At last, a sensible article on child care costs

From yesterday's City AM Forum:

IT MAY sound incredible given the current political debate, but the UK government now spends more as a percentage of GDP on childcare than all European countries except Denmark. Yet the direct costs to parents continue to rise inexorably...

Quality concerns (1) have led to excessive regulation. On top of the staffing ratios (among the tightest in the world), demanding health and safety conditions, local authority and Criminal Records Bureau checks, we also have the unnecessary and expensive Early Years Foundation Stage. All “early years providers”, whether large nurseries run by businesses, state primary schools or childminders in their own homes, have to follow a structure of learning, development and care for children from birth to five years old, monitored and overseen by Ofsted.(1)

I haven't done any Marshall curves for ages, so here goes. See if you can sketch an alternative third chart where the staff ratios remain unchanged, so costs are still £100 pcpw - but this time, the government gives parents a £50 pcpw 'nursery voucher'. What happens to quantity and price paid?
1) What "quality concerns", pray tell? If you're not happy with your children's nursery, then you take them elsewhere. Effectively, each nursery is inspected twice a day by each parent at drop-off and pick-up times (which are different for different children). So nurseries are more or less under constant outside supervision by people who are paying through the nose and really care. Sunlight is the best disinfectant etc. In a society riddled with scandals and horror stories, when was the last time you read one about a children's nursery?

You read about nastiness in NHS hospitals because that's a take-it-or-leave-it-thing, you can't decide half way through a hospital stay that you'd rather be treated elsewhere. And you read about nastiness in care homes because there is little outside scrutiny, they'd be much better if close relatives visited every day.

2) He only mentions a fraction of the bureaucratic crap you have to go through to open a nursery. I won't bore you with my own experience of ten years ago again, but as it happens I was chatting to somebody recently whose wife works for a nursery and whose mother (or mother in law?) owns and runs a nursery elsewhere and it is quite simply true - the barriers to entry are enormous, once you are up and running it's more or less a licence to print money, but nursery workers are not very well paid and they don't have the option of setting up on their own.

The actual annual cost of complying with these regulations is not huge and doesn't really add to the cost base; the reason they push up prices is because supply is restricted to much less than the market clearing level. You can tinker with the staffing ratios all you like, that will hardly affect the price paid, it will just push up unearned profits (i.e. "rents").