All Party Group hears about the impact of rising childcare costs on poverty and gender inequality

The All Party Group on Early Education and Childcare, chaired by Nicola Brogan MLA, met virtually on Thursday 19 January 2023. The first meeting of the group in 2023 brought together more than 50 attendees including elected representatives, senior departmental officials and a wide range of stakeholders representing early education and childcare, the women’s sector, business, parents’ organisations and the broader third sector.

Before moving on to the main business of the meeting, Chair Nicola Brogan, MLA presented short updates on behalf of the Departments of Education and Health. Work is ongoing within the Department of Education towards development of the new Early Learning and Childcare Strategy, with two meetings of the Stakeholder Engagement Forum having already taken place, and another meeting planned for February. The RSM report on the Review of Childcare Services is expected soon. It will be analysed by the Department of Education and publication of the report will be considered in due course in consultation with departmental senior management. Work continues, in conjunction with other departments, the Early Learning and Childcare Programme Board and through ongoing engagement with stakeholders, to develop proposals in relation to the new Strategy for Executive consideration.

Marc Bailie from the Department of Health has agreed to present at the next meeting of the All Party Group (due in March 2023) and provide a detailed overview of the plan for the Review of Minimum Standards, to take place in 2023. This will set out each stage of the review along with timescales.

Childcare costs and poverty – Social Market Foundation presentation

The meeting heard from Shreya Nanda, Chief Economist at the Social Market Foundation (SMF), an independent think tank which focuses on economic prosperity, public services and consumer markets. SMF launched new research findings in 2022, as part of its cross party Commission on Childcare, which show the long-term impact that leaving the labour market to care for children has on parents’ (especially women’s) wages.

Impact of childcare costs on those on low incomes

The SMF analysis shows:

• On average, childcare accounts for about 7% of household income among those paying for it, rising to 17% for those in the lowest 20% of income brackets
• A third of childcare users in the lowest income bracket are in ‘childcare poverty’, defined as spending more than 20% of their household income on childcare
• For many, the cost of paying for childcare prevents them from working. 76% of households with an income above £45,000 use formal childcare, compared with only 52% of those with an income below £10,000.

Examining the motherhood penalty

Parents who are unable to afford to use childcare can experience reduced income due to being unable to work as many hours as they would want to – this particularly affects women. The research found:

• For about a third of mothers out of work with young children, childcare costs are cited as a reason for not working.
• Half of part-time employed mothers that want to work more, say that affordable childcare would help.

Long-term impact on earnings

The analysis carried out by the SMF showed that having a child has a significant and sustained impact on female earnings which mean an income loss of as much as £70,000 for those with children, compared to wage growth for those who do not have children (based on the data analysed as part of the research).

Questions and discussion

Following Shreya’s presentation there were a number of questions from members of the All Party Group around issues including the definition of childcare poverty, the impact of the 30 hours free childcare scheme in England and the role of flexible working in helping parents to get into and stay in work. Shreya indicated that the next steps for the SMF would involve working on policy recommendations for the reform of childcare, as part of the Commission on Childcare – something that will be of great interest in the Northern Ireland context as work continues on the development of a new Early Learning and Childcare Strategy.

Thanks to speakers, members and stakeholders for their engagement

Commenting on today’s meeting, Chair Nicola Brogan MLA thanked the speakers, the members, and all those who attended:

“Thanks to everyone who participated in today’s meeting – the evidence presented in the presentation reinforces the key role childcare plays in lifting families and children out of poverty and that access to affordable childcare is critical to supporting parents to get into, and stay in work. This is more important now than ever with the cost of living crisis impacting so severely on families.

Yet we know that many childcare providers are being left with no choice but to increase their fees, in the face of their own rising costs for essentials like food, fuel and electricity. This will mean more families will be unable to afford the childcare they need to work.

This is why we need to see long-term investment in our critical childcare infrastructure and progress on the long-awaited Childcare Strategy. But we also need to see urgent intervention now, to support the sector, and those parents who rely on it, at this incredibly challenging time. The reality is we are facing into a childcare crisis and we need to see action.”

Looking ahead

Chair Nicola Brogan closed the meeting by thanking all stakeholders for their engagement with the All Party Group this year and advised that it is anticipated the next meeting will take place in Parliament Buildings, Stormont in March 2023, and will include an update from the Department of Health on the Review of Minimum Standards.

It was also noted, following on from discussion within the meeting, that the Chair will write to the Department of Finance regarding the issue of rates which are a significant outgoing for some childcare providers, and are causing real concern.

Find out more about the All Party Group on Early Education and Childcare

Further information on the All Party Group on Early Education and Childcare, including links to read more about previous meetings, is available here.

Employers For Childcare provides the Secretariat for the All Party Group on Early Education and Childcare – correspondence to aoife.hamilton@employersforchildcare.org or 028 9267 8200.