Pressure continues to mount on Rishi Sunak’s government, as the The Confederation of British Industry (CBI) reiterates the critical importance of increasing funding and support for childcare, to help tackle workforce shortages.
Pushing for free childcare provisions for one- and two-year olds, the CBI estimated that approximately £9 billion would be needed to revamp the incumbent system.
British parents face some of the highest childcare costs in the world; one of the many factors contributing to the UK’s ongoing recruitment challenges and record-levels of job vacancies.
The High Cost of Childcare: A Barrier to Growth for the UK Economy
Due to the exorbitant cost of childcare in the UK, growing numbers of parents have been forced to leave the workforce, leading to a drain of skilled workers and productivity.
Furthermore, the impact of expensive childcare has far reaching implications for the UK economy as a whole.
As families are forced to spend a significant portion of their income on childcare, they’re often left with minimal disposable income, resulting in decreased consumer spending.
In recent years, such cost pressures have intensified for families across the country, as high levels of inflation have led to a crippling cost of living crisis.
The Benefits of Free Childcare for Small Businesses and SMEs
The implementation of free childcare would not only benefit families and the economy at large, but it would also lead to significant positive outcomes for small businesses and SMEs.
In particular, it would help to address the issue of skilled workers not returning to work due to the high cost of childcare.
Small businesses and SMEs often struggle to compete with larger corporations when it comes to offering workplace benefits to employees, such as flexible working arrangements and on-site childcare facilities.
The implementation of free childcare would help level the playing field, making it easier for small businesses and SMEs to attract and retain skilled workers.
Moreover, by addressing the issue of workforce shortages, free childcare would help to support small businesses and SMEs to expand their operations, create new jobs, and contribute to the overall growth of the UK economy.
Discussing the issue at hand, Tony Danker, Director General of the CBI, said: “We know the economy can – and must – break out of its low growth trap, but we will need action on business investment to achieve it.
“Firms are seeing the end to the Super-deduction with nothing to replace it but a big rise in Corporation Tax. This will have a huge impact on investment and leave the UK falling behind its global competitors.
“The tight labour market and economic inactivity is another big concern for all businesses across all sectors.
“With more than 1m vacancies and UK parents facing some of the highest childcare costs in the OECD we need to see immediate action to urgently solve the labour challenge.
“Without it, businesses are left trying to grow, invest and become more productive with one hand tied behind their backs.”
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