Do employers have a role to play in overcoming the UK childcare crisis?

The UK has been experiencing a crisis in terms of childcare settings over the past year. The Early Education and Childcare Coalition and the University of Leeds’ November 2023 study Retention and return: delivering the expansion of early years entitlement in England revealed that 35% of nursery managers said they would limit the number of places they offered unless there was more government support to retain and recruit staff.

Worries over a lack of nursery places and rising fees means employees are in limbo and could face paying a high percentage of their salary towards the care.

The government’s new childcare support provision, which is available to households where parents work more than 16 hours a week, will apply 38 weeks of the year during term time. This will be introduced in stages, with 15 hours of free childcare available from April to parents with two-year-old children and from September for those with children aged nine months and above. It will then be extended to 30 hours for those with a child aged under five in September 2025.

While this sounds useful in theory, the Early Education and Childcare Coalition and the University of Leeds’ research also revealed that the number of childcare places in England would need to grow by 6% in order to meet the demand created by the expansion. Nurseries face a possible talent retention crisis as the increased free childcare hours will add to their workloads and could cause staff to leave, exacerbating the issue of parents being unable to secure a nursery space.

Childcare codes, which employees apply for and then give to childcare providers to receive their free hours of childcare, have added a further level of complexity, because care places are not available in every area of the country, meaning some working parents will struggle. In order to combat this, what can employers do to offer support?

Employer benefits provision

Challenges around finding and affording childcare can prevent parents from staying in work and progressing their careers. Onsite nurseries, workplace nursery schemes, and subsidised and emergency childcare provisions can enable them to balance care responsibilities with their work.

A workplace nursery scheme involves establishing a link between an organisation and a nursery. Operated via a salary sacrifice arrangement, employees can save money as a result of reduced tax and national insurance contributions (NICs). The nursery receives additional funds through offset NICs from the employer, and parents get a say on how these are spent.

Meanwhile, emergency or back-up childcare provision in the form of emergency nannies, nurseries, childminders and holiday clubs can be offered through dedicated childcare benefit providers’ apps and websites. Employers can also offer access to helplines or websites that can provide employees with a list of emergency childcare providers in their area. Such resources may be included within other benefits, such as an employee assistance programme.

More organisations are implementing inclusive policies that include parenting advice, educational support through virtual tutoring, parental leave, and return-to-work coaching, explains Paul Quartly, client services lead at Bright Horizons.

“Forward-thinking employers are able to provide support through gender and family role inclusive benefits to accommodate individual circumstances for expectant and new parents, as well as those with older children,” he says.

Employers offering childcare support as part of a benefits package, such as subsidies towards ongoing childcare, holiday club provision or loans to cover nursery deposits, can widen the talent pool they recruit from and be a valuable employee attraction and retention tool.

They can also help meet rising costs by ensuring they offer the living wage to employees at every level of the organisation, says Joanne Waterworth, head of employer services at Working Families.

However, any investment employers make must be supported by organisational practices and underpinned by an aligned culture, so that all parents feel they can use the support and arrangements designed for them without detriment to their careers, says Helen Sachdev, working parent expert and director at Work, Me and the Baby.

Flexible working support

Working Families’ May 2023 Spotlight report found that more than 50% of working parents on lower incomes have reduced their working hours to manage childcare needs. Employees with 26 weeks’ service currently have the right to request flexible working, but the law will be changing in April to allow them to request staff from their first day of employment, which could lessen difficulties in juggling work and childcare.

A positive and supportive discussion between an employee and their employer about the different types of flexibility, including working from home and term-time working, might offer a solution.

“Flexible working options can be an integral part of an employer’s support for working parents, enabling them to require fewer childcare hours,” Waterworth says. “Simple adjustments employers can make for employees who need to work around school drop-offs, pick-ups and other childcare arrangements include adapting shift patterns, working in a location of their choice, or allowing flexible start and finish times.”

Policies that dictate start and finish times can close the door on working parents, so employers should put a strategy in place to ensure career progression and development opportunities are also available for part-time employees.

“Job sharing can do this and meet the needs of employees wishing to work part-time, while more effectively filling the position for the organisation,” Sachdev says. “It is a great opportunity for working parents to maintain a work-life balance while being in a role that matches their skillset and seniority, and adding value to the organisation.”

Skills shortage and DEI efforts

By stepping up support for working families, employers could retain and attract key talent and help to plug the UK’s skills shortage. Enabling women to progress into senior level roles more easily can also have a positive effect on organisations’ gender pay gaps and diversity, equity and inclusion (DE&I) goals.

“Organisations that do not prioritise support for working parents will expose themselves to higher turnover rates, reduced productivity and slower progress on DEI efforts,” says Sachdev. “Any DEI strategy without specific consideration for working parents will be lacking in the detail needed to shift the dial of equality.”

UK employers are in the midst of a recruitment challenge and skills shortage, and family-friendly policies are key to addressing this, says Quartly. “They help to create equal opportunities by ensuring that talent can engage equally at home and work. When these are in place, we see improved recruitment, retention and productivity, as well as reduced absences.”

While employers do have a role to play in supporting working parents struggling with childcare, it will be a joint effort between all parties to overcome the UK’s childcare crisis completely.