The Case For Deregulating Childcare
In the early hours of International Women’s Day, a widely-popular petition calling for an investigation into crippling childcare costs was rejected. A few weeks ago, this became the latest tale of a government that has consistently ignored the concerns of young parents. With 97 per cent of parents complaining of such costs, little action has been taken. The need for rapid reform has never been greater.
We have been amidst a child care cost crisis for too long. Previous studies have found that dual income households in Britain are digging into more than a third of their net income to fund child care – with the average family spending more each month than on their mortgage. British parents are faced with the highest child care costs in all of Europe.
There was much publicity about this a decade ago, with articles covering cash-stricken families struggling to cover basic child care costs. Since then, the burden has become no lighter, and costs are now some £400 higher in real terms. Only through rapid deregulation can this be relieved.
As things currently are, the UK has an enforced median average child:staff ratio of 1:4.5. This means that for every 4.5 children in child care, there must be 1 adult supervisor. This places the UK in around the top quartile for most stringent levels of regulations around the world.
This has led to an ongoing unaffordability crisis, with prices maintained artificially high. Estimates show that over 77 per cent of fees paid up by parents are going towards staff wages. In enforcing a strict ratio of 1 teacher for every 4.5 infants, individual parents must foot a greater amount of this cost. Liberating this ratio would reduce the share of the pie each family must cover – lifting a great burden off households backs.
If we were to relax child:staff rules to the Norwegian level of 1 teacher for every 9 infants, the total cost paid by households would be expected to more than halve. A previous study has found similar cost savings through deregulation, concluding that a reduction of just one in this ratio reduces cost 9-20 per cent.
The reason for such extortionate costs is clearly not due to a lack of government spending. A wide range of nations – including Spain, Portugal and Poland – have substantially less public spending as a percentage of GDP on child care, yet account for around a seventh of the cost paid by dual income households in the UK. Such nations take advantage of their far more lenient child:staff regulations – with Portugal and Poland at around half the UK’s level, and Spain around a quarter.
Concerned parents are often led to believe that looser child:staff ratios will have a negative effect on the quality of child care. This came to a head with a highly alarming Guardian article, that claimed relaxing such rules will ‘make children suffer’.
However, studies have found that child:staff ratios have little effect on overall quality, with Perlman et al. concluding, ‘‘variations in [child:staff] ratios have small, if any, associations with concurrent and subsequent child outcomes’. Tighter regulations also force poorer households into other types of child care, such as non-relative home-based care, which are found to consistently fall short of centre-based care.
It must also be considered who the people concerned with quality are. It can be reasonably estimated how this is a worry of wealthier households, as for those less affluent, the principal worry is cost. Those with concerns regarding quality would still likely be able to place their infants in more premium centres with lower child:staff ratios, albeit at a greater alternative cost. The freedom to choose is an integral part of capitalism. A deregulated child care market would be no different.
Restarting the economy post-Covid, in the context of a cost of living crisis, the need for childcare deregulation has never been greater. With up to a fifth of all parents saying they are unable to return to work without adequate child care, focus should be on the availability of childcare places first and foremost. The sure-fire method to achieve this is the rapid de-regulation of child:staff ratios.