Prioritise low-income families to “poverty-proof” Scottish childcare ambitions

• A survey of over 500 parents shows they highly value early years childcare but 82% said the high costs were a downside of the current offer.
• A couple with two children under three, both working full-time for the National Living Wage, would spend 85% of their disposable income after housing costs and childcare. This family could quadruple their weekly disposable income, an increase of £336, if funded childcare places were available to under-twos.
• JRF modelling shows an expansion of funded childcare for the hours that parents want can reduce child poverty by 2.9 percentage points by 2030.
• Nine in 10 parents with an under-five agree that more funded early years childcare should be available

A new report from the Joseph Rowntree Foundation (JRF) finds there's still a significant amount of work to be done to give children the best chance of growing up free from poverty and reaching the Scottish Parliament’s 2030 child poverty targets.

In order to "poverty-proof" the future of early years childcare, the Scottish Government should follow through on the First Minister's commitment and expand funded places to children under three.

The Scottish Government currently funds up to 1,140 hours of early learning and childcare for children aged three or four-years-old. Though some two-year-olds are eligible for the current offer, concrete plans to expand this further aren't included in the Programme for Government despite the First Minister's ambitions. The need for enhanced childcare is clear but what's confusing is the lack of urgency in that case.

The report models an example universal offer that reflects what, on average, parents said they want - 25 hours per week for all one and two-year-olds and 35 hours for all three and four-year-olds. This could reduce poverty by up to 2.9 percentage points by 2030. To fully fund these additional places for all children could cost over £2 billion a year so JRF argues, low-income families should be prioritised in the first instance.

An expansion would also increase parental labour market participation. Nearly two in three parents (65%) agree that they would work more if there was more free childcare provision. Over half of parents told us an expanded offer would enable them to look for more secure work.

JRF estimates that a couple, with two children under three, in full-time work earning the National Living Wage (NLW) would be spending 85% of their disposable income after housing costs on childcare.

Expanding funded childcare to one and two-year-olds could bring this family an extra £336 a week in disposable income. In the current system, even higher earning couples working full time with two one or two-year-olds can be spending around half of their disposable income after housing costs on childcare.

Jack Evans, JRF Senior Policy Adviser for Scotland, said: "The wait-and-see approach to childcare in Scotland risks leaving thousands of families behind. A lack of affordable options is a significant barrier to low-income parents escaping poverty. The cost of childcare must not lock people in financial insecurity, closing the door to the labour market.

"By reducing early years childcare costs, we can dramatically increase household disposable income, with the biggest impact seen for low-income families. So an expanded offer should be designed and targeted at low-income families and while the impact on the child poverty targets would be modest against the cost, the improvement in quality of life of families, particularly for those currently struggling to get by, is potentially great.

"We can be under no illusions about the scale of reform needed. Holding the cost of the childcare that parents want alongside the state of public finance is daunting. Yet Scottish Government and politicians of all parties must meet the challenge head on, otherwise families on low incomes will be left behind. If the cost of universal expansion is a barrier then we need a debate about how we knock it down.”