On The Horizon – April 2023

Jennifer Liston-Smith’s monthly review reflects on key themes, news and public policy updates in the world of combining work and family for organisations, parents and carers.

Author: Jennifer Liston-Smith, Head of Thought Leadership, Bright Horizons

  1. Childcare is a key economic building block

The Budget – Summary

Childcare was recognised as part of the infrastructure for new developments in December 2022. Now, with the UK Spring Budget announcement on 15th March, it has been understood to be a major key to workforce participation and economic growth.

Under the recently-announced plans, by September 2025:

  • Children in England from 9 months and under 5 years will be able to access subsidised childcare places for 30 hours a week from September 2025 during the 38 weeks of term time (which equates to just under 22 hours each week across the year), as long as all parents in the household work at least 16 hours a week.
  • This will be introduced in stages: 15 hours for 2 year olds from April 2024; 15 hours for children from 9 months to three years from September 2024; 30 hours per week (38 weeks a year) for all eligible families with children under 5 by Sept 2025.
  • There will be discretionary scope for more flexibility in educator to child ratios, to increase from 1:4 to 1:5 for 2-4 year-olds in England, as in Scotland.
  • Parents on Universal Credit will receive childcare funding up front if moving into work or increasing their hours, and there is an increase in the maximum amount to £951 for one child / £1630 for two children.
  • Wraparound care: schools and local authorities will be funded to increase 8am to 6pm care. All schools should be able to offer this alone or in partnership with other schools by September 2026.
  • There’s a one-off incentive for new childminders: £600 to sign up or £1,200 to join through agency.

Given the overall number of hours available to parents in the new plan, and the timeline, there is a strong role for employers in continuing to address childcare as part of cost of living support and as a core talent retention strategy. Chancellor Jeremy Hunt explained in his Budget announcement, “for many women, a career break becomes a career end”. The Budget has created a huge appetite for working parents to access care as career support for themselves and early years education for their children.

The Budget commentary

HR Magazine offers one of many summaries exploring how the Budget measures focus on UK workforce growth through encouraging economically inactive people back to work, given that there are 1m vacancies in the UK but seven million adults of working age who are not in work. As well as working parents, the focus is also on people on long term illnesses, and over 50s.

According to The Telegraph, ‘the Office for Budget Responsibility, the Government’s official forecaster, giving 30 hours a week of free childcare to children aged between nine months and two years would “gradually increase” employment of parents with young families. It estimated roughly 60,000 parents in this demographic would join the workforce by 2027-28’.

Some commentators have expressed concerns and reservations about the proposed childcare plans, including Working Families, the Early Years Alliance and the Institute for Fiscal Studies (IFS).

One observation by the IFS is that ‘England’s childcare market could need about 65,000 new 30-hour places by 2027’. This is in a context in which Coram Family and Childcare’s 22nd annual Childcare Survey revealed on 9th March a sharp drop in childcare availability across England over the past year, with only half of local areas reporting sufficient childcare for children under two, a decrease of 7% on 2022, and under half (48%) reporting enough childcare for parents working full-time, a decrease of 11% on last year. In theme 3 below, there are links to commentary from the Boston Consulting Group on the part that employers can play in mitigating any risks.

At Bright Horizons, we plan to spend some time digesting the detail from the budget to fully understand the impact it will have, however, it’s good that Early Years is now a core item on the political agenda.

We all know effective Early Years Education with proper investment yields results in society. The children, families, our employees and the clients we serve all benefit from greater access to sustainable childcare and education.

In addition, our continued investment in our people will help us prepare for the anticipated increased demand. Bright Horizons invests in our colleagues through our apprenticeship programme and bespoke professional development courses such as Future Leaders for our nursery teams to grow our own talent pipeline and business-wide Leadership and Senior Leader programmes.

  1. The Gender Pay Gap – there are real ways to close it

The gender pay gap is not closing and – since it is based on comparing average female pay with average male pay, it will not close until there is a balance of genders in the most senior roles.

The Government Equalities Office published evidence-based approaches that are known to close the gap. These include family supports, since many women still shoulder the majority of childcare and eldercare responsibilities, despite the undoubted increase in men sharing the domestic workload. Recommended actions to close the gap include great communications and support through watershed moments such as the parent transition and practical enablers such as childcare and flexible working to remove barriers to ongoing career progression for all genders.

This Financial Times article provides helpful insight along with charts that show some firms with our most established programmes for coaching individuals through the parent transition have dramatically lowered their pay gaps.

Talking of the decisive impact of the parent transition, it's positive to see statutory rates for new parent leave have increased in line with inflation, to £172.48, up from £156.66. In our experience – and the GEO advice above - what really makes the difference for employees, in addition to well-supported time off, is all about relationships with managers, great communication throughout and challenging any assumptions, all things that coaching for the individual and the line manager help with. As one of the teams that pioneered this type of coaching, we know a thing or two about getting it right and we've captured all our knowledge into our Parental Leave Toolkit app with a date-driven journey that hand-holds the team member and manager before, during and after leave.

  1. The Care Economy: there’s a vital role for employers, particularly during the cost of living crisis

As reported in March’s ‘On The Horizon’ the Carer’s Leave Bill passed through its second reading on 3rd March, and is due for its Committee Stage on 19th April. This is set to bring in a week of unpaid leave for carers. With this modest provision in mind, it is helpful to have Carers UK update on the UK Census figures published by the Office for National Statistics on 28th March which show an increase in people who are combining work with substantial hours of caring. There are 2.5m unpaid carers in work (over 1m male carers and over 1.4m female carers, 900,000 of whom are combining work with caring for over 20 hours a week.

A very helpful, brief account of what employers can do comes at the end of this 15-minute conference talk by Sharon Marcil, North America Chair, Boston Consulting Group (BCG) from November 2022. BCG describes the “care economy” as “a vast ecosystem where families, employers, and institutions—from daycares and nursing homes to schools and hospitals—come together to support the young, the old, and the sick”.

It is particularly pertinent to focus on those with all kinds of caring responsibilities during the ongoing cost of living crisis. The number of people in working households who are living below the poverty line is 1.5 million higher than in 2010, according to new evidence. Government data published on 23 March also showed that the percentage of working age adults in relative low income after housing costs increased from 19% to 20% between 2021 and 2022. A new study by Acas, based on a survey of 1014 employees in Great Britain carried out by YouGov, has found that three out of five British workers (63%) feel stressed due to the rising cost of living. 15% said that they were very stressed while 47% replied “fairly stressed”.

The role of employers here is a key part of the mosaic of stakeholders in the care economy, as captured by BCG. We know that family services make a direct difference. In another family life stage, where parents are concerned about children’s educational development, our service users fed back that 73% agreed that without access to virtual tutoring as part of their back-up care provision, they would have used private tutoring with an impact on family finances (Bright Horizons user feedback surveys 2022 YTD). At this time, leading employers are continuing to look for ever more inclusive and innovative ways of supporting family life, both as part of talent attraction and retention and as pure cost of living support. And speaking of an inclusive view of family life, pet care is up next!