Even though the UK has among the highest childcare costs of the 38 countries in the Organisation for Economic Co-operation and Development (OECD), it only spends close to the average of what other countries are spending. Those results suggest professional childcare is used less, probably because of the costs. Perhaps unsurprisingly the main political parties in the UK therefore have proposals for how they would tackle this important issue.

Proposals for the UK

The Conservative Party's recommendations are that the government should:

increase the Marriage Allowance so that parents with a child under the age of 16 can transfer their full personal income tax allowance to their spouse if they are earning less than the basic rate income tax threshold (at present only £1,260 of the personal allowance can be transferred); and

begin a formal consultation on implementing a new version of Family Credit in the form of a direct cash payment to parents (in place of the existing free childcare entitlements and tax-free childcare) which would allow parents to decide how best to spend their budget.

The Labour Party's proposal is a wrap-around plan that creates a childcare system to support families from parental leave until the end of primary school. This includes:

• a £112 million investment into early years, a boost of funding that is said to equate to 21 million hours of free childcare; and
• making free breakfast clubs and after-school activities available for every child to boost development while giving parents the freedom to work as they choose.

International examples

Some other nations have successfully achieved a lower net cost of childcare and it is captivating to compare the different ways this has been done. France, whose net childcare costs are near the average of the 38 OECD countries, taxes families as households instead of individual parents. They also provide tax benefits dependent on the number and age of a family's children, as well as its income. This reduces the net cost (after allowances) of childcare in family budgets. France also provides a basic allowance to families with children which those families can decide how to use, as well as additional allowances to larger families. Perhaps most interesting is what is known as the Shared Allowance, which is a payment that allows one parent to cease working or to reduce their working hours to take care of a child. By helping parents to pay for childcare costs, the net cost of childcare is reduced.

In Estonia, which has one of the lower net costs of childcare amongst OECD countries as a proportion of average earnings, new parents are paid a one-off Childbirth Allowance, and any parent who provides care for a child under 16 is given monthly allowances. Parents are also paid a parental benefit while their children are under three, a Childcare Allowance when their children are aged between three and eight, and further allowances of €300 to €400 per month when their families have at least three children. These measures provide important support to families including by helping them afford childcare.

What can employers do?

In a Randstad UK survey of workers across the country, almost 30% of workers felt that a lack of flexible working opportunities and childcare options were key reasons for leaving their workplaces. Given the current climate where some businesses are struggling with staff retention and the government is contemplating reforms in this area, pre-emptively providing better childcare and flexible working options could be a way for employers to gain an advantage. There is a plethora of fantastic benefits already offered by companies across the UK. Those employers who want to stand out in this respect can consider if some of these might be viably offered to their employees. These benefits include:

• on-site nurseries – these can be run in various ways, e.g.:
  • paid for through monthly salary sacrifice;
  • heavily subsidised;
  • free for employees;
  • bookable by time slots, so parents would only need to pay for necessary time slots; or
  • operated in a "non-staffed" manner such that parents would have a workspace within the nursery and oversee their children while working;
• childcare vouchers; and
• subsidisation of the costs of sending children to external childcare providers.

Many employers already do so, but those who don't could consider increasing the opportunities for workers to reduce their working hours during the day, working fewer days in the week, or moving around the hours they do work during the week. Similarly employers that require attendance at a specific workplace could also contemplate whether it is practicable to offer more employees the opportunity to work remotely when they need to. By offering more flexibility to parents where this is feasible, employers may be able to help employees reduce their childcare costs (by allowing them to do school pickups themselves or by lowering their commuting costs) and improve their work-life balance.

These are just some examples of arrangements that show employees that their employers are genuinely concerned about their needs and wellbeing. If you would like to discuss anything in this article, or would like guidance from an employment perspective, please contact a member of our team.