Childcare is infrastructure - investment is essential
The pandemic has no upside. However, it has brought many discussions about changing society and the economy to a head.
These discussions are not so much positives as making the best of things. Asking what sort of community we all want to live in, now and in the future.
Northern Ireland’s childcare provision is underdeveloped. There is no statutory strategy. The services that are available are generally good, but this relies on the goodwill of staff in the sector.
Parents pay too much, providers are financially stretched, and the availability of places is inconsistent – with, of course, patchier access in rural and sparsely-populated areas.
Currently those services are largely on hiatus. Grandparents can help a lot less due to social-distancing measures. Children are at home. Many parents are trying to both work and look after their kids at the same time – something that, for younger children at least, is completely impossible.
For childcare in NI, the discussion is not how we turn back the clock three months to re-establish what we had before. It is about how do we adapt and move forward and create something better.
The 2011-2015 Programme for Government committed the Executive to producing and implementing a childcare strategy. Work began on that, apparently in earnest, in 2012. Since then there have been two public consultations, a draft strategy, and no end result.
There are many benefits to good childcare. Emotional, social and educational development of children can improve.
Parents’ lives are made easier – and more parents are able to work, improving the economy. The situation for working-age women is also improved, as the greater balance of childcare tends to fall on their shoulders.
The economic benefits go further. According to the last Employers for Childcare annual report, published last summer:
- 50% of NI families using childcare report spending more than 20% of their income on childcare – this rises to 63% of lone parent households.
- For 34% of families, childcare is their largest monthly outgoing – including housing costs. For another 30% it is their second largest outgoing. More than 10% of lone parents using childcare say they spend over half their income on childcare.
Huge amounts of money are poured into a childcare system that itself struggles with sustainability. A proper statutory framework would itself cost money, but would free up this household money to go elsewhere.
Currently, parents in Northern Ireland look enviously at the entitlement to 30-hours a week free childcare in England (subject to some conditions – although these are not too onerous, and means tested, and there is still free provision for those who do not qualify).
Scotland and Wales are not as far down the line as England, in terms of provision, but they are much further ahead of NI – which has no strategy, although there are some ongoing support schemes.
These include the childcare voucher scheme administered by Employers For Childcare – however, this has now closed to new applications (despite a six-month reprieve gained by the organisation) and effectively replaced by the Government’s new Tax-Free childcare scheme. This scheme is the best option for around one third of the families who call Employers For Childcare’s advice helpline (parents can claim up to £2,000 per year, per child, but to benefit from the full £2,000 families need to incur childcare costs of £10,000 per child).
Back in 2014, NICVA commissioned PwC to examine the potential economic impact of providing universal childcare in Northern Ireland, as part of the organisations Centre for Economic Empowerment programme.
Citing a report from six years ago comes with some caveats. The number crunching involved in such a significant piece of work will, inevitably, no longer be precisely applicable.
However, given the complete lack of forward movement on a childcare strategy, the broad principles are still very much of interest.
One interesting observation from the paper is that, without having a proper childcare framework, international comparisons indicated that “the charge for childcare in Northern Ireland as a percentage of the average wage was higher than the UK or OECD average.”
The PwC report was, at its core, a cost-benefit analysis of providing universal childcare in Northern Ireland (in 2014). It considered three different models:
- A highly-subsidised system similar to that used in Quebec, Canada.
- A system similar to the existing one in Denmark, where “roughly the first 75% of costs are paid for by the Danish local government authorities and remaining cost may be subsidised” with that further subsidy subject to means testing.
- A third model was the Netherlands, which had higher rate of subsidy than the UK (but lower than the Nordic countries) but where the overall spend per child place was lower than in the UK.
In purely economic terms, the numbers did not quite work out. None of the models paid for themselves.
Interestingly, the net loss from the most expensive model, Quebec (a cost of £545.3m, a benefit of £535.4m, so a net loss of £9.9m), was lower than the second-most expensive, Denmark (£513.5m cost, £487.6m benefit, so £25.9m loss), and much lower than the cheapest, Netherlands (£399.5m, £287.2m, a loss of £112.3m).
However, there is more to childcare than immediate economic benefits.
Effects – and challenges
In the foreword to the 2014 report, NICVA CEO Seamus McAleavey said: “Taking into account the potential benefits of higher employment and earnings, together with the cost of additional public spending, the authors conclude that for an 85% subsidised system, quantifiable economic costs would exceed quantifiable benefits by £9.9m. That would comprise less than 0.1% of Northern Ireland’s Gross Value Added.
“Whether this represents value for money depends on the weight given to various social benefits not quantified in this analysis. One is the prospect of greater gender equality - it is primarily mothers who assume responsibility for childcare and who carry the adverse consequences in terms of employment, career progression, and wages. Improved household finances may also help reduce child poverty.”
These extra social factors are important. According to the paper, international comparisons suggest that countries with relatively high rates of maternal employment tend also to have relatively low rates of child poverty.
Then there are the developmental benefits for the children involved. These can be enormous. And, of course, there are the potential health and wellbeing improvements for parents (which have knock-on positive effects for children) – having affordable and accessibly childcare could reduce anxiety, per se, as well as indirectly by allowing some parents to lead broader lives.
In that context, £9.9m might be a drop in the ocean.
Mr McAleavey also points out some of the difficulties in implementing comprehensive childcare.
“If a universal system is accepted as desirable in principle, a number of practical obstacles remain. How would it be funded, particularly given that the service would have to be paid for up-front, while some of the benefits would be reaped over the longer term?
“A further complication is that under the current fiscal arrangements, investment in childcare would come from the Northern Ireland Executive’s budget, but it is primarily the UK Treasury which would gain from improved public finances. The implied fiscal deficit for the Executive - in the region of £260m to £397m - is considerable.”
Stormont’s budget is stretched but, when the Assembly finally came back earlier this year, one of the key points agreed by all parties was the need for more long-term policy making. The financial realities are what they are but the Executive cannot credibly complain that long-term policies should not be pursued because they tend to only pay off in the long term.
Regarding the increased tax take, that is one matter – amongst many – that would have to be discussed with Westminster when it comes to Northern Ireland’s position in the coming years.
Childcare is infrastructure and, in Northern Ireland, that infrastructure is underdeveloped.
That there are complications in drawing up and implementing a strategy does not mean this should be avoided. No serious government can ignore a pressing issue simply because it is difficult.
One factor that might be of help is changing working habits.
As we leave lockdown, for whatever the future brings, one thing that seems certain to stick is an increase in workplace flexibility. Whenever people can work from home they will be given more freedom to do so and, for as long as the risk from Covid-19 remains, will be encouraged or even required to do this.
Working from home does not reduce the need for childcare. Anyone who thinks that needs to think again. But it does provide wriggle room.
Part-time places are very difficult to make work with a normal nine-to-five in an office or other rigid situation.
However, when parents are working from home and have some flexibility baked into their day, this could make a real difference.
Working from home does not solve the childcare problem because in general parents cannot be working and looking after children at the same time.
It does, however, provide an interesting wrinkle for those drawing up a childcare strategy.
Childcare costs money but between the situation now – no strategy whatsoever – and a very expensive, fully-state-funded universal model there are all manner of possible systems and structures that could be explored.
It seems inconceivable that something better – for children, for parents and for providers – cannot be made fit-for-purpose in NI.
Stormont has many disappointments in its history, but the failure to agree a childcare strategy – something that is not subject to some of the traditional policy stumbling blocks – is an underrated one.
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