Does free childcare actually help anybody?

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June 2, 2015 by Nash Riggins

David Cameron 2015

At this point, most voters should take it for granted that campaign promises are nothing but rubbish. Politicians can’t get elected without offering the world on a silver platter, and so party manifestos tend to be embarrassingly vague and optimistic in nature. Most of them fade into oblivion immediately after election night.

Well, David Cameron isn’t prepared to let that happen this time around.

This week, the Prime Minister is set to green light a mouth-watering item from his pre-election manifesto: free childcare. From as early as next September, hundreds of thousands of kids across England will be eligible to receive 30 hours of free childcare every week. That will double the amount of subsidised care most toddlers currently enjoy – and so long as you’ve got a child and earn less than £150,000 per year, you’re probably going to qualify.

Sound too good to be true? That’s because it is.

Childcare costs are obscenely expensive. Even council-run nurseries are a complete drain on family finances. So, unless you’re making big money, it’s almost more cost-effective to stay home and try your luck on benefits until your kids are old enough for primary school. That’s why it makes a lot of sense for the government to try and subsidise those childcare costs – if they can keep you at work, it ultimately lessens our collective welfare burden.

At least, that’s the theory.

At present, all three and four-year-olds in England are entitled to receive 15 hours of childcare each week. At face value, that policy has been a huge benefit to many working parents. But the truth is, it’s creating a major funding gap that’s ultimately hurting us more than it’s helping.

According to the Pre-School Learning Alliance, nurseries that have chosen to take part in the government’s current scheme are running at a loss because of it. Why? The government grants that are being handed out to ensure “free” childcare only pay for about 80% of its true cost. Translation: childcare is now so expensive that even the government can’t afford it.

Because of this funding shortfall, nursery schools must either charge a lot more money for the hours that are not included as part of the scheme, or make up the difference through budget cuts. Plenty of schools have chosen to take the hit and battle through losses to provide free childcare, which is great for parents. Yet David Cameron’s bright idea to drastically expand that provision will be the straw that breaks the camel’s back.

Experts reckon that childcare providers are set to lose up to £661 per year for every three and four-year-old taking part in the expansion scheme. Small, independent providers aren’t going to be able to make up for that shortfall. In turn, many nurseries will either fold under a weight of debt or they’ll have to charge families so much for extra time and services that it will chase parents back out of work and into their pyjamas.

As always, the answer to this whole problem is pretty damn simple: the government could just stop ripping off childcare providers. That way, we could get more parents into work without inflating the price of childcare further still. But that would cost a whole lot more money than the government is willing to commit towards the scheme. After all, we’re supposed to be pinching pennies, remember?

Nobody likes to hear it, but at the end of the day, there’s no such thing as a free lunch – and each time politicians try to help some of us haggle down the price of childcare, they’re simply inflating the costs for everybody else. So, maybe the next time David Cameron wants to keep a campaign promise, he should do us all a favour and just leave it.

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