{"id":2075,"date":"2023-03-15T16:54:06","date_gmt":"2023-03-15T16:54:06","guid":{"rendered":"https:\/\/blogs.bath.ac.uk\/iprblog\/?p=2075"},"modified":"2023-03-16T18:14:00","modified_gmt":"2023-03-16T18:14:00","slug":"can-the-chancellors-spring-budget-reforms-fix-britains-broken-childcare-system","status":"publish","type":"post","link":"https:\/\/blogs.bath.ac.uk\/iprblog\/2023\/03\/15\/can-the-chancellors-spring-budget-reforms-fix-britains-broken-childcare-system\/","title":{"rendered":"Can the Chancellor\u2019s Spring Budget Reforms Fix Britain\u2019s Broken Childcare System?"},"content":{"rendered":"

Dr Rita Griffiths<\/em><\/a> is a\u00a0Research Fellow at the University of Bath\u00a0Institute for Policy Research (IPR). She is a Principal Researcher for the \u2018<\/em>Navigating monthly assessment in Universal Credit<\/em><\/a>\u2019 project and\u00a0Co-Investigator of the ESRC-funded research project \u2018<\/em>Couples balancing work, money and care: exploring the shifting landscape under Universal Credit<\/em><\/a>\u2019. <\/em><\/p>\n

With the intention to extend 30 hours of free childcare to working parents with children from the age of nine months, increased funding for nurseries and childminders, and more wraparound childcare at the beginning and end of the school day, Jeremy Hunt\u2019s proposals could go a long way towards fixing Britain\u2019s broken childcare system. The achievement of this laudable ambition will ultimately depend upon how quickly and sustainably the supply of childcare places will be expanded to meet the likely increase in demand, but today\u2019s announcement prepares the ground for the completion of a new foundational building block of the welfare state. Although much of the funding for childcare and early years services has been cut since 2010, the commitment of \u00a34.1 billion to extend 30 hours a week of free childcare to parents of under-three year olds is a major and unexpected step forward by a Conservative government. It steals Labour\u2019s thunder in an area which the party had been planning to prioritise in its manifesto.<\/p>\n

With the proposals to be phased in over a number of years, changes to the childcare offer in Universal Credit (UC) are meant to fill the gap. Here, the reforms fall a long way short of what low-income working parents need. To be sure, removing the requirement for parents to pay their childcare costs upfront is a clear improvement and may help to persuade some low-income parents, who would otherwise be unable to fund these costs, to move into work (although no detail has yet been provided as to how this will be achieved). But this reform will do little to help parents who are already working. Increasing the maximum amount that parents are able to reclaim in childcare costs each month may look generous, but working parents getting UC were already able to reclaim up to 85 per cent of childcare costs prior to the Spring Budget. Raising the ceiling (from \u00a3616 to \u00a3951 for one child, and from \u00a31,108 to \u00a31,630 for a maximum of two children) on the maximum amount that could be reclaimed in any one month could certainly help low-income parents living in London and other locations where the costs of childcare are excessively high. But, as several commentators have pointed out, such families represent only a small minority of families with children claiming UC.<\/p>\n

In fact, our research with UC claimants<\/a> showed that having to pay childcare costs upfront when a parent first moves into work, was only one of a number of barriers and difficulties with the childcare offer in UC. \u00a0A lesser-known aspect of UC childcare help is that, among those already in work, the amount parents actually get depends on monthly household income \u2013 meaning that the contribution they receive towards their childcare costs can fluctuate each month alongside changes in earnings. If the hours or earnings of one or both parents increase \u2013 for example if they take on an extra shift \u2013 this will reduce the amount refunded in childcare costs.<\/p>\n

The impact of what is, in effect, a monthly means test in UC has received little coverage. In our research, fluctuations in the amount of childcare help parents were entitled to were hard to manage. The complex relationship between monthly earnings and benefit entitlement \u2013 made worse with two working parents (in couples, both parents need to be working to qualify for help) \u2013 made it extremely difficult to calculate the financial impact that working additional hours would have on the UC payment. The inclusion of the childcare contribution in the single monthly benefit payment could also obscure the amount of money they had actually been paid. Uncertainty over how much they would be refunded acted as a disincentive to working longer hours.<\/p>\n

Most affected were women. In couples, they were more likely to be the recipient of the single monthly payment, so it was mainly women\u2019s income which fell if their partner\u2019s (or their own) earnings rose. Women were also generally responsible for paying for childcare, so drops in the UC payment could leave them out of pocket \u2013 still liable to pay the same level of childcare costs but with a reduced UC payment from which to do so. The difficulties of managing an unpredictable and unreliable payment towards childcare costs led some women to leave their jobs or reduce their working hours. Knowing that the UC payment received by their partner would be reduced or might cease altogether if they earned more could also disincentivise additional hours among \u2018first\u2019 or sole earners in couples.<\/p>\n

The administrative burden of reclaiming and manging childcare costs each month also typically fell to women. Liability for paying childcare that was out of sync with the system of monthly assessment \u2013 for example, paying childcare weekly in advance, but reclaiming childcare costs monthly in arrears- was especially burdensome. Delays and errors in repayments, combined with the impact of monthly assessment, left some parents in debt. None of these issues were addressed in the Chancellor\u2019s Spring Budget statement. This is largely because issues with the UC childcare offer speak to a wider set of issues hard-wired into the benefit\u2019s design. Childcare entitlement is based on a monthly means test and payment is calculated in arrears. This cannot be changed without major structural reform.<\/p>\n

In the short to medium term, changes to the childcare element of UC may not bring about the increase in parental employment that the Government hopes for. Particularly worrying in this regard are the \u2018sticks\u2019 that are being implemented alongside the childcare \u2018carrots.\u2019 Conditionality requirements for \u2018lead carers\u2019 (UC claimants with responsibilities for dependent children) who are working below the administrative earnings threshold (AET is the minimum amount a person needs to earn without having to regularly meet with a work coach) are set to ramp up. \u00a0An increase in the AET from 15 hours at the minimum wage to 18 hours will mean that any parent working less than 18 hours will be subject to work conditionality in the same way as unemployed people are \u2013 required to meet regularly with a work coach as well as take active steps to increase their earnings or find another job. The couple\u2019s AET, where a second adult may not be required to look for work if their partner is working above the level of the AET, is to be removed entirely. The impact on the 700,000 parents who will have their work search and earnings requirements increased remains to be seen, but failure to comply will result in sanctions. With the introduction of 30 hours free childcare not currently expected until 2025 at the earliest, the next few years look set to be a difficult transition for some the country\u2019s poorest parents and children.<\/p>\n

Longer term, the next government \u2013 whether Conservative or Labour \u2013 will be left with an important task: consolidating the extension of childcare entitlements to create a wholly supply-funded universal early-years and childcare offer. To ensure this is not achieved at the expense of a reduction in quality, shifting resources for under-five year olds entirely out of UC would seem to be the most obvious and sensible thing to do.<\/p>\n

All articles posted on this blog give the views of the author(s) and not the position of the IPR, nor of the University of Bath.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Dr Rita Griffiths is a\u00a0Research Fellow at the University of Bath\u00a0Institute for Policy Research (IPR). She is a Principal Researcher for the \u2018Navigating monthly assessment in Universal Credit\u2019 project and\u00a0Co-Investigator of the ESRC-funded research project \u2018Couples balancing work, money and...<\/p>\n","protected":false},"author":1790,"featured_media":2076,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[109,129,138],"tags":[],"class_list":["post-2075","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-data-politics-and-policy","category-uk-politics","category-universal-credit"],"acf":[],"jetpack_featured_media_url":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-content\/uploads\/sites\/115\/2023\/03\/Universal-Income-and-Childcare.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/posts\/2075","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/users\/1790"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/comments?post=2075"}],"version-history":[{"count":0,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/posts\/2075\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/media\/2076"}],"wp:attachment":[{"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/media?parent=2075"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/categories?post=2075"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.bath.ac.uk\/iprblog\/wp-json\/wp\/v2\/tags?post=2075"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}