Select Committee on Work and Pensions Second Report

9 Childcare and life chances

166. Childcare is crucially important to the child poverty target as it frees up parents, particularly lone parents, to enable them to take up employment or training or education opportunities. This issue was explored by the Committee last year and it is worth revisiting some of the issues and reviewing progress made since we published our Report in July 2003.[170] Evidence received during this inquiry overwhelmingly pointed to the importance of childcare in improving the employment chances of parents and consequently helping to raise the income of poor families to acceptable standards.[171] Yet, in spite of large increases in the overall childcare budget, the largest proportion has been allocated to the provision of part-time early years nursery education for three and four year olds.

167. It should be pointed out that childcare in Scotland, Wales and Northern Ireland is primarily the responsibility of the devolved administrations; consequently this section primarily refers to childcare in England. However, the Childcare Tax Credit does cross the national boundaries and therefore comments on this issue apply to the UK as a whole.

Childcare, the Pre-Budget Report and the Budget

168. The Committee's childcare Report concluded that, in spite of the National Childcare Strategy in England and increases arising from the 2002 Spending Review, the childcare budget was not sufficient to enable either the lone parent employment target or the child poverty target to be met. The Report recommended rolling out Children's Centres beyond the planned 20% most deprived wards to the 30% most deprived wards and urged the Government to make a long-term commitment to establishing Children's Centres in all areas.

169. Following the Committee's Report, the 2003 Pre-Budget Report (PBR) and Budget 2004 marked a significant step forward for childcare provision, as significant promises were made. According to the PBR, and the Budget Report, the Government is on track to meet the target of childcare places for 1.6 million children by 2004 and over 2 million children by 2006, although this assertion appears to be thrown into question by the recent publication of a report by the National Audit Office (NAO) which suggests that since the launch of the National Childcare Strategy to Spring 2003, 626,000 childcare places have been created but 301,000 places have closed. The report also claims that the new provision is also under threat due to lack of funding continuity once their start-up funding ends.[172] This is of great concern to the Committee. We recommend that the national strategy on child poverty should aim for continuity of revenue funding for childcare.


170. The PBR contained a welcome commitment to create 1,000 Children's Centres within five years, with a long-term goal of a Children's Centre in every community. Budget 2004 took this further and announced a settlement for Sure Start, early years and childcare of £669 million additional funding by 2007-08, compared with 2004-05. According to the Budget Report:

171. As yet, little detail is available on how the roll-out of Children's Centres within the 1,700 areas will take place, or whether the longer-term funding will be available. In oral evidence, the Minister for Children told us that, for universal roll-out, the main constraints were expanding the childcare workforce and resources which, as the Minister pointed out, are dependent on the priority the Government gives to Children's Centres.[174]

172. By February 2004, 67 Children's Centres had been designated.[175] Local authorities have strategic responsibility for Children's Centres and are responsible for their planning and development. The NAO's report on childcare recommended that local authorities should have greater co-ordination and planning powers on childcare provision.[176] The Committee made a similar recommendation in the childcare Report and we therefore believe that the DfES have taken the right approach with Children's Centres.

173. According to the Daycare Trust, a Children's Centre in every area would cost an additional £1 billion plus £2.5 billion revenue expenditure.[177] More recently, research suggests that universal childcare in the form of 10,000 Children's Centres would cost a total of £10 billion per year. This includes the £3 billion already spent on childcare by parents and means that Government would need to double the £3.5 billion already allocated to childcare.[178] This appears to be a large financial obligation, but, to show what the Treasury can achieve, the introduction of the new tax credits cost the Treasury an additional £2.7 billion, and the last Spending Review in 2002 allocated an additional £14.7 billion to the education budget.

174. The announcement made in Budget 2004 to provide Children's Centres in all of the 1,700 most disadvantaged wards is welcomed by the Committee, but we still believe that further extension is necessary to reach the children in poverty who are not living in the 20% most disadvantaged areas. The Committee recommends that the roll out of Children's Centres should be extended to reach beyond the 20% most disadvantaged areas of high deprivation outside the 20% most disadvantaged areas.


175. In referring to Children's Centres potentially providing a universal childcare service, the Minister for Children stated:

176. The Minister went on to say that while targetting the most deprived children must be the first priority, a range of options is being examined which recognise the need for universal early years provision whatever the background of the child and which might be at least part-funded by parents:

    "We are examining a whole range of options…things like how we can make better use of our school infrastructure which all too often is wasted, with schools closed for much of the year and much of the day, how we can expand the free offer that is universal for three and hours year olds of 2.5 hours a day, to provide something which may have some charging in it for better-off families but which actually responds to the needs of particular working mothers."[180]

177. The Committee believes that universal childcare is what the UK should be aiming for and that, welcome as the nursery education place for all three and four year olds is, it does not constitute a universal service. The limited hours and restriction to school term only are unhelpful for parents who want to work. As we said in our Childcare Report, we recognise that finite resources necessitate targetting; however, universal childcare is a goal that can be achieved, as demonstrated in countries such as Sweden and Denmark.


178. According to the Inter-Departmental Childcare Review, the childcare workforce needs to expand by 8% every year to meet the Government targets on childcare growth by 2006.[181] The Committee's Report on childcare examined issues around the childcare workforce, including problems of low pay, leading to recruitment and retention problems, and workforce expansion. The Report urged the Government to work with childcare providers to establish how pay levels could be improved without passing unreasonable costs to parents; to widen their information and recruitment campaign; and to extend the Home Childcarers scheme to those who are not registered childminders.

179. Returning to these issues, the Committee was informed by the Minister for Children that an additional 180,000 childcare workers are needed in order to hit the Department's targets. She told us that this would be achievable through appropriate investment, close working with the Learning and Skills Council and through bringing new people into the childcare profession.[182] The Committee's Report on childcare urged the Government to step up the information and recruitment campaign and to continue targetting specific groups, such as men and minority ethnic groups. The recent NAO report recommended that more effort be put into recruiting older people into the childcare workforce. The Committee endorses this recommendation.

The childcare element of Working Tax Credit

180. The Committee's childcare Report looked in detail at the Childcare Tax Credit (now the childcare element of Working Tax Credit) and highlighted the many problems with the credit, including take-up, eligibility, qualifying hours, the proportion of costs covered, regional disparities and the restriction to formal care. These debates will not be revisited here, but it is worth drawing attention to some of the points raised in connection with the childcare credit during this inquiry.

181. As the childcare Report recognised, help with childcare costs through the tax credit system is valuable for those parents receiving it. Currently, 300,000 families are receiving the credit[183] and, as pointed out by Treasury officials, that is more than twice as many as under the previous tax credits system.[184] However, this is still a very small proportion of the total number of parents and the average award is only £50 per week. The Committee questions the extent to which the childcare credit impacts upon the charging policy of childcare providers. Anecdotal evidence suggests that childcare providers in the 20% most deprived wards may be designing a charging policy around the childcare credit.[185] The Committee is concerned that little is known about how many parents living in the 20% most deprived wards are actually claiming help with childcare costs through tax credits.[186] While recognising that the childcare credit is important for parents not living in the 20% most disadvantaged areas, this does raise the question of whether helping parents with childcare costs through the tax credit system is the most beneficial way of providing financial support for childcare in the most deprived areas.

Childcare - the way forward?

182. The main extra resources that have gone into the childcare strategy so far have been in the form of funding for nursery classes in primary schools. It is arguable that this, mainly part-time, term-time, provision is not the most effective way of enabling parents, especially lone parents, to obtain access to employment. Working Tax Credit only covers a maximum of 70% of the costs of childcare up to a ceiling. The package of funding available for childcare also calls for extremely complicated partnership working to be put together at a local level, with funding coming from a variety of national and local programmes. Childcare in the UK is still not universally available and is expensive and this contributes to why we still have a relatively low proportion of lone parents in employment and a relatively high proportion of children living in workless households. A second childcare review is now under way, led by the Treasury, which suggests a recognition by government that the policy mix is not yet optimal.

183. The Committee warmly welcomes the commitment to the universal roll-out of Children's Centres and urges the Government to consult widely upon the siting of the centres, as well as on the service that each centre will provide, to ensure that early access is given to those most in need. The Committee is concerned that little detail is available on how Children's Centres will be funded and urges the Government to set out how they aim to achieve long-term funding.

Sure Start and support for parents

184. The Minister for Children explained that parenting is so central to the child poverty agenda because,

185. The claim that the quality of parenting in the home is important for a child's life chances is uncontroversial. What raises the quality of parenting is more so. There is a consensus that relationship breakdown, unemployment, inadequate levels of educational attainment and healthcare provision, and involvement in crime are likely to damage the quality of parenting, especially if they are repeated across generations. However, there is little agreement about the relationship between stable parenting and marriage. Some academics and commentators argue that the quality of parenting is improved if children are raised by two parents in one home, and that the chances of those parents staying together are increased if they are married. Others disagree, maintaining that the crucial factor is not marriage, but whether the parents or parent in question provides a loving and stable environment. In its 1998 publication, "Supporting families", the Government said, in a chapter headed "Strengthening marriages":

    "The Government believes that marriage provides a strong foundation for stable relationships. This does not mean trying to make people marry, or criticising or penalising people who choose not to. We do not believe that Government should interfere in people's lives in that way. But we do share the belief of the majority of people that marriage provides the most reliable framework for raising children."[188]

186. The document went on to propose "measures to strengthen the institution of marriage. It is clearly desirable that the Government's view on the role that marriage plays in the quality of parenting, if any, should be clear, and that relationship and parenting support programmes and initiatives undertaken by the Government, such as the National Family and Parenting Institute, Parentline, and mentoring programmes should be assessed and evaluated.

187. The Committee urges the Government to commission research into the factors contributing to stable parenting and life chances and recommends that the national strategy should consider new initiatives to strengthen family ties.

188. We welcome the Chief Executive of Sure Start, Naomi Eisenstadt's statement on 24th February 2004 at the "Relationship Education across the community to support the family" conference that preventative work to keep couples together is important for the children concerned.

189. We commend the work being undertaken by health visitors, Registrars, teachers and Community Family Trusts and recognise the importance of relationship skills and urge the government to build on and promote this important work.

190. The Minister for Children admitted that support for parenting has so far been underdeveloped. The PBR explicitly linked support for parents to the strategy for tackling child poverty and announced a new initiative establishing links with primary and nursery schools in 500 communities "to help parents give their children the very best start in life." In oral evidence, the Treasury told us that these initiatives are being developed in conjunction with Sure Start programmes.[189]

191. The aim of the Sure Start programme is to achieve better outcomes for children, parents and communities by: increasing the availability of childcare for all children; improving health, education and emotional development for young children; and supporting the parenting role and parents as employees. According to the DfES, Sure Start has broken new ground in making integrated advice and support available to parents, yet:

    "Sure Start local programmes only offer services to 40% of poor children under 4 in the 20% most deprived wards of England. We want to extend this approach across the age range(s) building on the progress of existing initiatives."[190]

192. By the end of 2003 there were 524 local programmes in England - 15 based in rural areas - offering services to 40% of poor children in the 20% most deprived wards. In addition, there are 45 pilot 'Mini Sure Start' programmes in rural areas and pockets of deprivation that would not normally be covered by the larger local programme model. The spending allocation on Sure Start in England between 2001-02 and 2003-04 is £1.1 billion.

193. Across the UK, Sure Start is the responsibility of the devolved administrations and consequently has developed in different directions, using different approaches, with budgets set locally. Sure Start Northern Ireland has 23 local projects and the budget for 2003-04 is £8.5 million. In Scotland, Sure Start is a national programme, funding has been allocated to all local authorities and the budget for 2003-04 is £23 million. Sure Start in Wales has a budget of £39 million for 2003-04, which is amalgamated with the Children and Youth Partnership Fund across all local authorities. Although the Minister for Children told us that her directorate had recently undertaken a study visit to Wales and had looked at Sure Start,[191] it is not entirely clear that sufficient effort is put into learning from the different approaches in each country.

194. In England, the Sure Start Unit is also funding seven 'mainstreaming' pilots with the aim of testing how Sure Start principles can be extended beyond the one third of poor children currently reached by the local Sure Start programmes. The evaluation of the pilots is due in September 2004 and the Committee looks forward to hearing how they have progressed. We hope that, as with Children's Centres, the Government will eventually roll-out Sure Start to all areas and to all children rather than the current targetted approach which excludes so many children, many of whom are poor.

195. One of the strengths of the Sure Start Programme is that it provides support to families with children whether or not the parent(s) are in employment. Whilst there is a proven need for additional childcare to meet the needs of parents in employment, we also believe it to be essential that support should be provided to parents and children who are not in employment, as these will often include the most isolated and socially excluded. We have been concerned at the reports of threats to services such as crèches, drop-ins and even nurseries as a result of pressures on local authority budgets, and recommend that the Sure Start Unit develops a strategy to ensure that increased provision in one sector is not undermined by the loss of services in another.

Support for parents to stay at home

196. The Committee's childcare Report also touched upon the issue of choice for parents and whether enough was being done to assist parents who wished to remain at home and look after their children themselves. In light of the shortage of childcare provision it could be questioned whether it might be easier to enable parents to stay at home when they have very young children, rather than greatly expand childcare provision for the very young. This point was also raised by the Minister for Children.[192] Currently, mothers are entitled to take up to one year of maternity leave (26 weeks of which is paid, most of it at £102.80 per week) and fathers are entitled to up to two weeks' paternity leave (also at £102.80 per week). Parents with a child aged 5 or under may also take up to 13 weeks' unpaid parental leave, with no more than four weeks being taken in one year, and parents with a disabled child up to age 18 may take up to a total of 18 weeks. Parents also have the right to request flexible working arrangements.

197. The ability to reconcile paid work with the care of children is hugely important. However, as was pointed out in a review of family and child benefit packages in different countries, the right to time off is not adequate in itself.[193] In reference to parental leave One Parent Families stated that, "…existing unpaid provisions remain a right on paper only as most lone parents cannot afford to take unpaid time off."[194] The same could be said of couple families. Recent research illustrates the extent to which parents do not take leave which is unpaid. Most women (85%) were entitled to unpaid Additional Maternity Leave (AML) of 30-40 weeks, but three-quarters took less than this amount. Women who took advantage of their full entitlement to AML (or more) were strongly associated with being in a higher paid job during pregnancy. Take up of unpaid parental leave was even lower with only 8% of mothers and 10% of fathers who were entitled actually using the provision.[195]

198. International comparisons of leave entitlements for parents illustrate how far the UK has to go. The Committee's visit to Denmark showed how successful their leave system is with 30 weeks' paid maternity leave and up to 52 weeks paid childminding leave (the benefit corresponds to 60% of the maximum amount of employment benefit, with a possible top-up paid by local authorities.) In 2001, there were around 20,000 people on childminding leave.[196]

199. Another interesting system is in Finland, where following a paid maternity/paternity leave period of up to 44 weeks, parents are able to choose between a childcare place or an allowance for minding young children. The childminding allowance can be used for themselves or be put towards private childminding if the child is aged under three years. The allowance (at 2001 rates) was €252 per month for the first child, €84 for a second child and €50 for subsequent children.[197] Similar schemes exist in Norway, France and Germany.

200. In the UK, the DTI and the Treasury have been consulting on similar proposals which would entitle parents to take their full quota of parental leave at the end of the maternity/paternity period. This is a welcome development, although it is probable that the benefit for children in low-income families would be negligible, as research (cited above) already shows that women on low-incomes are not taking their unpaid maternity leave. The Committee recommends that the national strategy should study childminding and parental leave systems operating elsewhere in Europe and consider how to improve provision between now and 2010.

170   Work and Pensions Committee, Fifth Report of Session 2002-03 Childcare for Working Parents, HC 1184 Back

171   Ev 79, 93, 115, 139, 256 Back

172   National Audit Office, Early Years: Progress in developing high quality childcare and early education accessible to all, Session 2003-04: 27 Feb 2004, HC 268 Back

173  HM Treasury, Budget 2004 HC 301, March 2004 Back

174   Qq 399-401 Back

175   HC Deb, 23 March 2004. col 678w Back

176   National Audit Office, Early Years: Progress in developing high quality childcare and early education accessible to all, Session 2003-04: 27 Feb 2004, HC 268 Back

177   Work and Pensions Committee, Childcare for Working Parents, Para 67 Back

178   4Kids (2004) Creating Opportunities, Building Futures  Back

179   Q 402 Back

180   Q 402 Back

181   Cabinet Office (2002) Inter-Departmental Childcare Review - November 2002: Delivering for Children and Families Back

182   Qq 401, 412 Back

183   Inland Revenue (2004) Child and Working Tax Credits, Quarterly Statistics, January 2004, London: National Statistics  Back

184   Q 345 Back

185   Q 348 Back

186   Qq 348-9, 416 Back

187   Q381 Back

188   Home Office, Supporting Families: A Consultation Document 1998 pg 30 Back

189   Q 335 Back

190   Ev 142 (vol III) Back

191   Q 386 Back

192   Q 407 Back

193   Bradshaw J and Finch N (2003) A comparison of child benefit packages in 22 countries, DWP Research Report No 174, Leeds: CDS Back

194   Ev 212 Back

195  Hudson M et al (2004) Maternity and Paternity Rights in Britain 2002: Survey of Parents, In-house Research Report 131 Back

196   OECD (2003) Social Protection in the Nordic Countries, Nordic Social Statistical Committee Back

197   OECD (2003) Social Protection in the Nordic Countries, Nordic Social Statistical Committee Back

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