Paying for quality childcare

We funded the Daycare Trust to undertake a project to define high quality childcare and setting out how much it will cost to fund its roll-out across England.

The year-long research project was undertaken with the Institute for Fiscal Studies (IFS) and the Social Market Foundation (SMF) to identify the necessary elements required for early childhood education and care to be of ‘high quality’, and to cost a high quality model for England.

Key findings:

• The key driver for quality is investing in the workforce. This means qualified staff, a lower staff turnover and higher pay.
• Full daycare and sessional settings need substantial increased investment to enable them to meet the requirements in the high quality model, whereas ‘Maintained’ (i.e. State operated) settings require less additional investment as their staff are generally more highly qualified.
• Current staff:child ratios are adequate for high quality provision in the majority of settings when combined with well qualified staff, although higher ratios may be required in disadvantaged areas.
• If fees were increased overnight to cover the costs of better qualified, better paid staff, parents would have to increase their contribution from ‘2.6bn per year to ‘4.9bn per year.
• Without reform of Government subsidies for Childcare it is highly unlikely that parents could afford these levels of increases.

Daycare Trust recommendations:

• Spending on childcare must double from the current ‘4.4bn to ‘9.4bn, taking spending up to approximately 1% of GDP, in line with OECD recommendations.
• The free childcare entitlement must be increased to 20 hours per week for three and four year olds and 15 hours for two year olds.
• For children aged two and over half of staff must be graduates (Level 6 qualified) and the rest Level 3 qualified (A-Level equivalent).
• For children under two, one third of staff as graduates (Level 6 qualified) and the rest Level 3 qualified (A-Level equivalent).
• Reform tax credits so the poorest parents can claim up to 100% of the costs of childcare rather than the current 80% and remove the work test from the childcare element to better target those in the poorest households.
• Introduce a quality premium payment for places for children under the age of three, as otherwise many of their parents would be priced out of the childcare market.