Easing the cost of childcare: parents' views of the SMF's scheme

8 February 2012 - Ryan Shorthouse

The high cost of formal childcare effectively locks thousands of parents out of work each year and costs are set to continue to rise. That's a problem since the benefits it brings are huge - more time in work means that parent's earnings rise and formal childcare also has real benefits for children's development. It is clear that solving the childcare affordability dilemma should be a priority for policymakers. But with public finances tight and the Government in a full austerity drive, the question is how?

It is unrealistic to expect more public spending on childcare over the next few years. That's why the SMF's idea for a National Childcare Contribution Scheme (NCCS), where parents get access to up to £10,000 from the Government for childcare which they back back though the tax system, is a great example of how Government can help families in tough times without adding to the public debt woes.

So what do parents think about the childcare funding problem? And do they see the NCCS as part of the answer? As part of the report, we worked with YouGov to poll 500 randomly selected parents with children under the age of five years old to get their views.

What are the problems currently with accessing childcare?

First we asked them what were their biggest concerns were about childcare in their local area. As the chart below shows, 55% said that expense was the biggest problem.

Parents' views of the SMF's proposed model

We then asked parents whether they thought that the scheme was a good idea, a bad idea or if they didn't know.

The chart below shows that, when told about the basic idea of the scheme, a clear majority of those expressing an opinion (57%) thought that it was ‘a good idea’ compared with 43% who thought that it was ‘a bad idea’. This was broadly consistent across all demographic categories – with the biggest variation by age of parents. Parents under 40 were most favourable with 62% of those expressing an opinion assessing it as a good idea, whereas only 45% of parents over 40 expressing an opinion held the same view.This finding fits with the assumption that younger people are more likely to be credit constrained so more receptive to a scheme that helps them spread the costs over their lifetime.

Who is likely to use the SMF's scheme?

The YouGov polling showed that more than a quarter of parents in the survey (27%) said that they would be likely to use a scheme such as this, if it were to be implemented. This is demonstrated in the chart below. The polling showed that there was broad support across the social groups and gender for the scheme, with the major variation between older people who were less likely to use it, and younger people who were more likely to use it. This fits with the view above that younger people are more likely to be credit constrained.

Will the SMF's scheme have an impact on the amount of childcare used?

A significant minority of parents not using formal childcare said that they would be likely to use the scheme if it were available. This included a quarter of parents who currently do not use any childcare, and 28% of those parents relying on friends or relatives.

How much assistance will parents need?

The maximum amount of support offered through the NCCS in total is proposed to be £10,000. We sought to explore whether this would satisfy the needs of parents. Of parents who were interested in assistance from the scheme, more than half wanted less than £200 a month, and 83% would be covered by a scheme that offered up to £300 a month or £3,600 per year. This suggests that £10,000 would be sufficient to cover most families’ needs for the expensive early years of a child’s life. The most frequent amount of assistance that parents wanted to access was between £50 and £100 a month: 23% of parents who wanted some assistance through the scheme wanted this amount, and only one-in-ten of those who would seek assistance wanted above £350 a month. This is showed in the chart below.

Please add a comment

Posted by Pauline Simpson on Feb 9th, 2012

Why should parents be given money up front for childcare when they have enough money from government as it is with child benefit, working tax credits. This amount of money will make childcare even more expensive. People have to learn to live within their means.

Posted by Alex Kenmure on Feb 10th, 2012

It's interesting that in tackling the problem of childcare being too expensive, people tend to focus on finding subsidy to meet the cost rather than try and find out why it is so expensive and what can be done to provide a reduced cost solution that is affordable to most people. Is there an argument that if the current childcare model is unaffordable for most people then it is in fact broken and that we should be focusing our efforts on coming up with a new model?

I guess the trouble is that discussion usually gets hijacked by the "family values" mob which tends to rub people up the wrong way.

I could be barking up the wrong tree (it happens all too often), but it strikes me that any kind of govt. contribution to childcare (whatever the structure) stifles innovation within this "market" because there is no incentive to provide a more cost-effective product.