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This is an audio transcript FT news briefing Podcast Episode: ‘UK childcare in crisis’
Mark Filipino
Good morning from the Financial Times. Today is Thursday, December 22nd and this is your FT News Briefing.
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Major US tech companies are vacating their European offices and investors have driven Tesla’s stock down a peg. Also, the cost of childcare in the UK has become a crisis for families. We will see the effect.
Claire Barrett
It doesn’t seem like the government is doing anywhere near enough about it. And all the while, the birth rate is falling.
Mark Filipino
I am Mark Filipino. And you need this news to start your day.
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American technology companies have been expanding for years. Now, they’re shrinking — or at least their office spaces. Sources have told the FT that top tech names such as Alphabet, Meta and Salesforce are looking to give up leases in London and Dublin. And Amazon and Microsoft have put their London expansion plans on hold. It’s all about cost-cutting right now. Tech giants are adjusting to the cooling global economy and their stock values are plummeting. Vacant office space will add a huge headache for landlords. Commercial real estate values have plummeted on both sides of the Atlantic due to rising interest rates and people continuing to work from home.
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[SOUND OF PROTESTERS SHOUTING “WHAT DO WE WANT? FREE CHILD CARE!”]
Mark Filipino
British families took to the streets last autumn to protest the cost of childcare. Childcare in the UK is the most expensive in the world. That is according to the Organization for Economic Co-operation and Development, OECD. Parents spend up to two-thirds of their weekly take home pay on out-of-home care for toddlers, and availability of childcare is shrinking. The FT’s Consumer Editor, Claire Barrett, investigated her country’s childcare crisis and devoted an entire episode of her Money Clinic podcast to the issue. He joins me now. Hi, Claire.
Claire Barrett
Hi, Mark. Good talking to you.
Mark Filipino
Nice talking to you too, Claire. So, what are childcare costs for British families?
Claire Barrett
Well Mark, that’s an absolute nightmare. Three-quarters of parents are spending more on their monthly childcare bills than their mortgage or rent, according to a recent survey. Now, when your child reaches the age of five, school is free, if they go to a statement facility, care up to that point in nursery, pre-school – parents have to pay. Now there is no financial aid for under two. If your income is very low, you may be able to get some help when your child celebrates his second birthday. But for most parents, you have to wait until your child turns three before you get any help from the government. And then it’s really not a lot of money.
Mark Filipino
Well, it sounds like a nightmare. So you and your team go and investigate a little more why the costs are so high. Where did you go and what did you find?
Claire Barrett
Yes, well, we went to visit a pre-school in North London called Little Jewels.
[SOUND OF TEACHER AND KIDS SINGING]
It is a relatively low cost childcare facility. It is attached behind the church. There is a large open room with about 30 to 40 children and six or seven staff. They are all in different groups. A group of ten children sings with two staff members. One child makes a cake out of Play-Doh on their own, and another group eats fruit with another staff member. We spoke to the manager of this pre-school. Her name is Vlora Arifi.
Vlora Arifi
And I have been working here for the last sixteen years.
Claire Barrett
One review says its costs have increased across the board. They have to increase the fee. But the most difficult thing is to find staff.
Vlora Arifi
Some choose to work in a retail store because they prefer to do simple work that doesn’t pay as much as a retail job rather than working with children. Because working with children, doing such a wonderful job and such a proud job at the same time is very challenging.
Claire Barrett
And part of the reason wages are so low is the way government funding for nurseries works. You see Mark here in the UK, parents of children over the age of three receive government funding for 30 hours of childcare per child per week. Now those funds go directly to a child care center or pre-school, but it’s not enough to cover wages.
Vlora Arifi
We are only paid something like £6 an hour, which apparently isn’t even the minimum wage of a staff member.
Mark Filipino
It is extremely low. Like, how can someone survive on that salary, unless they’re living at home or living off someone else’s paycheck?
Claire Barrett
Well, the facility has to top it up, so that’s minimum wage. But to do that, they have to get parents who are paying more for care to cross-subsidize those who are getting those free hours. And the thing is, during Covid, the government only funded places that were actually being occupied by children. And because so many children were kept out of nurseries during that time, nurseries themselves received little government support.
Mark Filipino
wow So right now, Claire, how are our parents coping with the rising cost of childcare and the lack of childcare facilities, how is all of this affecting them?
Claire Barrett
Well, it is having a huge and I would say outsized effect on women who tend to do more of the primary care. Now, I spoke to a mother who was coming to the end of her maternity leave. His name is Jess.
Jess
What do you monkeys do? (children laugh)
Claire Barrett
She has a three-year-old daughter, Bea, and told me that when Bea was one, her maternity leave ended and she planned to go back to her job at the charity. But then she calculated that she would have to spend almost all of £30,000 of her annual salary on, guess what, childcare costs. So she thought the only option she had was to reduce her working hours.
Jess
One of the reasons I agreed to go back to part time is because I’m kind of in a sweet spot where I pay minimal taxes. I haven’t quite hit that student loan repayment threshold yet, so I’m looking to maximize my income in that respect and drastically reduce my childcare costs.
Claire Barrett
But it is a sacrifice for his own personal career ambitions.
Jess
I really love spending time with my daughter, but also really love my job. And I think I’m probably very angry or a little bit resentful about it because I feel like I have no other choice.
Mark Filipino
So women have to make some tough career choices. It’s something I know women in the US have to deal with as well. Are there other effects of affordable childcare?
Claire Barrett
Unfortunately, yes. Now, another person we interviewed on the Money Clinic is Joely Brearley, who runs an organization called Screwed After Pregnant. Brilliant name. This is the group you heard at the top of the show that organized that protest march.
Joely Brearley
One of the most devastating findings is that in a survey we conducted of 1,600 women who had terminated a pregnancy in the previous five years, nearly two-thirds said that childcare costs were a factor in their decision. I mean, it’s devastating. And one in five said childcare costs were the main reason they had an abortion.
Claire Barrett
That’s a really scary statistic, Mark, isn’t it? I mean, after recording that interview with Jolie I had to take some time and just go out and cry a little bit, to be honest. I mean, one in five people. These were the children who wanted. And due to financial reasons, it has not been possible. Then you have the parents we talked to on the podcast who had a child, but now their finances are against it. It’s just a really horrible situation. And for all the pain and injuries it’s causing, it doesn’t seem like the government is doing anywhere near enough about it. And all the while the birth rate is falling.
Mark Filipino
A very important topic to report on right now. Thank you so much, Claire.
Claire Barrett
Thanks for keeping me going.
Mark Filipino
Claire Barrett is the FT’s Consumer Editor. She hosts FT’s Money Clinic podcast, with special thanks to FT’s Percy Love, who helped produce this segment. We’ll include a link to the full episode Money Clinic did on childcare costs in the UK in the show notes.
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Before we go. Tesla’s market value has fallen below ExxonMobil for the first time since 2020. Analysts say Elon Musk’s flight from an electric car company to Big Oil is part of a larger pivot. Investors have shifted from growth stocks like Tesla to value stocks like commodity producers. Exxon and other oil companies have posted record profits this year thanks to higher oil prices. Now, if this sounds familiar, it’s because this trend is one we’ve seen before. A change in value is one that investors often make during economic downturns.
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You can read more about all these stories at FT.com. This is your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.
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