A cross-party report from Policy Exchange warns that Britain's childcare system is letting down both parents who want to work more and those who wish to spend more time with their children. The report, titled "A Matter of Choice: Giving Parents Back Control Over Childcare," argues that the current system is inflexible and expensive, failing to meet the needs of modern families.
Parents caught between work and care
Data from the Department for Education's survey of parents reveals that 69% of working mothers of children aged 0-4 would work fewer hours if they could afford it. Among non-working mothers of children aged 0-4, 54% said they would prefer to go out to work if they could find affordable childcare. The report concludes that the system is not working for either group.
Former Labour Education Secretary Ruth Kelly, who wrote the foreword, said: "If we want to strengthen support for families when costs are highest and incomes are most stretched, the early years are the obvious place to begin – and this proposal does so in a way that recognises that different families will have different preferences in terms of how, and when, they return to work, and that the state should not take sides in what should be deeply personal decisions."
Cross-party support for reform
The report is backed by a cross-party group of MPs, peers, and childcare practitioners. It calls for reforms that would give families greater choice, freedom, and responsibility, while providing more support for the most disadvantaged, who currently receive little from the system.
Liberal Democrat Education Spokesperson Munira Wilson endorsed the report, stating: "The affordability and availability of childcare remains a challenge for too many families across the country. The current system penalises disadvantaged families, and those in irregular work, above all."
Conservative Education Minister Baroness Barran said: "This Policy Exchange report highlights the complexity, inflexibility and risk inherent in the current childcare system. It tests new approaches which address these points and give more choice back to a broader range of parents about how to raise their children."
Dysfunctional market and proposed reforms
The report finds that the childcare market operates dysfunctionally: the government centrally sets rates for up to 80% of hours, while tightly controlling ratios. Providers use higher payments for under-2s to cross-subsidise below-market payments for 3- and 4-year-olds. Many rely on voluntary top-ups or charge more for non-funded hours to break even.
The proposed reforms would attach funding to the child, giving families a flexible, portable budget to spend across a wider range of provision. For under-2s, this would offer parents more choice over returning to work and open opportunities for families relying on grandparents or relatives. For children aged 3 and above, where educational benefits are stronger, providers could operate more flexibly, charging different rates for different hours or adjusting ratios to lower costs.
The report also recommends regulatory changes to reduce costs and ease market entry for childminders, including limiting Ofsted inspections of childminders to safeguarding and fraud checks.
