. We chose to focus exclusively on women because we know that women’s ability to work is most likely to be affected by the availability of professional childcare. Our previous research found that women provide 450 million hours of care for their children a week, 2.4 times as many as men.
This survey found stark evidence that the UK’s failing childcare system is sustaining the gender pay gap. Almost a million mothers (970,000) have been prevented from taking a job with a higher salary because of issues accessing suitable childcare – with an average foregone annual salary increase of £12,000.
540,000 mums have been prevented from entering paid work due to a lack of suitable childcare; 880,000 have reduced their hours at work, and 470,000 have quit their jobs. It’s clear that a lack of accessible, affordable childcare is driving women out of the workplace, as well as holding back their potential to progress in their careers, earn higher salaries and gain more skills. Not only does this perpetuate the gender pay gap, but it also curbs much-needed opportunities to earn more during a cost-of-living crisis. This is especially acute for single parent families, who are mostly headed by women and whose children have a 50% chance of living in poverty.
The costs of our broken system to individual women are shocking, but combined, they pose an enormous challenge to our economy as well. 27% of those surveyed – equivalent to around 1.5 million mums – said they would like to work more hours if they had access to suitable childcare. We calculated that if mums could work these desired hours, it would result in at least £9.4bn in additional earnings per year. The wider impact to the economy would be upwards of £27bn per year, or approximately 1% of UK GDP.
To put this into perspective, the UK economy has struggled to hit 1% of GDP growth per year since the financial crisis. An additional 1% of GDP would have a transformative impact on our economy.
At CPP, we see this as further evidence that childcare is infrastructure: it allows people to go to work, to access better skills and earnings, and to contribute to the economy. That's why CPP is calling on the government to recognise childcare as infrastructure in national spending frameworks, so that it can borrow to invest in provision, just like it can with roads and railways.
Our research shows that mums want reform to how childcare is delivered, including by reducing the hourly costs to parents, extending childcare into the school holidays, and more financial support for parents of children aged 0-2, who currently don’t get any support as standard. The one reform mums do not support is changing the staff ratios, so that workers can look after larger groups of young children: 82% of mums thought the ratios should either stay the same or that group sizes per worker should be reversed.
There is a growing drumbeat of support for the idea that childcare is infrastructure, from Pregnant then Screwed, Labour MP Stella Creasy and others. It’s clear that the high cost of childcare is holding back our economy. Parents want to work more, but to do so they need lower hourly costs and more wraparound care without compromising on quality. Any government that is serious about delivering economic growth needs to act.