Childcare, welfare reform and the Third Way

At the level of national politics, New Labour's childcare and family support policies need to be located within the wider context of its welfare reform agenda. Driven by Third Way politics (Giddens, Reference Giddens1998, Reference Giddens2000), this emphasised the coupling of (welfare) rights with responsibilities; predictably, children's own position within the rights and responsibilities debate remained contested (Such and Walker, Reference Such and Walker2005). Such reforms, aimed at creating a sustainable welfare state, had a clearly defined dual purpose:

Again, Britain was not alone in pursuing this agenda. At the time, welfare state retrenchment and the increasing subordination of social policy goals to economic ones could be widely observed in democratic capitalist welfare states (Swank, Reference Swank2005), although the incompatibility of economic competitiveness with high levels of welfare spending would continue to be questioned (Hay, Reference Hay2005: 197).

Given this context, the question arises: how central were the issues around quality of life, education, welfare and optimal development of young children themselves within such policy developments? Reflecting on the first Labour administration, Hendrick (Reference Hendrick2003: 206) argues that Third Way thinking did acknowledge the actual and potential impact on children's welfare of the three major transformations in society: globalisation, the emergence of the knowledge economy and the changes to the structure and functioning of the family. However, children's place within the new society, their place within their communities and within their families, had not yet been worked through at the time of the first Labour administration (Hendrick, Reference Hendrick2003: 209).

While acknowledging that the profile of young children and childcare had been raised early on in Labour's first term, Daniel and Ivatts (Reference Daniel and Ivatts1998: 166) warned that:

This warning proved prescient. The principle of ‘progressive universalism’ (HM Treasury, Reference Treasury2001) shaped provision for the poor or those less able to compete in the employment market, presumably including children, i.e. some support for all from public funds, but most for those most in need of it. High priority was given to improving children's life chances and the pledge made to eliminate child poverty altogether by 2020 (Blair, Reference Blair and Walker1999). However, as welfare policies evolved, rhetoric concerning citizens' rights and responsibilities still figured prominently (Brewer et al., Reference Brewer, Clark and Wakefield2002). Under New Labour the dominant discourse around child poverty was to remain in terms of potential loss of human capital (Hendrick, Reference Hendrick2003: 212).

With New Labour's early childhood policies subservient to the aim of welfare reform, childcare and family support, like other health and welfare services, were delivered within a mixed economy of welfare (Powell, Reference Powell and Powell2007; Stewart, Reference Stewart and Powell2007), underpinned by neo-liberal free market principles. The emphasis on the private-for-profit and the private-not-for-profit sector entering into service delivery partnerships with Government continued the trend set under the previous Conservative Government, although the marketisation and privatisation of childcare provision became even more pronounced after 1997 (Cohen et al., Reference Cohen, Moss, Petrie and Wallace2004; Penn, Reference Penn2007).

In this way, the UK consolidated its position among the Anglo-Saxon or liberal welfare regimes (Esping-Andersen, Reference Esping-Andersen1990, Reference Esping-Andersen1999), which:

Only a summary of the wide and complex range of New Labour's early childhood and child poverty policies and strategies can be provided here, but in-depth discussions are available elsewhere (Cohen et al., Reference Cohen, Moss, Petrie and Wallace2004; Pugh and Duffy, Reference Duffy, Pugh and Duffy2006).

Childcare and child poverty under New Labour: tensions and contradictions

Even during its first term in office, New Labour's package of childcare and family support policies came in for some criticism from early years organisations, practitioners, managers, academics and policy analysts, primarily because of the complexities of their implementation and the burden placed on providers by the volume and short-term nature of childcare funding strategies. Penn (Reference Penn2007), though, considers that the majority of academics and advocates in the field of early years persistently ignored the implications for poor children of the political shift in Labour's thinking, which prioritised the economic benefits of women's labour market participation over the redistributive function of a universal, publicly funded and equitable system of early childhood education and care provision uncoupled from parental employment status.

Expansion of provision largely occurred among day nurseries for children under two (DfES, 2001). The interface between demand and supply side childcare subsidies was characterised by anomalies and caused problems for parents and providers (Lloyd, Reference Lloyd and White2000). The universal free early education entitlement for three- and four-year old children covered only twelve and a half hours of provision weekly during term. Parents of children this age therefore needed ‘wrap-around’ childcare provision if they were to take any paid work. To qualify for childcare tax credits parents needed to work at least 16 hours. Moreover, modelling the economic impact of different formats of childcare subsidy, Duncan et al. (Reference Duncan, Paull and Taylor2001) concluded that they might influence parental choice and quality of provision without encouraging maternal employment. Eventually, the House of Commons Public Accounts Committee (House of Commons, 2007: 6) would highlight the persistent failure of the tax credit system.

Although the early education targets for three- and four-year olds were achieved, variable levels of childcare availability for children aged nought to 14, especially at atypical times, caused significant pressures for families (La Valle et al., Reference La Valle, Arthur, Millward, Scott and Clayden2002; Dex, Reference Dex2003; Statham and Mooney, Reference Statham and Mooney2003). Research uncovered a variety of parental attitudes towards maternal employment and the use of formal childcare for very young children, and a preference for informal, and hence unregistered, childcare for this age group (La Valle et al., Reference La Valle, Finch, Nove and Lewin2000; Woodland et al., Reference Woodland, Miller and Tipping2002). In the changing policy environment, mothers continued to struggle to reconcile paid work and family life (Skinner, Reference Skinner2003), while entering paid work seriously complicated the daily lives of lone mothers and their children (Sutherland, Reference Sutherland2002; Bell et al., Reference Bell, Finch, La Valle, Sainsbury and Skinner2005a).

Among policy analysts, Cohen et al. (Reference Cohen, Moss, Petrie and Wallace2004: 195) claimed that a gulf remained between the principles underpinning childcare and early education services, although Smith (Reference Smith2007) would conclude that the first ten years of Labour had amounted to a quiet revolution in early childhood services. Moss (Reference Moss1999, Reference Moss2001) regretted that Labour eschewed the opportunity to rethink the purpose of early childhood services and create a more coherent system of early childhood provision in favour of maintaining some of the problematic divisions by which it had previously been characterised. According to Penn and Randall (Reference Penn and Randall2005: 79) these problems not only reflected the:

Maintaining the split between publicly funded early education and a subsidised market in childcare for working parents and largely paid for by them, hindered poor children's access by preventing the development of an equitable and universal childcare system (Moss et al., Reference Moss, Dillon and Statham2000; Brannen and Moss, Reference Brannen and Moss2003).

The more disadvantaged children, who stood most to gain from good quality provision (Melhuish, Reference Melhuish2004), particularly those from Black and minority ethnic families, were more likely to encounter segregated and lower quality provision, unless it was statutory (Sylva et al., Reference Sylva, Melhuish, Sammons, Siraj-Blatchford and Taggart2004). Although the poorest parents in a UK study were keen on childcare for their children for social and educational, rather than primarily economic reasons, they often failed to access it (Ghate and Hazell, Reference Ghate and Hazell2002).

Sure Start remained on target, as funding had been earmarked for an unprecedented ten-year period. Budget underspend was the main financial issue confronting Sure Start in its early years (Ball, Reference Ball2005; Tunstill et al., Reference Tunstill, Meadows, Akhurst, Allnock, Chrysantou, Garbers and Morley2005), but it faced several challenges associated with its area-based nature (Barnes, Reference Barnes, Belsky, Barnes and Melhuish2007). First, the majority of poor children lived outside disadvantaged areas (Tunstall and Lupton, Reference Tunstall and Lupton2003). Next, the governance and administration of such initiatives not only placed considerable burdens on local delivery partnerships when operating in an environment of highly centralised and directive policymaking, but also suffered from problems of representativeness and accountability (Cabinet Office, 2000). Finally, a look at the history of area-based UK and USA anti-poverty initiatives would have revealed only a minor impact (Alcock, Reference Alcock2005).

To fight child poverty, Bradshaw (Reference Bradshaw and Fimister2001), cited in Hendrick (Reference Hendrick2003: 211), contended that Labour should have pursued redistributive policies much more actively and early on. He went as far as to claim:

According to Hendrick (Reference Hendrick2003: 211), the primary reasons for any early lack of vigour in tackling child poverty can be traced back to New Labour's need to clearly differentiate itself from Old Labour's ‘tax and spend’ image. Working initially within the spending limits set by the Conservatives was part of that. Sutherland and Piachaud (Reference Sutherland and Piachaud2001) concluded that while there had been a reduction in British child poverty levels towards the end of Labour's first term, they remained high relative to other European nations, while Brewer et al. (Reference Brewer, Clark and Goodman2003) demonstrated that the statistically significant decline in child poverty levels might have been related to the choice of poverty line.

Refocusing childcare, family support and child poverty strategies

Towards the end of its first term in office, the New Labour Government was forced to confront the unintended consequences of the free market approach to its early childhood and child poverty programmes. As a consequence, the Treasury took on a more prominent childcare policy role, alongside its role as the lead department for poverty. The Inter-Departmental Childcare Review (Cabinet Office, 2002) heralded a significant early childhood policy reorientation early during the second Labour administration (2001–05), which culminated in the publication of the Ten Year Strategy for Childcare by HM Treasury itself (HM Treasury, Reference Treasury2004a). For an in-depth analysis of the changing role of HM Treasury in relation to early childhood policies in the first six years of Labour, including its emphasis on the volume of childcare and relative neglect of the issue of quality, see Cohen et al., (Reference Cohen, Moss, Petrie and Wallace2004).

Even before the publication of the Childcare Review's recommendations, the Spending Review (HM Treasury, Reference Treasury2002) announced increased childcare budgets, as well as a more strategic and responsible role for local authorities. A closer relationship between education and employment was forged through the creation of the Interdepartmental Sure Start Unit, as the Department for Work and Pensions' programme of parental leave and family friendly employment policies dovetailed with the childcare and family support programme within the overarching framework of the strategies to help parents balance work and family life (Pugh, Reference Pugh and Duffy2006).

Although the Childcare Review acknowledged that in the short term the market alone would not deliver the substantial increase in childcare places needed to support the Government's employment and poverty targets, especially in disadvantaged areas, it reiterated its longer-term vision of a childcare market, in which every parent could access affordable, good quality childcare. Hence it proposed only ‘market failure’ remedies for the interface problems between the childcare and poverty strategies. For instance, yet more supply-side, but only pump-priming, support to providers in the public, private for-profit and not-for-profit sectors.

An early decision had been taken to complement family support in the original Sure Start programmes, renamed Sure Start Local Programmes, with childcare provision for working parents (Tunstill et al., Reference Tunstill, Meadows, Akhurst, Allnock, Chrysantou, Garbers and Morley2005). Alongside Neighbourhood Nurseries, Early Excellence Centres and other settings, they were transformed into less generously funded Children's Centres, one for every English community by 2010. Initially aimed at disadvantaged communities, they offered childcare, health and family support services for young children and their families and links to training and employment services, (Pugh, Reference Pugh, Pugh and Duffy2006). That childcare even in these settings should become self-sustaining remained axiomatic, although the likely financial viability of provision targeted at poor families, once supply-side subsidies were phased out, had already been seriously questioned (Harries et al., Reference Harries, La Valle and Dickens2004).

Rolling out the National Extended Schools Programme alongside the Children's Centre initiative reinforced the distinction between targeted and universal provision. Extended Schools would offer school-based wrap-around and holiday childcare provision, study and parenting support in every primary and secondary school by 2010. But the challenges faced by these integrated programmes in going to scale have been documented in several reports (Cummings et al., Reference Cummings, Dyson, Papps, Pearson, Raffo, Tiplady and Todd2006; NAO, 2006; Ofsted, 2006).

The vision for childcare articulated in 2002 was predicated on three factors: first creating employment opportunities for mothers – poor, lone and black and minority ethnic mothers in particular – second, persuading them to take these up and, third, consequently stimulating demand within the local childcare markets. Yet mounting evidence suggested that neither the routes towards achieving such conditions, nor their projected benefits, would prove obvious or straightforward (Brewer and Shaw, Reference Brewer and Shaw2004; Brewer and Shepherd, Reference Brewer and Shepherd2004; Kemp et al., Reference Kemp, Bradshaw, Dornan, Finch and Mayhew2004; Kazimirski et al., Reference Kazimirski, Southwood and Bryson2006). Even full employment might not guarantee the disappearance of child poverty and social exclusion (Gordon et al., Reference Gordon, Adelman, Ashworth, Bradshaw, Levitas, Middleton, Pantazis, Patsios, Payne, Townsend and Williams2000).

At the interface between childcare and family support strategies, a new agenda to improve developmental, educational, health and economic outcomes for all children and narrow the gap between the poor and better off, was announced in the 2003 Green Paper Every Child Matters, given legal force in the 2004 Children Act. This reform agenda for the delivery of children's services entailed both the improvement and integration of universal services, such as in early years' settings and schools, and the reconfiguration of family support services around children and families in one place, and delivered by multi-disciplinary teams, as in Childrens' Centres and Extended Schools (Pugh, Reference Pugh, Pugh and Duffy2006). Despite this becoming a major element of Labour's childcare policies, evidence of any direct impact on the uptake of childcare and family support, and resulting implications for child poverty levels, was scant, while the effectiveness of strategic partnerships remained in doubt (Percy-Smith, Reference Percy-Smith2006).

Building on the Every Child Matters agenda, the refocused Ten Year Childcare Strategy formulated the next steps to achieve the original childcare strategy's objectives of affordability, choice, sustainability, flexibility and quality, which had all been found lacking in an impact assessment by the National Audit Office (2004).

Crucially, the Ten Year Strategy also reflected the findings from the Child Poverty Review (HM Treasury, Reference Treasury2004b) and an even more explicit convergence with the Government's child poverty strategy became apparent:

On the cusp between New Labour's second and third term, it became clear, however, that this strategy, too, failed to address the needs of poorer families, such as large families, families with a disabled child or parent, and minority ethnic families (House of Commons Work and Pensions Select Committee, 2004; Dickens et al., Reference Dickens, Taylor and La Valle2005; Bell et al., Reference Bell, Bryson, Barnes and O'Shea2005b; Kazimirski et al., Reference Kazimirski, Southwood and Bryson2006). Even in Sure Start Local Programmes, black and minority ethnic children were shown to be at a disadvantage (Craig et al., Reference Craig, Adamson, Ali, Ali, Atkins, Dadze-Arthur, Elliott and Murtuja2007).

The provision of childcare for the children of workless parents, or those working in the ‘grey’ economy, remained problematic (Dickens et al., Reference Dickens, Taylor and La Valle2005). Surprisingly, for middle-class parents, too, the childcare market was not operating according to the markets of economic theory (Ball and Vincent, Reference Ball and Vincent2005). A survey found over a third of parents paying for the supposedly free early education entitlement (Butt et al., Reference Butt, Goddard, La Valle and Hill2007). Childcare not being free even within the new Children's Centres deterred families with the greatest needs from accessing their services (NAO, 2006; Ipsos-MORI, 2006).

The publication of interim findings from the ‘National Evaluation of Sure Start’ (Melhuish et al., Reference Melhuish, Anning and Hall2005) proved a turning point. Reaching out to the poorest and most excluded families had been problematic, while there was also some evidence of adverse programme impacts on these children and their mothers. It had always been virtually impossible to reconcile its aims with those of other care and educational policies for young children (Clarke, Reference Clarke2006), while its very role in combating child poverty was questioned by Rutter (Reference Rutter2006, Reference Rutter, Belsky, Barnes and Melhuish2007).

Emerging evidence of significant improvements in children's circumstances and parental employment in Sure Start areas (Barnes et al., Reference Barnes, Cheng, Howden, Frost, Harper, Dave and Finn2006), of positive impacts on family functioning after several years (Belsky and Melhuish, Reference Belsky, Melhuish, Belsky, Barnes and Melhuish2007) and of the factors influencing variations in programme effectiveness (Anning et al., Reference Anning, Stuart, Nichols, Goldthorpe and Morley2007) has only been partially taken into account in the development of the Children's Centre model.

Maternal employment rates, meanwhile, had remained almost static between 1994 and 2004 (ONS, 2005) undermining one of the main tenets of New Labour's welfare reform. Rising child poverty levels, however, posed perhaps the greatest challenge to realising the Ten Years Strategy's ambitions (Brewer et al., Reference Brewer, Goodman, Muriel and Sibieta2007; Shaw, Reference Shaw2007). As half of all children in poverty in the UK lived within working households (Palmer et al., 2007), increasing employment alongside childcare provision in disadvantaged areas could only be part of the answer. On a par with its economic and academic repercussions for children's life chances (Goodman and Sianesi, Reference Goodman and Sianesi2006; Feinstein et al., in press), the social costs of poverty for children warranted an urgent and multi-faceted response (Attree, Reference Attree2007).

Consequences of the mixed economy of childcare

In Labour's third term the primary response to the problems identified above has been to interrogate the workings of the childcare and family support markets (Price Waterhouse Coopers, 2006a, 2006b), rather than to revisit the neo-liberal principles underlying welfare and public sector reforms and to question the very basis on which services for young children are provided.

The Government has reaffirmed its commitment to the mixed economy of childcare in the Childcare Act 2006. This introduces a requirement on Local Authorities to secure sufficient provision locally for employed parents, while themselves only acting only as ‘provider of last resort’. From 2008 they have more discretion and flexibility to fund diverse local childcare markets, taking account of ‘provider sustainability’ (DfES, 2006). Both private for-profit and not-for-profit providers are expected to contribute to the delivery of childcare and family support services in Children's Centres and Extended Schools.

In the swiftly transforming childcare and family support service system in England, the private for-profit sector has assumed a dominant role. Market conditions have favoured the corporate childcare sector, which has grown sevenfold since 1997, after a good deal of consolidation (Penn, Reference Penn2007: 202). In 2007, private for-profit providers, both corporate chains and sole traders or small partnerships, made up 78 per cent of the UK children's day nursery market, as compared with 11 per cent each supplied by the private not-for-profit and public sectors (Laing & Buisson, 2007).

In such a market, pressure for deregulation is increasing, as evidenced by the Code of Practice introduced to address the issue of private providers charging parents ‘top-up’ fees for delivering the early education entitlement (DfES, 2006). Could the protection of providers become a significant policy driver in this not-so-free market? In contrast with the predictions of economic theory, two successive Ofsted overview reports have failed to produce evidence for major quality improvements, despite rising childcare costs (Ofsted, 2006, 2007).

In Australia, where childcare corporatisation has progressed apace, Sumsion (Reference Sumsion2006: 99) asks whether support for continued expansion of corporate childcare chains is ethically justifiable, while a secondary analysis of longitudinal US data has confirmed quality repercussions of provider status, with private for-profit chains scoring lowest overall (Sosinsky et al., Reference Sosinsky, Lord and Zigler2007). According to a Canadian study (Cleveland et al., Reference Cleveland, Forer, Hyatt, Japel and Krashinksy2007), standards in not-for-profit and maintained provision are higher by about 15 per cent than in the for-profit sector, while in the UK several studies provide critical evidence of the very mixed performance on quality by the UK private for-profit childcare sector (La Valle et al., Reference La Valle, Smith, Purdon, Bell, Dearden, Shaw and Sibieta2007; Mather et al., Reference Mather, Sylva and Joshi2007).

The delivery of integrated early childhood education and care in the UK is bedevilled by the contrast between child-focused early education, which arguably is being treated as a ‘public good’, and childcare, which is regarded as a commodity to be purchased by parents. This ‘sticky policy design’, to use Rigby, Tarant and Neuman's (Reference Rigby, Tarrant and Neuman2007) description, coupled with New Labour's persistent belief in a market approach to social welfare provision, has affected all institutional arrangements in this area. Under these circumstances it is uncertain even whether the planned extension of the free early education entitlement for three- and four-year olds to 15 hours weekly by 2010 (Kazimirski et al., in press) will make much difference to accessibility.

Yet a policy approach that generously funds integrated early childhood education and care as a ‘public good’ does have a sound theoretical basis (Cleveland and Krashinksy, Reference Cleveland and Krashinsky2003). International evidence demonstrates that:

Among OECD member states, the UK is in a minority of liberal economies featuring a strong private market in this area, whereas compelling evidence exists that markets do not work effectively in all parts of the public sector (Greener, Reference Greener2008). The de facto situation in other OECD member states supports the argument that predominant public funding has strong social and educational rationales (OECD, 2006).