Following Prime Minister Rishi Sunak’s indefinite shelving of predecessor Liz Truss’ proposed childcare reforms in January 2023, the Confederation of British Industry (CBI) has called for an £8.9bn investment in the childcare sector, in order to help get parents back to work.
Truss’ recommendations originally included scrapping mandatory child-staff ratios to cut costs for nurseries, and increasing free childcare support by 20 hours a week. It is unclear what Sunak plans to implement in their place, but it is expected to be much smaller scale.
In its recommendations document, the CBI outlined that this investment would cover an independent review of childcare, increased funding for providers, and the roll-out of existing provisions for three and four-year-olds to younger children.
According to Office for National Statistics (ONS) Labour Market Statistics, 19% of economically inactive people in the UK who want to work are held back from doing so due to caring responsibilities. Meanwhile, studies by the World Bank Group and Centre for Progressive Policy found that limited access to childcare prevented 1.7 million women from taking on more hours, equating to £28.2bn in economic output lost each year.
The CBI said: “We need a system where people who want to increase their hours – or just get back to work – are supported to do so. It’s why there’s an imperative to have a coordinated labour market strategy for both skills and labour market activation.
“Firms are taking proactive steps where they can support and retain workers – for example, through flexible working, phased retirements or ‘returnships’, as well as apprenticeship programmes. Others have introduced tailored, six-month ‘Return to Work’ programmes for people who have taken a career break – boosting productivity and talent acquisition and, crucially, allowing parents to keep working once they start a family.
“They now need government policy to underpin these steps and to expand workplace support.”
Nicole Bello, group vice president EMEA at UKG said that, due to Sunak’s lack of commitment to childcare reforms, it may be up to UK businesses to step in and provide flexibility to those dealing with rising childcare costs. She also added that businesses should engage politically in order to protect and promote their employees’ interests during a difficult period.
Bello added: “The childcare reform U-turn is a prime opportunity for business leaders to proactively support staff who are struggling with rising bills. The easiest way businesses can assist the employees affected is to offer a truly flexible model of working, that gives colleagues the chance to schedule shifts or office days around childcare demands.”
She said that employers should consider lowering the number of office-based days required, or let employees decide which remote working days suit their needs. In addition, she recommended providing educational resources via HR portals, to help staff make informed financial choices.
Bello added: “Times are undeniably tough for both businesses and their staff, but the organisations that prioritise the needs and wellbeing of employees will be rewarded with loyal and engaged personnel for years to come.
“It’s important to remember that nobody understands the requirements of the current workforce better than employees themselves, so trusting them with an agile and empowering working environment is the most effective way of offering support.”
In relation to wider employment issues, the CBI recommended that government expand the scope of health support as a non-taxable benefit in kind, to cover musculoskeletal conditions, mental health, and ergonomics, as well as delivering on the commitment for an SME subsidy for procuring occupational health services, and the launch of a health and work taskforce.
The CBI said: “The truth is, there are simply too few people in the workforce. 75% of businesses say they’ve been hit by labour shortages in the last 12 months, yet there are also 1.7m economically inactive people who want to work. The most common reason for this is long-term sickness (33%). Annually, the UK loses [131 million] working days to ill-health, which is why health and wellbeing is the number one priority for nearly two-thirds of businesses’ diversity and inclusion strategies.
“Business therefore welcomes the commitment to a programme of fundamental reforms to support people with long-term conditions or mental illness to overcome the barriers and prejudices that prevent them working. Although removing many of these barriers will be complex and require upfront costs, it should be a top priority of the Spring Budget to tackle as many of them, as possible.”
