The CBI is calling for the government to reform the childcare system – because members believe it’s critical for economic growth.
More and more businesses are speaking to the CBI about the need for urgent action to address the cost of childcare provision in the UK. That cost is one of the highest in the OECD. It’s forcing too many parents to give up work when they choose to start a family. And thousands more are prevented from taking on more hours of paid employment due to childcare issues.
Not only do firms care about their employees suffering this financial and emotional stress, it’s also losing them valuable talent and expertise – and that means many of them are missing out on opportunities to grow.
“Effective and affordable childcare is vital to ensuring a productive, engaged and inclusive workforce. We are keenly aware that the exorbitant cost and limited availability of childcare prevents many talented candidates from returning to the labour market and causes significant stress and loss of productivity for those who do.”
That’s the opinion of engineering firm Buro Happold – and it’s shared by many.
Businesses that can afford to are going beyond their statutory requirements to support working parents
Employers know they play an important role in creating inclusive workplaces that ensure all talent can progress. Many are working hard to support working parents with flexible working policies – Zurich, for example, is now advertising all roles as either part-time, full-time or job share. Others are improving their enhanced maternity and paternity leave and pay packages – like Aviva, which has introduced equal parental leave to all employees with six months at full basic pay.
Others are providing childcare grants. Sony Music, for example, recently announced that it will offer grants to support their employees in paying for childcare to improve productivity, boost talent acquisition and crucially allow women to keep working once they become a parent. With funding correlating with employee salaries, lower and middle earners can claim up to £15,000 per year towards childcare costs during working hours.
But government can do much more to support their efforts
Not every firm can afford to go above and beyond in how they support working parents – especially against a backdrop of rising costs. It’s also easier for some sectors and industries to offer flexibility than others, especially when it comes to working from home.
Businesses can’t be expected to solve this crisis in childcare on their own.
With the government already seriously looking at what they can do to reduce the high levels of economic inactivity in the UK, reforms to childcare should come high on their to-do list. And there are four things we believe they can do to address the affordability, accessibility and quality of childcare:
1) Announce an independent review of the UK’s childcare system – looking to reduce cost for parents, maintain high quality provision and create a sustainable funding and employment model.
2) Increase funding to the existing system so it reflects the true cost of service provision.
3) Extend existing provision for 3- and 4-year-olds to all 1- and 2-year-olds, taking into account their specific needs.
4) Change the Universal Credit system, so that childcare support is paid up front rather than in arrears to address the way that prohibitive childcare costs prevent parents from working or taking on more hours.
These proposals were included in the CBI’s submission to the Treasury ahead of the Spring Budget on 15 March. It continues the CBI’s call for the government to take long overdue action to tackle labour and skills shortages – two of the most common reasons why firms are struggling to grow.
Read more from our economists in this briefing on the potential impact of reform.
