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Saturday, January 31, 2009


This was the letter, referred to on Wednesday that I sent to several newspapers on the reason why childcare costs are rising 4 times faster than inflation. According to Google news it remains unpublished.
The Daycare Trust, a largely government funded charity, has reported that childcare cost is rising 4 times faster than inflation & explicitly calls for government subsidy. Why exactly such costs should be rising so spectacularly is not addressed by them, or indeed by newspapers & broadcasters reporting them. However experience suggests that when such an unexplained & substantial increase happens it is almost always because of government regulation. House prices have risen 4 fold above the Retail Price Index over the last century because of planning restrictions & the mandating of Victorian building techniques. Our electricity costs 4 times what the French pay for their's because the government has insisted on windmills rather than nuclear power. Hardly surprising then that mothers are unable to work because their after tax incomes would be less than their childcare costs.

The answer is obvious & does not involve more government interference
The fact that it was not published does not lead me to think I have not got it right - quite the contrary. I do not see any technical reason why looking after pre-schoolers should cost significantly more than looking after & educating school children in the cheaper private schools & must put it down to bureaucratic regulation. That such answers cannot even be mentioned in an obedient media which will censor any fact whatsoever in the state's interest does not in any way reduce the likelihood of them being true.

Neil, you almost certainly have got it right. But there is more to this than meets the eye, as I said when we last discussed this here:

"UPDATE. Re NC's comment that regulations are driving up prices. Nulab love regulations as it creates jobs for The Righteous. There's very little need for this of course - when you choose a school or a nursery, you talk mainly to other parents about experiences they've had - as long as your child sets off happily and comes back happily, the nursery is probably doing the right thing.

Further, if a nursery were involved in some gross negligence, it would be all over the newspapers and people would take their children elsewhere, so simple information sharing makes most regulations unnecesary.

But the real force for increasing regulation is economics. The nursery cartel likes subsidies of course, because it enables them to put up prices. However, in the absence of barriers to entry/restrictions on supply, these super-profits would be competed away by new entrants. So for existing murseries to benefit disproportionately, they need subsidies AND barriers to entry, which they cunningly dress up as being "for the chi-i-ildren".

Good point about bringing producers on the regulator's side over the barriers to entry issue. By getting them on board the conspiracy the voice you would naturally expect to be against raising costs isn't & only the poor customer isn't in on it.

I saw the quote on your link from "banned or compulsory" :

"Yesterday Beverley Hughes announced that anyone and everyone working in 'early years childcare' will be required to have an A level qualification in that. This is a " new drive to meet a key Labour target of eradicating child poverty by 2020 - making it easier for parents to work and arrange childcare."

Out will go generations of midddle aged women who know perfectly well how to look after other peoples children and out will go huge numbers of mainly female youngsters who may not be academically gifted but do have the right personality/temprament to do that job."
Obviously this gratuitous barrier raising will increase prices & I find it impossible to believe that, no matter how stupid Hughes may be, that nobody in the government realises that if this is part of "fighting child poverty" then the government is fighting on the wrong side.
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