Hunt is right to prioritise childcare—but his package is flawed

This budget will help parents afford to return to work. But it does not address the early years education gap

March 22, 2023
Jeremy Hunt met with nursery school children after delivering his budget. Image: Associated Press / Alamy Stock Photo
Jeremy Hunt met with nursery school children after delivering his budget. Image: Associated Press / Alamy Stock Photo

Successive chancellors have put on a hard hat and high-vis jacket to promote their policies, championing investment in buildings, roads and railways as the key to economic growth. Jeremy Hunt instead joined a group of three year olds with Play-doh as he put childcare at the heart of the measures to boost productivity in his first budget. 

He rightly understands that the soft infrastructure that supports women’s participation in the labour market is just as important as the physical networks that allow the economy to function. His pledge to create a “childcare system comparable to the best” is a welcome decision to prioritise an issue that has been sidelined at Westminster for too long. 

As Hunt told MPs, the UK has one of the most expensive childcare systems in the world. One survey by the campaign group Pregnant then Screwed found that 43 per cent of mothers said the hours than they would like to. This means the country is missing out on a lot of talent and potential. According to the chancellor, half of non-working mothers would prefer to work if they could arrange suitable childcare. If Britain matched Dutch levels of participation in the labour market, there would be more than one million additional women working. Instead, the chancellor said, in this country, “for many women, a career break becomes a career end.”

Hunt promised to reverse the trend. Many families will be delighted by his announcement that the 30 hours of free childcare for three- and four-year-olds will be extended to toddlers and babies over nine months. The change will be phased in over the next two and a half years, but Hunt said that the package would eventually be worth on average £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week, reducing childcare costs by nearly 60 per cent. That is a “retail” policy that will make a significant difference to parents.

The change to allow families claiming universal credit to receive childcare support upfront is also a good idea that will stop so many struggling parents being plunged into debt. The support for childminders is sensible, because the country needs more of them to meet the demand for care. And the extra funding for breakfast clubs and after school provision should help broaden the type of education offered to pupils. There are many good things in yesterday’s announcement.

Serious questions remain, however, about the funding and focus of the chancellor’s plan. There are already too few nursery and childminder places in many areas and problems with the recruitment and retention of staff. The Treasury is going to increase the hourly rate that will be paid for the free childcare places, but the additional funding is nowhere near the amount that providers say they need to meet the true cost of care. The chancellor announced an initial rise of £204m this year, but the Early Years Alliance has calculated that the real shortfall for the current two-, three- and four-year-old offer is £1.8bn, based on the government’s own figures. Already nurseries are heavily reliant on parents who pay for more hours to cross-subsidise the state-funded places, and many have closed down. Neil Leitch, the chief executive of the Early Years Alliance said the extra money announced in the budget was “highly unlikely to match what’s needed to put providers on a steady footing and raises serious questions about the government’s entire approach to costing this policy.”

There is another flaw in the flagship budget plan. The chancellor’s package is focused almost entirely on using childcare to boost employment rather than for the sake of improving education in the early years. The additional hours of childcare will be available only to parents who are working at least 16 hours a week, excluding many of the children who most need support. 

One of the things that shocked me most as chair of The Times Education Commission was discovering that 40 per cent of the gap between rich and poor students that emerges by the age of 16 is already in place before children even reach school. Disadvantage is baked in before children get anywhere near a classroom. Nearly a third of five-year-olds are not reaching a good level of development—a situation that has only been exacerbated by the pandemic.

I have had heartbreaking conversations with headteachers about pupils starting Reception still in nappies and unable to say their own name or hold a knife and fork. Many of these children are so far behind socially and academically that they never catch up, however hard their teachers try. These are the pupils who most need the state to step in with high quality early years education, to compensate for the lack of support they are getting at home. They will not benefit from the budget announcement.

Hunt also said that the staff-to-child ratio in nurseries would be relaxed—a misguided change that parents hate and providers are reluctant to introduce because they fear it would undermine the quality of the care they can offer. 

The best childcare systems in the world see early years provision as the vital first steps in education, rather than a babysitting service. They employ highly trained staff with the time to do their job properly, rather than simply seeking to drive down costs and get women back to work. In Estonia, they compare education to a tree and argue that the strength of the branches depends on the depth of the roots which are created at the very start of life. 

The evidence is compelling. What happens in the first thousand days of life is critical to outcomes later in life. One study in Jamaica showed that disadvantaged children who were exposed to high quality early intervention stimulation as babies and toddlers earned up to 25 per cent more 20 years later as adults. The American Nobel prize-winning economist James Heckman has calculated that there is a 13 per cent return on investment in the early years as a result of better education, health and social outcomes. This is one of the few policy reforms that can, if it is done properly, simultaneously boost economic growth and improve social mobility. 

The chancellor trotted out his four “Es” for economic policy in his budget speech. As an employment measure the childcare package may be a strong one, helping parents afford to return to work. But in terms of early years education, it is deeply flawed.