A new deal for the childcare sector

A new deal for childcare and early years 

A new deal for the childcare and early years sector must be part of a broader package of support for families that ensures every child gets the best start in life and support as they grow, and that no family is left worse off because they work and need to use childcare. This new deal must be underpinned by the principles of every family having access to affordable, flexible, high-quality childcare; a workforce that is well paid, well organised with good terms and conditions rooted in value and respect for the profession; and a well and publicly funded sustainable sector with children at its heart and a diversity of provision that delivers for children, parents, and workers.  

Our policy asks to deliver a new deal for the childcare and early years sector are: 

• Universal, flexible, high-quality childcare that is available to all from the point at which paid maternity or parental leave ends. 

• A new deal for the childcare workforce, starting with a new sectoral minimum wage.  

• A new social partnership forum in childcare, bringing together unions, government, employers as a first step towards a fair pay agreement that covers the sector. 

Why reform is needed 

Across the UK, childcare for pre-school aged children is unaffordable, inflexible and access to high-quality provision is unequal. The childcare and early years workforce are undervalued and underpaid in comparison with colleagues working in other parts of the education sector. Childcare workers are often employed with poor terms and conditions, The problems facing the childcare and early years sector are not new, but with the fall out of the pandemic and the cost of living and wages crisis we are at crisis point.i  

The TUC believes, there are three fundamental issues within the sector that must be addressed.  

1. There is a lack of affordable, accessible childcare and this has a significant impact on parental, and particularly maternal employment. The cost of living and wages crisis is exacerbating this.  

Working with Coram Family and Childcare Trust, our new analysis shows that:  

• the cost of full-time childcare for parents with children under two has increased by nearly £3000 a year in England, since 2013. Rising from £11,285 in 2013 for a family with a child under 2 to £14,226 in 2021 - an increase of 26 percent. 

• On average, monthly childcare fees are now over £1000, in 2013 this was the case in only three English regions.  

• If childcare costs continue to rise at the same rates as they have done for the last five years, by 2026 nursery bills will have risen to £2,000 a month in London and reached the same level in the East of England by 2027. 

Previous TUC analysis found that the cost of part-time childcare (25 hours) has risen by 44 per cent since 2010,1  and one in three working parents with children of pre-school age spend more than a third of their wages on childcare. 2

While women’s participation in the labour market has reached record highs averaging around 72 per cent, we know that most part-time workers are women and that a lack of childcare acts as a barrier to women’s activity and progression in the labour market. The UK has the second highest childcare costs among leading economies,3 and it is estimated that 1.7 million women are prevented from taking on more hours of paid work due to childcare issues. 4  

The gender pay gap (currently 15.4 per cent) opens up when a woman has a child and compounds throughout women’s lives as demonstrated by the gender pensions gap which is more than double the pay gap at 38 per cent.5 Mums also experience a motherhood penalty in the workplace, when their pay and progression is compared to women who don’t have children. 6

Universal, affordable, flexible, and accessible childcare is essential to rebalancing the burden of childcare more equitably and enabling women’s equality and participation in the labour market. ONS data found that over half of mothers (56.2 per cent) said they had made a change to their employment for childcare reasons compared with 22.4 per cent of fathers. Three in ten mums with a child aged 14 and under said they had reduced their working hours because of childcare reasons compared with one in 20 dads.7

2. The childcare sector is underfunded, and provision and access are inconsistent and unequal. Lack of access and provision has a disproportionate impact on low paid, BME and single parent families and families with a disabled child(ren) and/or parent. 

Funding for the childcare sector has been a problem for some time and this, as well as access and provision have been exacerbated by the pandemic. Ofsted research found that between August 2020 and March 2021 there was a net loss of nearly 4000 childcare providers and over 14,000 childcare places. 8

The UK spends less than 0.1 per cent of GDP on childcare, the second lowest investment in the OECD.9 The governments flagship childcare policy of 30 free hours (all 3- and 4-year-olds in England are entitled to 15 hours for free childcare, working families who meet certain criteria are eligible for a further 15 hours and some disadvantaged two-year-olds are entitled to 15 hours) has had mixed results and the government funding for these hours does not sufficiently cover the costs of provision. The cost of a government funded early years place for 3- and 4-year-olds was estimated on average to be £7.49 per hour by civil servants. In contrast local authorities receive on average only £4.89.10 Many providers therefore rely on cross subsidisation which often means charging parents additional fees.  

Under the current eligibility criteria, it is predominantly children from better off families who are entitled to the full 30 hours, 70 per cent of children who are eligible are from families in the top half of the earnings distribution, just 20 per cent of children from the bottom of the earnings distribution are eligible.11 According to the Sutton Trust the development gap between better off and poorer children when they start primary school is already 11 months and there is strong evidence that closing that gap is at best stalling and may be widening.12

Coram Family and childcare research shows 57 per cent of local authorities in England have sufficient childcare for children under two years old, with 63 per cent saying they had sufficient provision for two years olds eligible for the free entitlement, and 59 per cent said they had enough provision to cover parents working full-time. Only 19 per cent of local authorities have enough provision for parents working atypical hours. Provision for 3- and 4-year-olds with either 15 hours (79 per cent) or 30 hours (73 per cent) entitlement is higher but all the above have declined since the pandemic. Before the pandemic around only a quarter of local authorities in England had enough provision for children with Special Educational Needs (SEND) and this has fallen further during the pandemic to 21 per cent.13

Provision only covers 30 hours a week for 38 weeks of the year, meaning parents working full-time must find alternatives or pay for additional childcare for the remaining 14 weeks. Research from Coram Family and Childcare shows that families will have had to shell out £900 per school age child for six weeks of summer holiday childcare this year. That's around £500 more than the term time equivalent and a 5 per cent increase on last year.14

3. Childcare workers are underpaid and undervalued, and the pandemic has compounded an already significant recruitment and retention crisis. 

Even before the pandemic there was a recruitment and a retention problem in the childcare sector. A 2018 report for the Education Policy Institute supported by the Nuffield Foundation reported providers citing issues with recruiting staff, and that the sector was facing a potential exodos as the workforce ages with little sign younger workers were entering the sector in adequate numbers. The same research also cited low pay and a high degree of financial insecurity for childcare workers as factors fuelling recruitment and retention issues.15 Early Years Alliance research from 2018 found that a quarter of early years workers were considering leaving the sector due to the impact of work on their mental health.16

These trends have been exacerbated by the pandemic. Research from the ‘Childcare during Covid Project’ found that during the pandemic of the childcare settings they surveyed, almost half of those that had taken action to stay operational had either changed staff contract conditions, permanently cut staff or not renewed temporary contracts.17 The same research found that childcare workers felt demoralised and ignored during the pandemic, unsurprisingly nearly 56 per cent of the childcare settings surveyed said they were finding it harder to recruit staff.18 Many childcare workers, particularly childminders have been pushed into financial difficulties. Childminder average pay fell from just over £17,500 pre-pandemic to £14,300, and 32 per cent reported earning less than £10,000 versus 13 per cent in 2018/19.19  The number of childminders claiming universal credit peaked in 2020 but remains 3 times higher than pre-pandemic.20

Our recommendations for reform 

Our vision for childcare is based on the following core principles: 

• Every family has access to affordable, flexible, high-quality childcare; no one should be worse off because they work and need to use childcare. 

• A well paid, well organised work force with good terms and conditions, rooted in respect and value for the profession.  

• A well-funded, sustainable sector with the interests of children at its heart and a diversity of provision that delivers for parents, children, workers. 

To deliver a childcare and early years sector that is rooted in these principles we need a new deal for childcare.  

Our policy calls for: 

Universal, flexible, high-quality childcare that is available to all from the point where paid maternity or parental leave ends.  

The briefing sets out some of the issues with the current 30 hours entitlement for 3- and 4-year-olds and some two-year-olds. But we know that the gap in provision for families with children under 3 is also a key issue that particularly impacts mothers. Any new deal for the sector must offer fully funded childcare from the point of need, which for many families is the point at which paid maternity or parental leave ends.  

A new deal for the childcare workforce 

Any reform of the sector must start with improving the pay and conditions of childcare workers, whether they are in formal childcare setting such as nurseries, or if they are home workers. This starts with guaranteeing a sectoral minimum wage for the childcare workforce.  

Alongside the introduction of a new sectoral minimum wage, determined through negotiations between unions and employers, the TUC wants to see government take concerted action to fix the recruitment and retention crisis in childcare. A new workforce strategy must ensure all childcare workers are employed on good terms and conditions, have security and dignity at work, and a recognition of their skills with clear pathways to progress their career. The way to achieve that is through sectoral collective bargaining which should also cover:  

• pay and progression, with pathways to progress and pay structures linked to skills, experience, qualifications, and job roles. 

• Working time and holidays, with a right to minimum guaranteed hours; holiday allowance and pay. 

• Work organisation, with agreement on safe staffing levels, sick pay and health and safety. 

• Training and development, agreeing on skills and qualifications that are recognised across the sector and paid time off for workers access training opportunities. 

A new social partnership forum in childcare. 

Bringing together trade unions, government, employers, as a first step towards a fair pay agreement for childcare and early years workers.

• 1 Cost of childcare has risen by over £2,000 a year since 2010 | TUC 
• 2  https://www.tuc.org.uk/news/tuc-poll-1-3-parents-pre-school-children-spend-more-third-their-pay-childcare 
• 3 https://data.oecd.org/benwage/net-childcare-costs.htm 
• 4https://wbg.org.uk/wp-content/uploads/2022/03/Childcare-and-gender-PBB-Spring-2022-1.pdf 
• 5 What is the gender pension gap? | Prospect 
• 6 The Motherhood Pay Penalty | TUC 
• 7 ONS (2019) Families and the labour market.
• 8 https://wbg.org.uk/wp-content/uploads/2021/06/Briefing-Childcare-FINAL-version.pdf 
• 9 https://www.progressive-policy.net/publications/women-in-the-labour-market-2 
• 10 New data shows ministers knew early years was underfunded | early years alliance (eyalliance.org.uk) 
• 11 https://www.suttontrust.com/wp-content/uploads/2021/08/A-Fair-Start-Summary-Report.pdf 
• 12 https://www.suttontrust.com/our-research/a-fair-start-equalising-access-to-early-education/ 
• 13 https://www.coram.org.uk/sites/default/files/resource_files/Coram%20Childcare%20Survey%20-%202022.pdf 
• 14 Charity criticises lack of UK summer childcare as cost rises to nearly £900 | Childcare | The Guardian 
• 15 https://epi.org.uk/publications-and-research/the-early-years-workforce-in-england/ 
• 16 https://www.eyalliance.org.uk/mental-health-and-early-years-workforce 
• 17 https://childcare-during-covid.org/final-report-essential-but-undervalued-early-years-care-education-during-covid-19/ 
• 18 Ibid
• 19 Ibid
• 20 Ibid