Double Dutch: The case against deregulation and demand-led funding in childcare

Despite major advances over the last 15 years, childcare in the UK is more expensive and or more variable in quality than in many other European countries. This is especially problematic given the potential of good childcare to overcome early childhood disadvantage and enable parental employment.

The argument in Liz Truss' paper is rooted in the claim that our childcare system delivers poor value for money, for both parents and taxpayers, and she suggest that British policymakers should take inspiration from the reforms that took place in the Dutch childcare system in 2005. These reforms focused on reducing regulation, especially on childminders, and on switching to a demand-led funding model for childcare services.

This report argues that the outcomes of the Dutch reforms are not universally positive, and concludes, more generally, that this two strategic directions - deregulation and demand-led funding - are likely to take the UK's childcare system down the wrong path. Specifically, it argues that:

• reducing regulation of childminders (by loosening child-to-adult ratios or ending individual registration and inspection) would undermine quality and parental trust
• a demand-led funding system would not reduce costs or increase quality: on the contrary, it would lead to increased costs for government and parents, and to lower quality and diminished parental choice.

As an alternative source of inspiration for British policymakers, the report surveys the Danish childcare system, which:

• offers a universal national entitlement to childcare
• prioritises spending on services over spending on benefits
• fosters a high-quality workforce
• decentralises governance
• maintains relatively generous parental leave and workplace flexibility.

All this is premised on a broad political consensus and strong alliances, especially in the entrenched social partnership between employers and trade unions, and so would be difficult to import straightforwardly into the British context. However, there are a number of insights that we believe can be gained from looking elsewhere in Europe for inspiration in childcare reform.