The report by social enterprise United for All Ages, The Childcare Funding Crisis, warns that the UK is heading towards a ‘childcare costs car crash’ unless radical reform of funding is tackled urgently.
It warns that without reform, childcare businesses will continue to close, more families will be unable to afford daycare and have to give up work, and the promise of free early education for two-year-olds will not be deliverable.
The deregulation of childminders to increase the number of affordable childcare places is not the answer says the report, which calls for the Treasury to review and simplify all current funding streams that help parents pay for childcare.
Following a review, United for All Ages makes four recommendations for action. One suggestion is to introduce an Oyster type debit card that can be loaded with credits to pay for childcare.
The pre-paid card could be loaded with credits for the 15 free hours and topped up by employers who support employees with childcare, and by parents.
Denise Burke, director of United for All Ages and author of the report, claims that the card would give parents greater flexibility of childcare and ensure childcare subsidies are used for what they were intended.
Other recommendations outlined in the report include:
properly funding childcare providers to deliver the free entitlement for two, three and four-year-olds so they can cover the costs, and removing the local variation in funding;
bringing back the Childcare Affordability programme pilots with extra subsidies for childcare costs for parents entering work;
encouraging nurseries to share backroom costs and reduce overheads to prevent more closures.
Ms Burke said, ‘The starting point has to be about completely tweaking what funding looks like. We need to start with a clean sheet and the Treasury needs to look at different funding streams and see what is left in the pot.
‘I believe there is more money than we think there is and it should be fairly distributed.’
She added, ‘We have to do something and act quickly as we are losing daycare provision at an alarming rate.’
