When UK chancellor Jeremy Hunt announced that this year’s spring budget would include reforms to childcare, parents’ WhatsApp groups across the country were on fire. Parents in the UK have to shoulder some of the highest costs for childcare in the world, and many were anxious to hear how much of a life raft the government was willing to throw them.
The package Hunt presented—an extra 30 hours of free childcare per week to parents of 1- and 2-year-olds, more funding for the existing program of free childcare for 3-year-olds, and an increase in hourly pay for childcare providers—is a step in the right direction. However, most of the measures won’t kick in until 2024 at the earliest, leaving many still struggling with exorbitant costs.
According to the Organization for Economic Cooperation and Development (OECD), UK parents spend a third of their wages on childcare, on average. Another study by maternity discrimination charity Pregnant Then Screwed found that 22 percent of parents shoulder childcare costs equating to over half of their household income, and one in 10 say it’s the same or more than their take-home pay per day.
The cost of childcare has meant that many parents—often, mothers—see no financial benefit to going back to work. With government support still less than adequate, some companies are taking on the burden, offering childcare vouchers, time off for emergency childcare, shared parental leave, and even on-site childcare facilities.
"The UK’s childcare crisis isn’t new, but skyrocketing living costs and the remote work revolution kickstarted by the pandemic mean workers now expect their employers to help them manage," says Ally Fekaiki, CEO and founder of Juno, a platform through which employees choose their own benefits. "As part of this, staff are given the option to use their Juno allowance to reimburse any service or product that adds value to them—for lots of people, this means reimbursing childcare."
Fekaiki has noted that in lieu of adequate government support, many of the 150 companies in Juno’s user base are stepping in to cover rising childcare costs. It’s proving invaluable for workers based in the UK, but also farther afield. “We’re seeing users based in the UK, Spain, Canada, Egypt, and beyond expensing wraparound childcare, summer camps, and nursery fees—this support is universally invaluable,” he says.
Some companies began providing subsidized physical spaces long before the crisis began. Toyota has been running an on-site nursery at its Burnaston plant in Derbyshire for over 15 years, as has the networking software and hardware company Cisco, with a nursery on its Bedfont Lakes campus in Feltham, Greater London. Developed in partnership with childcare provider Bright Horizons, it offers 55 places for children aged three months to five years, running 8 am to 6 pm five days a week. “Of course, we’ve had a dip in numbers [using the facility] because of the pandemic,” says Jen Scherler-Gormley, Cisco’s Global Country Acceleration Leader of People and Communities. “But Cisco ensures that the provision is open, regardless of how many people are actually in at one time.”
Like most employer-supported childcare, Cisco pays for the nursery and the cost is taken out of the employee’s salary, but as workplace childcare is exempt from income taxes, these schemes offer savings of almost a third for those paying basic rate tax, and almost half for those taxed at higher rates. All employees also get access to Bright Horizons’ Back-Up Care Advantage program, which covers the gaps if typical care arrangements fall through. It’s available for a child or children aged three months to 18-years-old, as well as adult dependents over the age of 18. This takes the form of holiday clubs, in-home care with a nanny, or other nurseries and preschools with which Bright Horizons partners.
Other companies, like Goldman Sachs, offer on-site care in specific circumstances. The bank’s London HQ, Plumtree Court, has had a creche since 2003, also developed in partnership with Bright Horizons. Designed as a backup option if other childcare arrangements fall through, parents with children between three months and 12 years can use it for free for 20 days a year, as well as for four consecutive weeks when parents return to work after a birth or adoption.
Some coworking spaces, particularly in London, have childcare facilities attached. Global workspace brand Second Home has had a nursery at its London Fields site since 2019, and Oru Space’s second site, in Sutton, has a built-in children’s club and plans to launch in the summer. “[Having on-site care facilities] can act as a magnet for recruitment and one that gets people into an office, but even when you do find a great childcare provider to partner with, on-site childcare should be part of a suite of offerings—it’s not a silver bullet,” says Scherler-Gormley.
These companies represent a tiny minority—only 5 percent of companies in the UK offer subsidize childcare through on-site crèches. Just over half of British companies offer childcare vouchers and 23 percent provide paid time off for emergency childcare, according to the Chartered Institute of Personnel and Development, the UK professional body for human resources.
Having physical spaces for parents to leave children during the working day is only a small part of the problem. In both the private and public sector, qualified workers to care for and educate children are in short supply. According to the Early Years Alliance, the industry is facing its worst crisis in recruitment and costs in 20 years. Ofsted, a government body responsible for education standards, found that between March 2021 and March 2022, some 4,000 providers closed down, the biggest decline since 2016.
“The subsidy proposed by the government will only help if the childcare is available and of good-enough quality,” says Birgitta Rabe, a professor of economics at the Institute for Social and Economic Research, University of Essex. “At the moment, childcare centers charge higher rates for 1- and 2-year-olds because the rates from public funding for 3- and 4-year-olds is too low to cover costs.”
Indeed, 98.4 percent of nurseries in England say their funding rates do not cover delivery costs. As per the reform bill, if younger children do get the free hours, the cross-financing will be curtailed. “People are worried that either means there will be no childcare on offer, or it will have to be of substantially lower quality to make it cheaper—which may ward even more parents off sending their child to nursery,” says Rabe. Based on existing patterns of childcare use, the Institute for Fiscal Studies finds that the reform will leave Whitehall in charge of the price of 80 percent of all preschool childcare in England (increasing from just under 50 percent now). That raises the stakes for getting the funding rate right.
“If it’s too low, nurseries will not be able to pay competitive wages, which could force even more providers to close,” says Rabe. That could leave Hunt’s promises a theoretical offer for parents. “The question is whether the sector will even be able to survive under these conditions—most of which we don’t even know yet.” Childcare services were on the brink of collapse even before energy costs and bills began to rise. Compounding this is the exodus from the profession, where one in three practitioners were considering leaving the sector after their existing job role in 2021, with half saying it was mainly down to low pay. The current median wage of £9.50 ($11.80) an hour—which the TUC, one of several unions representing childcare workers, has called “poverty pay”—is well below the national average of £13.57 an hour, according to government figures.
Brett Wigdortz, CEO and cofounder of Tiney, an Ofsted-regulated tech startup helping people retrain and get licensed as childminders, worries that the government reforms will boost already-high demand for childcare, without any efforts to increase supply. “They’re not going to find people willing to work for next to no money for these nurseries, and they won’t suddenly be able to build loads of nurseries either,” he explains. “Even if the pay offerings for childcare workers are competitive, there’s not suddenly going to be a huge number of workers out there.”
After years of dysfunction, there’s no quick fix for the UK’s childcare infrastructure issues. Of the 42 global countries assessed by the OECD, bar Switzerland, parents in the UK are faced with the most expensive childcare costs, with an average two-parent unit spending 29 percent of their salary on full-time childcare. German couples spend 1 percent, Austria 3 percent, Sweden 5 percent, and Estonia 7 percent. Prime Minister Rishi Sunak has denied that the UK’s childcare system is in crisis, but Britain’s parents and the practitioners supporting them are being pushed to the breaking point.
“The government support on affordability needs to go hand in hand with support from employers to provide more flexible working arrangements for those with caring responsibilities who feel that leaving work is their only option,” says Catherine Foot, director of Phoenix Insights, the longevity think tank set up by the London-based insurance provider Phoenix Group. "It’s not just younger working parents who will benefit from the support, but also those in their fifties and sixties.”
Phoenix Group’s research shows 15 percent of people over 50 who have left the workforce since the pandemic cited caring responsibilities as the reason why, including looking after grandchildren.
After all, childcare support is a powerful talent attraction and engagement tool, and parents make up too much of the UK's workforce for their struggles to be ignored by their employers. For businesses, supporting parents through on-site nurseries or offering fully- or partly-subsidized childcare makes for more meaningful—and for some workers, absolutely essential—employee benefits. And with many companies deepening their understanding of worker well-being and how it chimes with productivity, helping parents to be as present as possible on the job can only be a win-win for bosses.
This article was originally published by WIRED UK
