openDemocracyUK: Investigation

Solutions to the childcare crisis must protect parents, children – and childcare workers

The UK's childcare sector was struggling pre-pandemic. Now it’s in crisis – and the government must ensure those working at the frontline don’t continue to pay the price. Part of openDemocracy’s ‘Forgotten key workers’ series.

Victoria Noble
4 September 2020
Sign in closed nursery window. But the outlook for the sector is far from sunny.
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Flickr/byronv2, CC 2.0

As working parents come under increasing pressure to return to work, the crisis in childcare is coming to a head. Yesterday the TUC warned that women risk being pushed out of the workforce as a result of the shortage of adequate childcare provision, with a new survey showing two in five working mothers of young children are struggling to find the childcare they need. And today the Institute for Fiscal studies warned that childcare shortages could worsen further, with many nurseries and childminders facing the prospect of permanent closure due to the “severe consequences” the pandemic has had for their finances.

Even before COVID-19, childcare providers were often in “already weak” positions, the IFS notes. Industry representatives are calling with increasing urgency for changes to the current flawed funding model. But the key workers at the sharp end mustn’t be forgotten, either, if high turnover and difficulties for children and parents are to be reduced. Childcare workers need government action to make it harder for employers to get away with poor working conditions and paying below the minimum wage, too, an openDemocracy investigation has found.

‘An awful work environment’

The average wage for childcare workers is below minimum wage, with one in ten earning less than £5.00 an hour, according to government research released last month. One in six workers leave their jobs within the year, the same report shows.

Low pay rates can in part be attributed to the industry’s reliance on young workers - 40% of the workforce are under 30 – and apprentices. Both can legally be paid less than the adult minimum wage. But in some cases, childcare providers are also breaking the minimum wage laws. And even well-regarded nurseries can be guilty of both poor pay and conditions, and unlawful underpayment.

Scamps Day Nursery in Macclesfield, which was ranked by Ofsted as in the top ten nurseries in the country, was in 2018 found by HMRC to have illegally underpaid two workers almost £2,000. Although no details were provided on how Scamps underpaid their workers, typical tactics used by employers include unpaid overtime or holiday pay, or making employees foot the bill for necessary equipment and uniform.

openDemocracy has spoken to two of Scamps’ previous employees, Jessica and Helen (not their real names). Although they were not illegally underpaid themselves, they described Scamps as an “awful work environment” where management “cut as many corners as they possibly could to line their pockets”.

Scamps has since been taken over by Busy Bees nursery group since the end of 2019. These allegations relate to before its takeover. The previous owners did not respond to openDemocracy’s requests for a statement.

Jessica noticed irregularities with her payment: “We’d never get our payslips on time, things like that. We’d get payslips usually about two weeks after we got paid and there were often mistakes as well. I got paid something different every month.”

“As nursery nurses you get paid absolutely peanuts, you get minimum wage and it’s not even close to enough,” she said. “The fact that people are working full time in those conditions and they can’t afford to live is absolutely disgusting.”

The ex-employees also said that Scamps would employ up six apprentices at any time. Jessica said the apprentices at Scamps were treated as “lesser employees”.

“The apprentices always had the short end of the stick. They were always cleaning the trolley after tea, always doing the nappies, always taking the bins out. The apprentices were left with the dirty jobs that nobody else wanted to do,” she said.

Employing apprentices can be a way of saving money as minimum wages rates are much lower, starting at £4.50 an hour. The Low Pay Commission has also warned that one-in-five apprenticeships are not paid even their legal entitlement, though there’s no suggestion this was the case at Scamps.

Toxic workplace cultures

The former Scamps employees also allege that management’s attitude could affect the children. Helen specialised in helping children with Special Educational Needs at Scamps, giving one-to-one care to a boy who had global developmental delay. This was funded by the government.

“He was either allocated 12 or 15 hours a week where he was supposed to have one-to-one care to help with his learning development,” she recalled. “But then I was told that the hours I was with him should be between certain hours of the day, which included the hour that he was asleep. I said, ‘How am I giving him one-to-one attention to help his development if he is asleep?’ I was told, ‘Well, we actually make a loss on those hours anyway because the government doesn’t give us enough money to cover the one-to-one attention.’ I said: ‘That’s not the point. If he’s supposed to be having one-to-one, he’s supposed to be having one-to-one.’”

A low-pay culture often goes hand in hand with poor treatment of staff. Scamps were awarded an exceptional Ofsted rating but Jessica and Helen believe this hid a “toxic” workplace. They described being shouted at by management, questioned over taking compassionate leave and being forced to work overtime.

“You were just made to feel worthless,” Jessica said. “Frankly, treating your staff nicely doesn’t cost a penny. They just chose not to, they used intimidation to get staff to do what they want.”

Her mental health suffered as a result: “On the drive to work there were many occasions where I had to pull over to be sick because I was so anxious because it was a tense and unwelcoming work environment. All you’d think is: ‘Oh God, what have I done today?’ and live in fear of being asked to go to the office for a chat.”

After more than two years of struggling to pay her bills, Jessica left the sector completely: “Working at Scamps had ruined the experience of childcare for me so I moved away for my own mental health.”

Enforcement has stalled

Childcare has the highest levels of unlawful underpayment of any sector, official figures revealed earlier this year. And HMRC’s latest ‘name and shame’ list of employers who break minimum wage laws showed that 64 childcare workers were owed almost £60,000.

And there are concerns that employers that break minimum wage laws are slipping under the radar.

Since 2015, government has doubled the enforcement budget and workforce of HMRC, and has greater powers to prosecute. Yet HMRC has not prosecuted any National Minimum Wage cases since August 2017, noted the government’s Director of Labour Market Enforcement Matthew Taylor in a report in July. They have also failed to publish their quarterly ‘name and shame’ lists since 2018.

A spokesperson for HMRC told openDemocracy: “Paying the National Minimum Wage (NMW) is not optional – it is the law. Failing to pay workers the correct NMW can result in significant fines, being publicly named, and for the most serious offences, criminal prosecution. HMRC will continue to target employers who flout the rules, ensuring workers receive the wages they are legally entitled to.”

The Low Pay Commission, who advise government on the National Minimum Wage, agree that there should be more prosecutions. But Chair Bryan Sanderson noted that the challenge comes in finding employers who are deliberately breaking the law and operating under the radar. He told openDemocracy that workers must be encouraged to report abuses.

“There is underpayment and the main reason is that we haven’t got processes in place which allow people to draw attention to the underpayment,” he said. “We have a need for transparency, for people to be made aware very specifically what their rights are and to sign off on it, and to be encouraged to draw attention.”

He highlighted that the Low Pay Commission are “very concerned” about underpayment in the childcare sector in particular: “We are going to try harder. We have regular meetings with HMRC.”

An industry in crisis

Childcare experts believe that the government and its childcare reforms are to blame for the sector’s poor pay.

“The government have introduced more universal access to free funded care, which I think as a sector we would support because children need to be professionalised early education,” said Victoria Flint of the Professional Association for Child Care and Early Years. “But the sector has been crippled by underfunding in recent years.”

Providers are paid different amounts for the 30-hours of funded childcare, ranging from £4.30 in the parts of the Midlands and North East to £8.51 in North London. Flint said: “The level of funding just hasn’t met what it costs to care for children.”

Flint’s view was echoed by Jonathan Broadbery of the National Day Nurseries Association (NDNA), who said that nursery businesses get the majority of their income from the government, who were not paying enough. He said that “pay concern” was leading to “more qualified and experienced staff leaving the sector”.

Jonathan Broadbery also stressed that unscrupulous employers in the sector are a small minority but that most providers are under huge financial challenges.

“Profit might sound like a dirty word when you’re talking about children’s education, but that is what goes into making sure that there are the places there for families as and when they need them,” he said. “There has to be an element of surplus where private providers are being funded by the state to deliver public service because otherwise that service will fall over.”

What of the future?

The pandemic has hit the sector hard. Childminders have seen a huge reduction in the number of children in their care, with 40% worried that their business won’t survive as a result. Two-thirds are now claiming Universal Credit, according to a PACEY survey of 5,000 childminders during the pandemic.

Nursery workers have also faced problems after furlough rules meant their wages were only partially covered. The furlough scheme could not be used for any income covered by the early education funding.

Both of Scamps’ ex-employees were sceptical of their newly-found appreciation as key workers given the absence of practical support to childcare workers who are suffering.

“I think the clapping was a waste of time,” said Helen. “If they really appreciated key workers, they’d give them better working conditions, working hours and money. Not just stand on the doorstep and clap.”

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