Ryan Bourne: It’s time for the Conservatives to deliver on childcare deregulation

4 May

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Can any rational person comprehend the emotive, knee-jerk reaction that always follows modest proposals to relax minimum staff to child ratios for childcare?

Here are mandates, the details of which barely anyone can recite, introduced within the last two decades, which vary substantially across the world, and which some pleasant countries don’t impose at all.

Yet every time Conservatives suggest even limited deregulation of a sector that everybody moans produces services that are too expensive, they generate a Pavlovian response that implies today’s exact regulatory details are all that protect children from imminent danger.

Milton Friedman called this reactionary impulse the “tyranny of the status quo” – referencing the reflex-blocking coalition of politicians, bureaucrats, and interest groups.

Given the weight of theory and evidence is on the liberalising side here, Tories should have the courage of their convictions, using today’s circumstances to finally overcome such forces.

Reform of staff:child ratios was rebuffed first when Liz Truss’s efforts were blocked by Nick Clegg’s Liberal Democrats. This time, as the Conservatives scramble for ideas to reduce living costs, blowback comes from Labour and the nursery trade bodies.

A rather minor proposed change is to allow carers of two year olds to look after up to five children at a time (as in Scotland) instead of four. Yes, all the hand-wringing about “endangering children” arises from plans for England to match a policy already implemented north of the border.

The economic case against tight staff:child ratios in childcare is well-grounded. With binding restrictions in such a labour-intensive sector, the costs of supplying childcare to a given number of children grows as more staff are required.

There’s also reduced flexibility to accommodate for staff absences or to deliver care for an additional child in unusual situations. This all raises prices by restraining childcare availability.

In the US, where ratios vary by state, researchers consistently find that loosening ratios by just one child across age groups is associated with prices that are six to 20 percent lower. Given a full-time childminder or nursery care place for a two year old averages £11.8k or £13.2k per year; that’s equivalent to annual savings of £710 or more.

Quite simply, when you cut the profitability of childcare, the number of providers falls. This might occur directly by raising staffing costs, or indirectly, as tight staff:child ratios reduce the revenue-earning potential of workers, restricting wages available to obtain better staff.

Either way, the regulation makes childcare less productive, so fewer providers operate.

Crucially, research (again from the US) has found that the resultant closures are almost all concentrated in low-income areas. Less availability and higher prices are regressive, forcing poorer households to use other forms of informal care or forego important labour market opportunities entirely.

Given England has about the tightest staff:child ratios in Europe for two year olds, the Government focus on loosening requirements for that age group is understandable.

But the truth is, this logic pushes against having such top-down regulations at all. Denmark, Sweden and Israel have no such restrictions. A lot of people who preach the idea of evidence-based policy, and think themselves internationalists, seem strangely unread and parochial about this.

Instead, their objections either reek of the special pleading of large, formal nurseries who don’t want the competition of a more pluralistic sector, or to the busybody tendency that desires one’s own preferences being imposed on everyone.

But… these ratios aid child development, no?

Doesn’t having fewer children per staff member lead to more staff-child interactions and better child development?

Labour’s Bridget Phillipson argued so, but actually, there is little evidence that’s true. Meta-analyses on these types of regulation have found “small, if any, associations with concurrent and subsequent child outcomes.”

This conventional wisdom ignores the potential for higher wages to improve quality and the possibility that higher prices caused by these regulations drive poorer households towards more informal care or even out of work, also affecting children’s development. One cannot just look at the sample of kids who continue to access more expensive care.

Aren’t parents opposed to these changes?

Online parents often claim to speak for all in opposing this deregulation on safety grounds. But providers in a market face strong incentives to give parents the assurances they desire.

Some centres would therefore no doubt advertise they are sticking to the pre-reform ratios, or even develop private accreditation – these rules are only minimum standards, after all.

Parents, not governments, should judge the features that constitute childcare quality. Research analysing Yelp reviews suggests high- and low-income households have different average preferences on this. Richer families tend to be more concerned about childcare as a learning environment. Poorer families worry more about its availability and price.

A government policy for tight ratios amounts to imposing richer households’ preferences to the detriment of poorer households’ needs. Deregulation allows the market to offer various price-feature bundles to suit different families’ wants.

Don’t only the rich use formal childcare?

Torsten Bell, of the Resolution Foundation, implies deregulation won’t help those really struggling, because just 44 percent of poorer parent households use formal childcare, compared with 69 percent of those earning over £45k per year.

This is still a large chunk of the population, however, and at least one of the reasons fewer poor people use formal childcare is precisely because such regulations reduce its availability and raise its price.

Arguing that lower usage rates by poorer households are a reason not to deregulate is as silly as those who think, having constrained housing development around London, that it’s not worth building new properties there because the rich will inevitably buy them.

Isn’t this a distraction to the real cost of living problem?

The strongest argument for not using political capital on this now is that childcare deregulation will not solve the near-term inflation problem driven by overly expansionary macroeconomic policy and heightened energy prices, which is undoubtedly true.

But the art of politics entails pushing for worthy reforms when opportunities arise.

Our current inflation woes are a good time to reflect on how a range of government policies raise the structural level of prices in regressive ways across important sectors, even if these regulations can’t explain the recent living standards squeeze.

As Henry Hill noted, government subsidies and the professionalisation of childcare over two decades have significantly driven up costs of provision, with deeply unsatisfactory results.

Loosening ratio regulations and occupational licensing requirements would not solve all these problems. But it would be a helpful first step to restoring a bit of market sanity to a sector being gradually destroyed by unthinking, cumulative government interventionism.

Deregulating childcare would be a small step towards solving a vast problem

27 Apr

The cost-of-living crisis, like so many of the most serious problems facing the country, arises in large part from structural causes. but is being met by a Government that seems incapable of thinking in such terms for any length of time.

Boris Johnson is not breaking new ground with this failing; every government in recent times has, for example, preferred counter-productive short-term demand boosts to trying to address the root causes of our chronic housing shortage.

But what previous generations of politicians managed to get away with (more or less) in good times will not necessarily fly in really bad times.

Take latest drive to try and bring down childcare costs as an example.

Bringing carer-to-child ratios, qualification requirements, and so on down to something closer to the systems that prevail in neighbouring countries seems perfectly sensible. Both Bright Blue and the TaxPayers’ Alliance has set out the case for doing so, highlighting the different ways each regulation pushes up the overall cost of provision.

It would scarcely be the only area (rented housing springs again to mind) where an insistence on gold-plated standards combines with limited supply to produce less-than-stellar outcomes. And it would be welcome to see the Tories using their majority to return to an issue they had to retreat on under the Coalition, when Nick Clegg stymied Liz Truss’s reform effort.

Yet the fact ministers were trying to tackle this almost a decade ago shows that this is another problem with deep roots. The solution is probably not going to be conjured in a Cabinet meeting to brainstorm a hodge-podge of suggestions for cutting household costs without offending the Treasury.

Were the Government stepping back and taking a more strategic view of the question it might ponder the fact that many European providers are able to cross-subsidise the resource-intensive work of looking after very young children with the proceeds of caring for older ones, who in this country are already in school.

It might also, when the Chancellor was out of earshot, reflect on whether or not the childcare system should be so ruthlessly focused on freeing up parents to re-enter the labour market.

Why could the resources not, as some have suggested, be made available on a more flexible basis, to support stay-at-home parents or care by friends and relatives?

Or is Whitehall so safeguarding-brained as to demand those expensive CRB checks and qualifications from them as well? After all, it does seem to have a real aversion to these informal alternatives. As Ryan Bourne noted in a recent column:

“Yet governments have sought to professionalise and formalise the sector through heavy regulation, constraining supply, while then subsidising demand. This has brought a whole host of dissatisfaction, as well as rising market prices.”

Or if we’re taking inspiration from overseas, Johnson could consider Miriam Cates’ proposals to reform the tax system so that it recognises the reduced ‘taxable capacity’ of families with children, as in France or Germany?

The prohibitive cost of raising a family is a vast challenge. Really tackling it would involve a sustained and coordinated push on multiple fronts: against the vast coalition of interests opposed to new housebuilding; against the Whitehall fixation on workforce participation; and indeed against the attitude that sees ‘paying for other people’s children’ as an imposition on the taxpayer rather than the rightful duty of the State.

We have little reason to expect that any such plan will be forthcoming, because there is scant interest that Johnson really thinks in such terms.

But an extra subsidy here and the cutting of a bit of red tape there will not give families the sort of help they really need.

Cristina Odone: The government engaging with parents is crucial in improving early years education

16 Mar

Cristina Odone heads the Family Policy Unit at the Centre for Social Justice.

Children arriving to school in nappies, unable to eat with a spoon, properly articulate simple words, or even play. Even before the pandemic struck, schools were struggling with children lacking basic skills.

Covid-19 accelerated this. On average, 50 percent of children were not ready to start school in 2021 – as opposed to 1 in 3 pre-pandemic. The new YouGov survey of almost a thousand primary school staff, carried out for the Kindred2 foundation, exposes a terrible truth: a government unwilling to help our youngest.

The Government cannot fail to have learned that the first 1001 days shape a child’s brain. Andrea Leadsom consulted experts throughout 2021 to produce her Early Years Healthy Development Review report, highlighting the need to invest in early years. Robert Halfon MP, Chair of the Education Select Committee, is calling for the same. The Royal Foundation, with the Duchess of Cambridge, travelled to Denmark to report on their critical early years education programme. The Education Endowment Foundation has been preaching since 2011 that what happens at home at this time promotes children’s cognitive development. 

These efforts focus not on pastel-coloured nurseries and cuddly toys, but neuroscience: a child’s brain is formed during their first two years, particularly through communication with their primary carer. Developmental progress at 22 months serves as an accurate predictor of educational attainment at 26. Consequently, messing up then impacts a child’s life: 40% of the attainment gap evident in GCSE outcomes at 16 are established before children starting school.

Preventing this disaster doesn’t need the Government to establish kibbutz-style nurseries or Stalinist creches. It does not need to step into the family home, but should focus on parents. What happens at home counts four times as much as a formal setting in affecting a child’s cognitive development. A Government wanting to promote toddlers’ progress needs to engage with their parents, prioritising equipping them with the know-how to care for their children. Yet ministers remain reluctant about intervening.

Parents of toddlers feel short-changed. Those working to pay the bills sense that they should not leave their child with a babysitter slumped in front of her Ipad; and that nurseries, over-subscribed and over-priced (UK childcare is the third most expensive in the world) should offer more than finger painting and mud fights. They suspect their children should be encouraged to speak better, listen more, and exercise self-control. But they are unsure how to achieve this, and would welcome guidance.

We need policies to supply it.  Many schools already have family liaison officers, who prove indispensable in linking hard-to-reach families to their child’s school. Crucially, they can deliver parenting classes. Parents can learn how to stimulate their child’s development and regulate their behaviour. They can appreciate the need for give-and-take and understand the brain’s basics. Feeling better-equipped, they become confident. This lubricates their relationships with their children but also with their spouses, parents, and others.

These programmes are popular, as Matt Buttery, CEO of the Triple P programme has highlighted “It would be a mistake for the Government to assume parents (and voters) want to be left to raise their children. Our online offering, Triple P Online, received a three-fold increase in enrolments during the pandemic…parents are eager to learn strategies and skills.”

Training family liaison officers is a few hundred pounds: a daunting sum for primary schools already feeling financially squeezed. The government would not have to pay, but they could nudge schools into allocating their budget to cover this investment. The Pupil Premium, received by schools with very vulnerable children, would be one source.

Family hubs, a concept the CSJ introduced in 2007, are already integral to the Government’s vision for supporting parents, and the Chancellor has pledged £500 million to promote them. They provide accessible settings for classes and – as Robert Halfon MP has called for – support for local parents struggling with bringing up Baby. But roll out should be accelerated and budget-holders steered towards investing in the early years. 

Childcare must also shift focus. The present system fails to support the most needy. It should deliver free early education for the under-twos in low income households, and not worry about subsidising a few hours (15 per week) of babysitting for well-off 3-4 year olds. Presently, take-up of free childcare is higher among higher income families; only 67% of low income parents are aware of their entitlements. After streamlining this system, the Government should spend more communicating its offer.

Spending on early years is an investment. Failure to do so affects us all. When half the children in a classroom do not have basic skills, they compromise everyone’s learning. As one teacher surveyed by Kindred2 reported, if she is constantly leaving the classroom accompanying a six year old in nappies to the lavatory, how does that affect their classmates’ learning? Every extra hour of instruction accounts for significant improvement in academic performance.

But the impact is long-term, too. It is scary that half of our Reception-age children are ill-prepared to learn, and continue to be so for GCSE and A Levels. Poor educational outcomes are associated with everything from permanent absences (as the CSJ’s Lost but not Forgotten report showed last month), through mental health issues to homelessness and gang membership. The government must learn about the way the brain works – parents’, as well as children’s. 

Ryan Bourne: How Government is making childcare more expensive

11 May

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Childcare is a hot topic again. Boris Johnson allegedly sought donations to finance a nanny to care for his son. In the U.S., Joe Biden plans to cap how much low and middle income families spend on childcare as a percentage of income, with the federal government covering the rest and funding pre-school for three and four year olds. All this, we are told out here Stateside, will reduce costs for parents, help child development, and facilitate mothers returning to work.

Which is funny, because we heard similar claims in the UK, where there is already up to 30 hours of government-funded care for three and four year olds, as well as subsidised care for disadvantanged two year olds. That’s in addition to Sure Start centres in places, “tax-free childcare”, support for school-based after-school care, and childcare cost relief through Universal Credit.

And yet Johnson’s worries about childcare costs sparked much hand-wringing anyway, with high prices variously described as a “devastating tax on motherhood” or evidence of long-neglected “social infrastructure.” The consensus takeaway, as ever, is that high prices necessitate yet more government support.

Come on, guys. Is anyone actually thinking in a joined-up way about the impacts of this snowballing state takeover of childcare? Subsidies don’t make something inherently cheaper. At best, they change who pays for it, while driving up prices for those ineligible for the programmes through pumping up demand. Far from the lack of state intervention being the problem, it’s obvious that government policies are driving up costs and eliminating options for parents.

A free society should produce a wide array of childcare options, with everything from parental and grandparent-provided informal care, right the way through to round-the-clock pre-school, if that is what parents want.

Yet governments have sought to professionalise and formalise the sector through heavy regulation, constraining supply, while then subsidising demand. This has brought a whole host of dissatisfaction, as well as rising market prices.

Yes, childcare is a labor-intensive, personalised service entailing the care of something parents value highly. As we become richer, we tend to spend more on higher quality services. Wealthier families, in particular, like the idea of care not just being about minding children, but as a form of early education. That sort of “quality” costs money. But present government policies push towards entrenching these preferences for everyone, stamping out cheaper options and raising out-of-pocket prices.

Looking after children need not be particularly expensive, given the reserve army of stay-at-home parents who could scale up to care for another kid. But if money is exchanged and the child is cared for in the friend’s home, the government dictates that person must apply to be a registered childminder, going through childminder registration, extensive training, Ofsted inspections and more.

These expanding supply-sapping constraints, coupled with subsidies for nurseries that crowd out childminder demand, have seen registered numbers plunge from 103,000 in the mid-1990s to less than 40,000 by the pandemic’s onset.

Restrictions on childcare supply don’t stop there, of course. Brexit has undermined the au pair childcare option, whereby a young foreigner, usually from the EU, lived in your house, obtaining free lodgings in exchange for a modest payment of £5,000 per year to learn English while providing regular childcare. Now applicants must go through the new visa route for a skilled occupation, which requires a salary of at least £20,480. This raises the cost to something comparable with a British nanny, an alternative which itself brings all the responsibilities and paperwork associated with hiring an employee.

Then there are the regulatory restrictions in the form of staff:child ratios across settings, something which the Conservatives wanted to relax early last decade, though their coalition Lib Dem partners blocked them. When such regulations bind, they have the perverse impacts of either making childcare more expensive or reducing wages for childcare workers, by reducing staff members’ revenue-earning potential. From the childcare-specific to the general, “low-skilled immigration” restrictions, minimum wage increases, and tight planning laws all raise the costs of childcare provision too.

Ofsted and governments claim childcare regulations are needed to ensure “quality” – so that carers aren’t overburdened with kids and have the right training to improve child development. But why are governments, rather than parents, the best judges of “quality” here? It seems upper class professionals are imposing their preferences for formal settings on everyone else, with this attempt to “raise quality” bringing the inevitable trade-off of higher prices and fewer affordable providers.

The demand for subsidies and government commitments to deliver “free care” is, in large part, a reaction to this. But subsidies don’t solve the underlying problem of inflated costs making provision uneconomic. Just the opposite, in fact. When governments provide “free” care, they have to cap the rates they are willing to pay, lest providers ramp up prices. Yet these effective price controls are often lower than would-be market prices, putting a big squeeze on even nurseries.

This has perverse consequences. Providers tend to cross-subsidise government-financed rates by charging more for unsubsidised families with older or younger kids. As “free” care has broadened to 30 hours per week for three and four year olds, the opportunities to price discriminate like this have fallen, further straining the viability of many nurseries.

A full 39 per cent of child-care settings said their profits fell as the 15 hours of care for three and four year olds was extended to 30 hours. The Professional Association for Childcare and Early Years warned back then that providers were losing some of their best staff because they were simply unable to increase wages given the level of government payments. Others began to strip back services offered for vulnerable two-year-olds, because these children were relatively less profitable given the tighter regulations on staff-to-children ratios for that age group.

The result: more dissatisfaction. The steady descent into a highly regulated, highly subsidized model has raised market prices for those still paying out-of-pocket, seen some providers go out of business, and brought ever-rising demands for governments to step in with yet higher subsidies or even direct provision. Covid-19, of course, has plunged the sector into more disarray, with discussion of as many as a quarter of providers going under.

It’s time we unwound this costly experiment, rather than doubling down with yet more subsidies. High prices and the restricted availability of childcare is in large part a result of bad policy. Politicians must recognise that, as with housing, they have constrained the supply of childcare and then bid up demand. In doing so, they have not just made out-of-pocket childcare less affordable, but suffocated the sort of pluralism a market would provide.

Cristina Odone: How to help poorer mothers – and become a family-friendly government by doing so

11 Mar

Cristina Odone is Head of Family Policy at the Centre for Social Justice.

“They shouldn’t have children if they can’t afford them.”

I heard this familiar refrain often, when I was growing up, directed at lone mothers raising a brood of kids on welfare. Why should hard-working tax-payers shell out so someone could slob about the house in pyjamas and curlers, children at their feet?

That was America, in the 1970s. But a spirit not dissimilar is at work in twenty-first century Britain. The state sees no reason to help mothers who don’t work.

Yes, the Government, which offers up to 30 hours of free childcare for three and four-year-olds to families, will extend this to mothers who have been furloughed.

The policy has packed a less than powerful punch for low income families: at a recent extraordinary witness session of the Early Years Commission run jointly by the Centre for Social Justice and the Fabian Society, participants reported that because there “is no norm of pre-school offer” and the offer is too complicated, the share of childcare spending on low-income families has fallen by close to half, from 45 per cent to 27 per cent.

The aim was to promote female participation in the labour market. Successive governments from New Labour on have regarded this as a priority: more taxes raised, less benefits paid. It makes financial sense when you calculate that £16.7 million is lost every year in potential tax gains and benefits paid to mums who have not returned to work.

A tax system that treats us as single units seems equally sensible. We may be parenting the same children, but we regard ourselves as autonomous individuals, judged on our own merit.

This mindset suits many women. High-profile and professional, they regularly take to social media and the airwaves to hail free childcare for liberating women, and limit their asks to equal pay for equal work, flexi-time at the office, more part time opportunities – and maybe a creche at work.

These women have a well-paid career – or a wealthy partner or spouse. They can afford to spend the first years of their children’s lives off work, or to hire a nanny or au pair. They will still multi-task crazily, taking on maternal and professional tasks. They will still bridle at the glass ceiling that persists across almost every industry. But they can afford a family.

Slide down the earnings ladder to the woman for whom work amounts to a job, not a high-flying career. How can she afford to raise a family? She would love to stay home to care for her children, provide a role model for them, share with them her own parents’ values and traditions. She senses what neuroscience confirms: that those first 1001 days from conception are key in a child’s development. And even later on, schools may offer a great deal – but until they are 14, a child spends 84 per cent of their time at home.

This working mother loses out on every front. After tax, her spouse’s income is not enough for the family to survive on, so she must work too. Neither partner can afford to work part time: anything less than what they earn now would spell penury. She can’t do overtime, though, without worrying about leaving her children vulnerable to gang-recruitment or child sexual exploitation.

The couple work all hours just to break even, and arrive home stressed and exhausted. Money worries and job uncertainty (McKinsey reports that women’s jobs are 1.8 times more vulnerable during the pandemic than men’s) rock the relationship. The family risks breakdown – with all the damage that this entails.

It need not be this way.

The Treasury could transform this mother’s fate by adopting a simple, tried and tested, approach: tax parents on their combined income, and offer them tax credits for each child. With this one move, the Chancellor would recognise the value of the family, and the important role parents play in forming the next generation.

Championing this fiscal model is a high-profile mother – the Miriam Cates, the recently-elected MP for Penistone and Stockbridge. Cates is socialising the idea at Westminster – and getting traction among women both sides of the House.

The present system, Cates points out, ignores total household income and parental responsibilities. A woman on £30,000 a year will pay the same amount of tax and national insurance, regardless of whether she is living on her own, without children, or is a lone parent with three dependent children.

Cates was inspired by the way the German tax system takes into account the significant costs, in terms of time as well as money, of raising children. By taxing couples on their combined income, Germany promotes rather than penalises single earner families. In this country the opposite is true – so that a one earner couple with two children in the UK pays nine times the taxes that their counterpart in Germany will pay. The child tax credit – in Germany, this is £2500 – further contributes to a more family-friendly fiscal system.

For Cates, representing a Red Wall constituency, this is a key part of any levelling up agenda: why should raising children become an elitist pursuit? She has a point: a government willing to subsidise restaurants and pubs can surely subsidise children, too.

Being seen as a family-friendly government would prove popular – and not only among the socially conservative Red Wall voters. A recent CSJ survey found that 88 per cent of parents and 82 per cent of adults thought that more should be done to help parents who wish to stay at home and bring up their children in the early years.

The benefits of incentivising one-earner families extend well beyond the home. The present system, which steers everyone into paid work, undermines the other kind of work – the unpaid, altruistic volunteering that has proved key to the country’s resilience during the pandemic. Mothers are not the only ones who have, or should, volunteer; but again and again, they ran the PTA, helped with the church bazaar, offered to shop for the octogenarian neighbour. Help them to be in a position to raise their children and they will be in a position to help the rest of us too.

The Chancellor should stop treating us as atomised individuals, freed of any relational moorings. Families cannot be ignored, nor should they be punished. They could even, dare I say it, be encouraged.

Jonathan Gullis: The blight of Covid gives us new reason to cut back school holidays

16 Nov

Jonathan Gullis is MP for Stoke-on-Trent North, and a member of the Education Select Committee. He was previously a secondary school teacher.

The Government has rightly decided to extend free school meals for the holidays, and give hard-pressed families reassurance that their kids will be fed this winter. But at a time when many kids are falling behind due to the pandemic and many families are struggling, we should go further.

It is time to cut school holidays, to give disadvantaged students time to catch up with their peers after long gaps in learning due to covid and to further ease the pressure on family finances. We could cut two weeks from the long summer break, and even shave a few days off at Christmas and Easter, to help children reclaim their futures.

As a former teacher, I know the problems that long holidays create for poorer families. Holiday learning loss contributes to widening attainment gaps between economically advantaged and disadvantaged students. Evidence gathered during the lockdown in April shows that pupils were doing on average two and a half hours of school work per day.

When broken down based on eligibility for free school meals a shocking gap can be observed. Around a quarter of pupils eligible for free school meals spent on average no time or under an hour on schooling compared with 18 per cent of those students not eligible.

The same survey found that roughly a fifth of free school meal pupils had no access to a computer at home, compared to seven per cent for other students. Another survey found that some pupils could return to school having made only 70 per cent progress compared to a normal year in reading and only 50 per cent in maths.

Another factor contributing to the attainment gap is the home environment, and specifically the involvement (or lack of) parents in a child’s educational development. Disadvantaged parents are less likely to support children because they may be in work, or lack the money to pay for tutoring, learning software or homework clubs.

These combined factors contribute to disadvantaged children falling behind their peers during long holiday breaks. Studies have found that only after seven weeks of teaching in the autumn do some children exceed the level of education they achieved prior to the summer.

And that’s before the impact on family finances. The average cost of holiday childcare in the UK is £133 per week. Between 2003 and 2015, nursery costs increased by 77 per cent while earnings have remained roughly the same. It is estimated that the loss of free school meals adds between £30 and £40 per week to parents’ outgoings during school holidays.

There is also evidence that long school holidays cause an increase in child poverty. Evidence from charities suggests that food bank use accelerates significantly among families during the long summer holidays as they struggle to feed their children every day. Every year, three million children are at risk of going hungry over the summer period every year.

Long periods out of school also have a knock on effect on children’s physical health. Evidence shows that children from more disadvantaged backgrounds suffered a greater loss of fitness following the summer holidays. The poorest quarter of kids see a drop in their fitness levels 18 times greater than the wealthiest 25 per cent over the summer.

There is wide variation the length of school holidays around the world. In some parts of Asia, including high performing countries like South Korea and Japan, students are only on summer holiday for four weeks, whereas in Italy and Portugal pupils are typically out of school for up to 13 weeks.

A number of academics have made the case for shorter summer holidays, including Professor Tina Hascher of the University of Bern, who has argued that four weeks of summer holiday should be enough to ensure pupils, teachers and parents are able to enjoy a degree of respite whilst mitigating the effects of the summer slide in learning.

When I was a teacher, I recognised the value of the summer break. It is an important time for students to rest and recover after a long academic year. But, I also know from experience the difficulty some students face when they start the year in September after a long summer of losing academic ground.

Lockdown has taught us the difficulties that come with long stints away from the classroom, with learning suffering, health suffering, families struggling financially and a widening attainment gap between well off and disadvantaged students.

This is why I am proposing that the Government introduce a shorter summer break of four weeks from Summer 2021, and consider reducing other holidays, including the upcoming Christmas break. These new weeks of learning should be used for structured activities and education in the term-time either side.

We cannot change the past. The time that has been lost has been lost. But we can make up for that lost time. Reducing the length of school holidays will help close this attainment gap, while reducing the burden on working families.

Ryan Bourne: If you want to feed hungry children, don’t target food poverty. Aim to reduce poverty as a whole.

28 Oct

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute. 

Covid-19’s initial economic impact fell disproportionately on those least able to mitigate it. An Institute for Fiscal Studies paper in July found that single parents, low educated poor households, and ethnic minority groups suffered the worst relative hit. Since then, workers in low-wage services industries such as hospitality, transport, and retail, have faced both the worst of unexpected job losses and uncertainty about their income.

With this unique shock, it is unsurprising that a welfare state built around previous experiences has exhibited failures in protecting against hardship. Falling incomes, especially for those without savings or access to government benefits, have consequences. The Food Standards Agency reports greater food bank use, self-reported hunger, and families eating out-of-date produce.

That context is why the Government faces intense pressure over extending free school meals during school holidays through Easter 2021. Given the uncertainty around the efficacy of other government support, you can see the temptation to follow the advice of Iain Martin, who proposes caving to Marcus Rashford’s campaign again. Give the “£20m, handshake with Marcus R on steps of Number 10 on Monday and Royal Commission into child poverty,” Martin tweeted.

That defeat might seem a small price to pay to end the optics of opposing meals for hungry children, regardless of any questions you might have about the realities, or the desirability of extending the government scheme. As Isabel Hardman writes, the belief that Conservatives are insensitive to “food poverty,” coming first in righteous anger over food bank use in 2010-2015 and now “free” school meals, has hung around the Conservatives for a decade, whether fair or not.

Martin’s short-term solution, however, neglects that campaigners won’t be satiated by extending out-of-term meal vouchers to Easter 2021. Rashford’s campaign’s ultimate aim, remember, is to implement the Dimbleby Review, which would double the number of kids on benefit-triggered free school meals by extending eligibility to every child from a Universal Credit household (an extra 1.5 million kids.)

Crossbench peer Baroness D’Souza is already pushing for out-of-term meal vouchers to become a permanent feature. Combined, that would be billions of pounds, year on year, not tens of millions.

Come next year, no matter the labour market’s health, the Government will face the same criticism. If much of austerity taught us anything, it’s that even when acute need passes, wrapping up programmess will renew accusations that Conservatives “want to starve kids” by “snatching” their lunches.

Milton Friedman’s warning that “there’s nothing more permanent than a temporary government programme,” in part stems from recipients’ aversion to losses. A Royal Commission packed with do-gooders who examine food poverty in isolation will bring further demands for spending and diet control.

That is why, I suspect, some Conservative MPs vociferously oppose the Rashford campaign. It’s not heartlessness, or even this specific extension they oppose, but the precedent and direction of travel. They can foresee the vision of government this type of reflexive policymaking and its paternalistic particulars end with.

The problem for them is that they are on a hiding to nothing in claiming this specific measure risks creating longer-term “dependency” or “nationalising children” if the public think today’s needs are real. Conservatives who believe in a small, limited state have to have answers —about what responsibility the Government should have in dealing with hardship, what tools it should use, and what its role should be for those falling through gaps.

After ten years in government and riding cycles of support for the welfare state, there’s a lack of clarity in the Party’s position, with a mix of preferences among its MPs for income support, service provision, civil society solutions, and combinations of the three. There is a clear, principled alternative vision of how to deal with poverty if the Tories want it. But it requires getting off the fence.

That alternative would say that “food poverty” is not distinct from poverty. Free school meal campaigners are broadly right that hunger is not usually caused by parental fecklessness.

Therefore, logically, food poverty largely results from insufficient disposable income for some families. If widespread hunger is evidenced, the debate should therefore be about whether benefit levels or eligibility are sufficient to meet basic needs—the goal of a safety net welfare state.

This type of limited support that trusts people to use top-ups for the betterment of their families is vastly preferable to a paternalistic state stripping us of responsibility, through demeaning out-of-term food vouchers akin to U.S. style food stamps.

In deep unexpected crises, the case for additional emergency income relief is greater. But if there really is a more structural problem of hunger, then it demands examining why wages plus benefits are insufficient to deliver acceptable living standards. Rather than just look at benefits then, we should examine living costs, too—the poor spend disproportionately high amounts on housing, energy, food, clothing and footwear, and transport.

My former colleague Kristian Niemietz wrote a free-market anti-poverty agenda back in 2011, which I’ve pushed MPs to adopt since. He showed that market-friendly policies on housing (planning reform), food and clothes (free trade), energy (ending high-cost green regulations), childcare (reversing the credentialism and stringent ratios), and cutting sin taxes to economically-justified levels could shrink poverty by slashing the cost of living for the poor, so reducing food hardship, homelessness and more.

Most of this agenda would require no extra spending or busybodying from government paternalists; some of the policies would bring the double-dividend of raising wages .

The Government has ambitious policies in a number of these areas. But why are they never linked to the poverty discussions? As they press for planning liberalisation, why is nobody highlighting how cheaper housing would lessen these tales of distress? Why is nobody identifying the discrepancy of some campaigning about food poverty while opposing trade deals that would make food, clothes, and manufactured goods cheaper, to the huge relative betterment of poor consumers?

Sure, there would be families who make bad decisions and find themselves in trouble, even in a world of cheap and abundant housing and an effective safety net.

But instances of poverty owing to lack of resources would be much lower and these thornier challenges (often stemming from addictions, loss, ill-health, criminality and more) are much better identified by local charities and civil society groups anyway, as Danny Kruger argued in the Commons last week in relation to hinger. Giving nearly three million kids “free” school meals year-round would be an absolute sledgehammer to crack any remaining nut.

In today’s emotive debates, it’s not enough to just oppose proposals when the need is perceived as urgent. Conservatives must be better at re-setting the debate on their terms—a task much easier if they held a clear vision of the role and limits of state action.

Ryan Bourne: Sunak should not and cannot try today to restore pre-virus Britain. It’s gone – and we must now adapt.

7 Jul

Ryan Bourne holds the R Evan Scharf Chair in Public Understanding of Economics at the Cato Institute. 

Rishi Sunak earned plaudits for his dealing with the immediate economic fallout from Covid-19. Yet today’s summer statement presents a thornier challenge than playing Emergency Santa, dishing out funds to keep businesses alive. For today requires taking steps to further facilitate the “normalisation” of economic life.

Boris Johnson waded into economics last week, arguing (rather conveniently) that the Coronavirus highlighted the need for his pre-pandemic “leveling-up” agenda. Exactly how Covid-19 proves the need for, say, HS2 is unclear. But underpinning the Prime Minister’s argument was an assumption that, post-lockdowns, we can get back to focusing on pre-virus priorities – in the Government’s case, state-led economic rebalancing.

Similar “back to our future” thinking underpins business representations ahead of this statement. From calls for taxpayer-financed high street spending vouchers, to VAT cuts for hard-hit sectors, the prevailing discourse appears to be “now the virus is less of a threat, let’s incentivise returning to normal activity,” with “normal” meaning “what happened in early March 2020.”

Perhaps it’s because I’m in the U.S. and so have been to this reopening BBQ before, but I bear bad news: while the UK can expect a relatively sharp bounce-back in things such as retail activity, “normalisation” will not and should not mean a return to the economy of March 2020.

Before a vaccine, consumers will go where they feel safe, businesses from restaurants to cinemas will be supply constrained by social distancing, and certain behaviors (from the demand shift from restaurants to supermarkets, to the supply shift to working from home) will partially remain. That will bring major reallocation costs: businesses will close and lay off workers, while other sectors grow.

It was understandable that the Chancellor, not knowing which businesses would be viable after lockdown, set up a furlough scheme to avoid companies and jobs perishing. This helped protect important “job-matching capital” and “firm-specific capital” – i.e. people doing jobs they are good at and firms as important bundles of productive relationships. But one risk was always that businesses would interpret support not as mere lockdown relief, but a commitment to ensure their survival through the whole pandemic.

Some aspects of the campaign for arts subsidies, rumblings by MPs for ongoing aerospace supply-chain support, and the Resolution Foundation’s gimmicky “high street vouchers” idea suggest that some now do believe the Government should support sectors, even after full re-openings, precisely because consumers would otherwise continue to reject them, preferring not to fly as much, attend as many in-person events, or go to fewer restaurants or stores.

This is a very different policy proposition. Attempting to keep the March 2020 economy preserved as some eternal truth would mean workers and funds not being where businesses and consumers actually value them given today’s circumstances, bringing large economic costs beyond the fiscal.

For example, if more professionals now work from home semi-permanently, then tastes will shift from buying lunches within cities to local delis, online, or at supermarkets. Hence why Pret is laying off workers.

But as Julian Jessop has said, the purpose of economic policy should not be to protect Pret jobs. What normalisation should instead mean is the return to a functioning market economy where the rise and fall of businesses depends on their ability to meet our wants and needs in today’s circumstances. Sunak’s aim, in other words, should now be “market-led adaptation to the virus.”

We want businesses to figure out how to serve us in safe, cost-effective ways. The alternative – having the government tilt activity towards our early 2020 preferences – would not only encourage activity worse from a public health risk perspective, but also inevitably subsidise much that would take place anyway.

So Sunak should today reject “painting by numbers Keynesianism” that sees industry spending collapses as holes taxpayers should help fill in. He should snub VAT cuts or vouchers. If, with the virus still around, people would rather spend money on food to cook at home, Netflix subscriptions, and a hot tub for the back garden over restaurants, cinemas, and trips to the Lake District, workers and capital should flow accordingly. Economic activity serves consumers, not vice versa.

That’s not to say government cannot make this process less painful. But we need to be clear about the challenge we face: a supply-side shock we hid with relief. New realities mean workers in the wrong jobs, businesses serving customers in the wrong ways, and capital in the wrong places. Government policy should focus on removing barriers that gum up businesses, landlords, workers and entrepreneurs adjusting.

Sunak appears to get this on the worker side. He is tapering the furlough scheme gradually to give businesses breathing room, but inevitably those with newly uneconomic business models will make some permanent layoffs.

It’s crucial to try to get workers reallocated into new roles quickly to avoid the scarring effects of unemployment. Direct financial incentives for new hiring, even beyond subsidies for traineeships trailed in the papers, would encourage this. The reported plans for expansions of jobcentre capabilities are important too to try to speed up the matching process of unemployed workers to new roles, as would re-training efforts be. Some U.S. states are rolling back licensing restrictions on people shifting to different jobs too. With child-care difficult to come by, now would be a good time to review the UK’s oppressive childcare regulations, for example.

Yet the Conservatives should do more to facilitate the adaptation of businesses as well. Repurposing premises to earn consumers’ confidence often requires upfront investments that the Chancellor should write-off entirely for the basis of tax, through full expensing of investment. The planning law reforms should have an eye to business activities too – if more out-of-town activity is demanded, let it bloom.

The case for allowing existing businesses and property owners more flexibility – on how they operate, opening hours, what premises can be used for etc– is overwhelming as well. With apologies to my Editor, when we are seriously discussing throwing billions at retailers such as John Lewis or Topshop through vouchers, it seems daft to consider it beyond the pale that such retailers open beyond 6pm on a Sunday. Give freedom to businesses to adjust to what customers want: what barriers exist to entrepreneurs developing drive-through cinemas, for example? These are the sorts of supply-side questions that should animate government.

As always with fiscal events, any financial support to industries will be heralded as ‘good news’  and absence of it denounced as throwing sectors to the wolves. But it’s time for Sunak to be bold and honest: his task is not to “normalise” activity by resuscitating the composition of the March 2020 economy, but to “normalise” the market-led economy that makes us rich by meeting our demands.

Caroline Nokes: Spare a thought for women. Male ministers have forgotten we exist in their lockdown easing plans.

30 Jun

Caroline Nokes is Member of Parliament for Romsey and Southampton North. 

Covid-19 has taught us many things about the importance of physical and mental wellbeing. We discovered (if we actually needed to be told) that your chances of recovery were greatly improved by being physically fit and in the normal weight range for your height.

We found out that mental resilience was important to cope with long periods of relative isolation, and social contact carried out mainly by Zoom. We were told very firmly that an hour of exercise should be part of our daily routine, and pretty much the only way to escape the house legitimately.

But for women in particular the importance of wellbeing seems to have gone well and truly out of the window as lockdown is relaxed.

Why oh why have we seen the urge to get football back, support for golf and fishing, but a lack of recognition that individual pilates studios can operate in a safe socially-distanced way, rigorously cleaned between clients?

Barbers have been allowed to return from July 4 because guess what – men with hair need it cut. They tend not to think of a pedicure before they brave a pair of sandals, although perhaps the world would be a better place if they did. Dare I say the great gender divide is writ large through all this?

Before anyone gets excited that women enjoy football and men do pilates can we please just look at the stats? Football audiences are (according to 2016 statistics) 67 per cent male and don’t even get me started on the failure of the leading proponents of restarting football to mention the women’s game.

Pilates and yoga (yes I know they are not the same thing) have a client base that is predominantly women and in the region of 80 per cent of yoga instructors are women. These are female-led businesses, employing women, supporting the physical and mental wellbeing of women, and still they are given no clue as to when the end of lockdown will be in sight.

Could it be that the decisions are still being driven by men, for men, ignoring the voices of women round the Cabinet table, precious few of them though there are? I have hassled ministers on this subject, and they tell me they have been pressing the point that relaxation has looked more pro-men than women, but it looks like the message isn’t getting through.

I will declare an interest. Since I first adopted Grapefruit Sparkle as a suitably inoffensive nail colour for an election campaign in 2015, I have been a Shellac addict. The three weekly trip to Unique Nails is one of life’s little pleasures, an hour out, sitting with constituents, chatting, laughing, drinking tea.

It is good for the soul, a chance to recharge and chill out. And for many of the customers it is their chance to not have to bend to get their toenails trimmed, it is a boost to their mood, that can last for a full three weeks until it is time for a change.

And it is a fairly harmless change to go from Waterpark to Tartan Punk in an hour. Natural nails have done very little for my mood since a nice chap from Goldman Sachs told me: “you could go far if only you opted for a neutral nail, perhaps a nice peach.”

At school I was described as a “non-participant” in sport – I hated it, and it has taken decades to find the activities I can tolerate to keep my weight partially under control. Walking the dog is a great way, but nothing is as effective as the individual work-out rooms in a personal training studio – where it is perfectly possible for those of us who do not like to be seen in lycra to exercise in isolation and then have the place cleaned for the next victim.

I am not suggesting it is only women who do not like to exercise in vast gyms, there are men with similar phobias, but what I cannot get over is the lack of recognition that a one-to-one session in a studio is not the same as toddling off to your local treadmill factory.

The Pilates studio owners of Romsey and Southampton North are deeply frustrated at the apparent inability to draw the distinction between their carefully controlled environments and much larger facilities where, to be blunt, there is a lot of sweat in the atmosphere.

I know I get criticised for being obsessed about women – it goes hand in hand with the job description – but I cannot help but feel this relaxation has forgotten we exist. Or just assumed that women will be happy to stay home and do the childcare and home schooling, because the sectors they work in are last to be let out of lockdown, while their husbands go back to work, resume their lives and celebrate by having a pint with their mates.

(And yes I do know women drink beer too, but there is a gender pint gap, with only one in six women drinking beer each week compared to half of men.)

Crucially, women want their careers back and they want their children in school or nursery. Of course home working has been great for some, but much harder if you are also juggling childcare and impossible if your work requires you to be physically present, like in retail, hairdressing, hospitality.

These are sectors where employees are largely women, and which are now opening up while childcare providers are still struggling to open fully – with reduced numbers due to social distancing requirements. It is a massive problem, which I worry has still not been fully recognised or addressed.

Perhaps if the PM needed to sort the childcare, get his nails done and his legs waxed it might be different. But it does seem that the Health Secretary, the Chancellor, the Business Secretary and the Secretary of State for Sport and Culture, who all have a very obvious thing in common, have overlooked the need to help their female constituents get out of lockdown on a par with their male ones.

Am I going to have to turn up to work with hairy legs to persuade them that women’s wellbeing matters?