The CBI has successfully called on the government to reform childcare. These are the reasons it's needed.
Childcare provision in the UK is at crisis point – and it matters. For the families affected. The businesses that lose out on valuable talent. And the economy that’s weaker for it.
Here are five reasons behind the CBI’s campaign:
- It’s contributing to labour market shortages
According to the Office for National Statistics, there are 1.7 million people currently economically inactive who would like to work – 21% of them cite caring responsibilities as the main reason behind it. 29% of mothers with a child aged 14 or under have said they had reduced their working hours for childcare reasons. A similar proportion of mothers and fathers report facing obstacles in fulfilling childcare responsibilities within their work life. All of which costs businesses valuable expertise and limits their chance to grow.
- It’s exacerbating the cost-of-living crisis
Childcare costs in the UK are now some of the highest in the OECD. Full-time nursery for children under the age of two now costs almost two-thirds of an average parent’s weekly take-home pay in England. Employers are concerned about the negative impact this is having on their staff.
- It’s dampening economic output
The Women’s Budget Group estimates that lost additional hours women cannot work due to childcare constraints cost more than £28bn in lost economic output every year.
- It’s slowing down social mobility
An investment in childcare to boost labour supply today is also an investment in social mobility and long-term growth. High-quality early years education helps to close the attainment gap between lower-income children and their more advantaged peers, reducing inequalities and creating benefits that last throughout a child’s time in school and work. This issue is also about the workforce of the future.
- It contributes to gender inequality
The gender pay gap significantly widens for the 40-49 age group in the years after parents have their first child, showing that women continue to pay a penalty for having children and often carry the burden of unpaid caring responsibilities. Previous economic forecasts have identified that bridging the UK gender gap in work has the potential to create an extra £150bn on top of business-as-usual GDP forecasts by 2025. More than a third of this could come from increased female participation in the labour force which greater childcare provision could unlock.
On 15 March, the Chancellor responded to our proposals with a pledge to provide 30 hours of free childcare a week for children over nine months, alongside a boost to subsidised childcare for parents on Universal Credit. Although there's work to be done to ensure the market has the capacity and support to deliver on this commitment, this lays the firm foundations we need to tackle labour market shortages and gender inequality.
Read more on why this issue matters so much to business.
Read more from our economists in this briefing on the potential impact of reform.
And find out more about this win, and another announcements in the Budget that can help your business, in our member-exclusive analysis.
