Woman assisting a child in the playground
More than half of UK families with pre-school children did not use paid-for childcare in 2019 © Isabelle Johnson/London Early Years Foundation

June O’Sullivan was a single mother working for the National Health Service in London when she was first confronted with the flaws in the UK’s childcare sector.

She was dropping off her son at a new nursery and struggling to help him settle when she was met with abuse from the manager.

“They screamed at me and said, you’re an Irish single parent, I could have given this place to a doctor,” she recalls. “I thought: there must be a way of doing this that’s fair and right.”

That was back in the 1980s. But women in the UK continue to struggle with a childcare system that is expensive, dysfunctional, and retains many problems of the “unfair and broken” system she encountered.

Yet women are also on the frontline trying to solve them. In the past 15 years, O’Sullivan has built the London Early Years Foundation into one of the largest childcare social enterprises in the UK.

“Childcare is such a crucial structural issue,” she points out. “By down-valuing it, we’re putting the country at political risk.”

June O’Sullivan
June O’Sullivan

Lack of access is a problem, and its cause is complex, but experts say much of the blame lies with the UK’s muddled mix of private providers and patchy government funding.

Private providers supply the bulk of nursery places in England, funded by a combination of government money and fees from parents. All 3- and 4-year-olds are entitled to either 15 or 30 hours of free childcare during term time, and most parents qualify for tax-free childcare beyond that. However, government funding does not go far enough.

According to Coram Family and Childcare, a charity, it costs an average of £19,000 a year to send a child under the age of two to nursery in London on a full-time basis. That represents an increase of 60 per cent between 2010 and 2021.

Bar chart of Nursery for children under age two (£) showing Cost of 50 hours a week childcare in England by region

As a result, many families have to spend large proportions of their income on childcare, while others cannot afford to send their children to nursery at all. According to UK think-tank the Institute for Fiscal Studies, more than half of families with pre-school children did not use paid-for childcare in 2019.

For parents, the lack of childcare coverage for younger children, or for the full year, means eye-watering costs are hard to avoid. For providers, the money the government offers is not enough.

Last year, an investigation by the Early Years Alliance, which represents parts of the sector, found that the government had estimated that adequate nursery places would cost £7.49 per hour per child. But, in 2021, it gave nurseries an average of only £4.89.

Christine Farqurson, a researcher at the IFS, says the funding shortfall makes it difficult for childcare to fulfil either of its purposes: to help parents return to work, and to give children a good-quality education before they start school.

Insufficient funding becomes a drain on family finances and it is more likely to be mothers who cut down their hours or step out of work. Research also shows that nurseries in the most deprived areas are more likely to close than those in wealthier neighbourhoods. To cover costs, providers rely on charging better-off parents for additional hours, or extras, such as nappies and meals.

Many female leaders in the sector feel that politicians fail to recognise the importance of early-years care in educating the next generation, promoting equality, and supporting families to work — in part because it is often seen as a “women’s issue”.

“Childcare is deeply political but they see it as ‘those little women over there’ . . . [and the subject isn’t given] the seriousness it deserves,” O’Sullivan observes.

Rebecca Swindells founded The Blue Door Nursery, in Seaford, south-east England, after working in primary schools for 15 years. She says the majority of small nursery chain founders are focused on giving children the best start — despite the tight finances of the sector.

Rebecca Swindells founder of The Blue Door Nursery
Rebecca Swindells founder of The Blue Door Nursery

“Fundamentally, nurseries are started by education professionals who start businesses to provide childcare and education. This isn’t a sector that you go into to make big bucks.”

Smaller employers in the sector can sometimes offer workers more support than other businesses, she adds — such as giving staff time off to care for their own children or allowing more time for personal development.

“It’s not a profession that people work in for the money,” she stresses. “We have to make it attractive in other ways — for example, by offering staff different kinds of motivations, such as flexibility with hours or allowing them to develop their own skills and interests at work.”

Other organisations have adopted more radical approaches, such as offering employees a stake in their nurseries, in the face of challenging financial conditions.

Anne-Marie Dunn, who built multi-nursery chain Kidzcare into a 150-employee business with an annual turnover of £3mn, this year sold 100 per cent of her shares to workers via a trust, making it the first fully employee-owned childcare company in Scotland.

Anne-Marie Dunn founder of Kidzcare

As well as monetary benefits, Dunne hopes the shift will give employees a greater sense of agency and control over how the business is run, resulting in better outcomes. “They’re starting to think, in a small way, this is my money we’re spending, this is my service we’re delivering,” she says. “One of the joys is transforming the lives of people . . . [employees’] salaries and their lives are going to be really different.”

The London Early Years Foundation has adopted a social enterprise model that cross-subsidises fees for poorer parents. All profits are redirected to the social business, rather than being paid out in dividends, with the aim of reserving 35 per cent of places for disadvantaged children.

O’Sullivan hopes businesses like hers can contribute to the wellbeing of children, their families and communities — and the longer-term needs of the country’s economy, too. “Our way of doing business adds value to the economy — it’s not to be down-valued,” she says.

Women at the Top Americas Summit

Join leaders from Qualcomm Incorporated, PepsiCo, Twitter and more at our Women at the Top Americas Summit. Taking place on November 14 at the Dream Downtown, New York, as well as online, our speakers will discuss how purposeful action from leaders can drive real change. Claim our limited 25% discount offer on our VIP in-person summit using promo code SPECIALREPORT22. Register for your in-person or digital pass today.

Copyright The Financial Times Limited 2024. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article