Tuesday, 4 September 2018

"Free childcare scheme 'closing' nurseries, education charity says"

From the BBC:

A scheme offering 30 hours of free childcare a week has had a financial impact on providers, a charity says.

It's not a charity, it's a trade body/lobbying group, but their point stands.

The government pays a national average of £4.98 per hour for places to local authorities, of which a minimum of 94% is passed on to providers.

As background, until a year ago, parents received a subsidy for 15 hours 'free' nursery care but at a higher hourly rate. Of all the various overlapping schemes for subsidising private childcare, this was the best, being universal, non-means tested and with a minimum of bureaucracy. (Even better/cheaper would be more pre-school places at local state primary schools, but that's a separate topic).

The [Pre-School Learning Alliance] charity surveyed 8,000 nurseries and childminder firms between 17 July and 23 August.

It received answers from 1,662 providers and found 46% of them felt the scheme "had a negative financial impact on their business", while two-thirds said funding for child places did not "cover the full hourly cost of delivering the places"...

It doesn't take a rocket scientist to work out that price controls (which is what this boils down to) will increase demand and reduce supply (unless it simply prevents rent-seeking, in which case the impact on supply is negligible, but that does not appear to be the case here).

In a statement, the DfE said it had provided "£1bn extra funding a year to deliver all of this government's free childcare offers... We continue to monitor delivery costs and we have commissioned new research to provide further information on the costs around childcare," it added.

The DfE said parents were saving up to £5,000 a year on childcare costs.

That "saving" consists of two things - the amount by which nurseries' incomes are squeezed and the value of the subsidy, which those working parents are partly paying for through their taxes anyway.


Lola said...

"....government's free childcare..." It's not fucking 'free' you bastards. What you mean is that someone else is paying!

Mark Wadsworth said...

L, of course, which is why I put the word in apostrophes in the post.

Bayard said...

"....government's free childcare..." It's not fucking 'free' you bastards. What you mean is that someone else is paying!"

I beg to differ. If what you pay, you pay anyway, whether you receive the goods or services or not, then the goods or services are effectively free. I have no children to educate, but I still same the same taxes as if I had ten. I receive no rebate for not availing myself of the educational services provided by the state, therefore those services are free. What's more, if the state no longer provided those educational services and everyone had to pay for them, then my taxes would still not be less, the government would just spend the money on something else. It's the same as LVT not putting up rents.

Lola said...

Bayard. (apologies for late reply).
No. Disagree. yes, the service is 'free' to those who claim it. But it is not 'free' in nay meaningful sense of the word as implied by the weasally government.

" I receive no rebate for not availing myself of the educational services provided by the state, therefore those services are free. Eh? And it is simply untrue to say that you taxes would be (be able to be ) reduced. Of course they could. But I do agree in one sense that governments always seek to raise the most tax and then work how best to spend it - how best spend it from their point of view, not the taxpayers. See Friedman on the four ways that money can be spent.

Bayard said...

"Of course they could."

Well, yes, we know that, but my point was, and you agree with me here, that they wouldn't be.

"See Friedman on the four ways that money can be spent."

I know that one, but I didn't know it was one of Milton's.

However, you might as well say that everyone pays for the right to walk around or drink alcohol through their taxes, because if they didn't pay their taxes, they wouldn't be able to do either of these things because they would be sitting in a prison cell.

mombers said...

I will not be collecting a state pension, therefore I will not be paying NI thank you very much. I will not be using a care home, ditto. I do not use x, y and z, where's my tax rebate??

BTW I didn't use UK state education or the NHS as a child so does that also count towards a hypothetical tax reduction? The whole 'I don't have kids/have 1/2/fewer than someone else so I should pay less' argument is blown out of the water by the vast majority of people consuming these services as children themselves. And of course availing themselves of the goods, services and taxes of those who are in a position to do so because of same.

@Lola I think the state will find that it has to spend a lot more on prisons if investment in children is reduced, and the economy will be smaller absent a healthy, well educated workforce. The current child poverty being foisted onto us will come back to bite severely I reckon. We're already seeing higher spending on emergency interventions like taking kids into care as a result of reductions in investments in intervening earlier.