The link between childcare and poverty 

It’s about time we recognise lack of childcare as a key driver of poverty and take decisive action, argues Jessica Laimann, Policy and Public Affairs Manager at WEN Wales.

Lack of affordable childcare, paired with unequal caring responsibilities, is one of the biggest driver of women’s poverty and inequality in Wales. This can be seen most clearly in the situation of single parents. In Wales, 86% of single parents are mothers. Between 2017 and 2020, almost half (46%) of single-parent households in Wales were in poverty, twice as high as the overall poverty rate in the country.

Single parents had lower than average employment rates, and those who balance caring responsibilities with paid work often end up in low-paid, part-time employment – resulting in the highest in-work poverty rate of all household types in Wales. Even in two-parent households, almost two thirds of mothers are solely or mainly responsible for childcare. As a result, they often work fewer hours in lower-paying roles, which leaves them with lesser lifetime earnings, fewer savings and more debts than men.  

At a time when low-income families need affordable childcare more than ever, few can access it. The UK as a whole has the second most expensive childcare system in the world, with Wales coming second just past England – which is striking considering Wales has lower wages and higher poverty rates than the rest of the UK. This leaves women on low incomes in a Catch-22: they would end up losing money if they increased their working hours, as the cost of childcare is more than they would earn in the same time. This leaves many with no means whatsoever to keep up with rising costs. The fall-out, in the form of heart-breaking news stories of mothers skipping meals to ensure their children do not go hungry, has become a regular occurrence.  

As the same time as costs for childcare have gone up, availability has gone down. Free childcare is currently only available for three and four-year olds, with very limited provisions for two-year olds in Flying Start areas. The perfect storm of lockdowns and inflation exacerbated workforce and sustainability challenges in the childcare sector, leading to a 13% reduction in childminders last year. 

Coram’s Childcare Survey 2022 saw childcare sufficiency in Wales decrease since 2021 for all categories, except for 12- to 14-year-olds after school provisions. To make matters worse, the biggest shortages are affecting demographics which already experience higher poverty rates. Not a single local authority has enough childcare for families with disabled children and parents working atypical hours, and only 7% have sufficient provisions in rural areas.  

There are positives. In September 2022, entitlements for three- and four-year olds were extended to parents in education and training. The Welsh Government is rolling out free childcare to all two-year-olds under the Flying Start scheme, and recently committed an additional £10 million to this. But while the scheme has positive effects on child development and parenting skills, the impact on employment and poverty will be limited. Support is only available for 2.5 hours per day on the basis of a postcode lottery that does not reach the majority of  income-deprived families.  

If we want to see a meaningful impact on poverty and inequality, we need bolder commitments than this. We can learn a lot from countries like Canada, who recently invested $30 billion (£18.4 billion) in childcare to ensure parents will pay no more than $10 (£6.14) per day. The investment followed a test case in Quebec, which found that every dollar invested returned between $1.50 and $2.80 into the wider economy through increased employment. 

Wales has devolved power over childcare, now is the time to use its full potential as a key lever for tackling poverty. We need to urgently accelerate the expansion of early years provision, so all families can access it when and where they need it.