the times | Monday May 23 2022 39

Business

Paul Johnson

Reducing the expense of childcare

won’t solve the cost-of-living crisis

Marcus Boyle

S

ince joining the Gambling

Commission last September,

my focus has been on

identifying beneficial

changes for both consumers

and the industry. The gambling

industry is changing fast and there is

much more that can be done,

particularly in reducing the harms

caused. My proposals come from

listening to academics, individuals

with lived experience, politicians,

recreational gamblers, gambling

operators, government officials,

charities and many others.

We have looked at all areas,

including how we regulate, and have

studied the opportunities afforded by

technology and data. The

conclusions will feed into our advice

to the government‘s review of the

Gambling Act, but we know that

while this review is happening we

cannot stand still and will be

consulting on proposed

improvements.

A key area is increasing the

impact of sanctions imposed on

persistently failing operators. Recent

investigations reveal cases with jaw-

dropping examples of substantial

amounts being taken from

individuals who cannot afford to

wager such sums.

Our enforcement has led to

operators paying out more than

£130 million in the past five years,

but this clearly is not a sufficient

deterrent. Consequently, operators

can expect to see cumulative

sanction packages with not only

increased financial penalties but also

a suite of sanctions aimed at

changing behaviour, including fines

being based on a percentage of

customer takings, short or long-term

suspensions and attaching

significant conditions to licences.

We will expect full board oversight

and personal accountability through

increased personal management

gambling licences at strategic and

operational levels. And we will not

tolerate an attitude of lowest

possible compliance being sufficient.

We expect our licence-holders to

genuinely commit and learn from

failings. Licences will be withdrawn

where standards are not met,

meaning that individuals could not

hold senior positions in the industry.

Licence-holders should aim for the

highest standards.

To that end, we — with the

leading operators — have launched

a best practice study into the

algorithms that they use to spot

individuals at risk of harm and the

resulting practices that operators

use to protect those individuals. I

would like also to introduce a new

mandatory, independent audit of

standards and accreditation for

those achieving the highest levels.

Technology can play a role in

protecting consumers from

gambling so that they don’t spend

more than they can afford. I believe

that operators and individuals would

benefit from gambling companies

being able to use soft credit checks

that do not have an impact on their

credit rating to provide real-time

affordability assessments.

We also need significantly more

data about gambling patterns,

allowing us to better understand

how people gamble, the number of

problem gamblers and the level of

harm being suffered. We plan to

invest more in our data sources and

will start to research the links

between gambling and suicide.

I want, too, to build our

technology capability so that we can

properly interrogate trends to

underpin our regulatory agenda —

for example downloading and

analysing the vast amount of data

that operators maintain — allowing

us to undertake multiple more

checks on operators than we

perform at present, potentially even

in real-time. Engaging with licensees

through both education and

enforcement will mean that we

share meaningful information more

frequently to drive rapid change for

the benefit of consumers.

Data and technology will play a

role in how we monitor and act on

the black market and I am keen that

we continue to study ways to work

with technology companies to take

more co-ordinated actions. We will

be increasing our resource in this

area and will invest in our domestic

and international relationships.

I welcome the Gambling Act

review and believe that it will result

in a legislative environment that

meets the needs of this global

industry and gives the commission

the capacity to regulate it. This will

help to keep people safe from harm

while keeping the enjoyment of the

recreational gambler.

Marcus Boyle is chairman of the

Gambling Commission

Gambling needs better

regulation, and this

is how we will do it

child for the under-twos than do most

other countries pushes up the costs.

Our rather convoluted system of

subsidies, not at all well targeted

towards those on the lowest incomes,

doesn’t help.

There is one element of

government support, supposedly one

of its central planks, that seems to be

especially ineffective. That is tax-free

childcare. It’s ineffective because most

families have never even heard of it,

and that includes half of those who

would be entitled to it. Even some of

those who are aware of it are put off

from claiming it by the hassle and

complexity. Take-up has been so poor

that it has ended up costing just a

quarter of what was projected. In the

four years since it was introduced, it

has cost more than £2 billion less than

intended.

There’s another reminder for

policymakers — and for me. Things

that look great on paper, that work

well in theory, won’t necessarily cut

through to a general public who have

got far better things to do than keep

on top of all the latest policy twists

and turns.

If the government wants to help

with the cost of living, there will be

some families who would benefit

from cheaper childcare. But not a

huge number of them, not very soon

and not on the whole those on the

lowest incomes. In any case, childcare

is, or should be, about much more

than merely keeping the kids out

from under the parents’ feet. Policy

should focus on making sure that it is

as high-quality as possible and on

ensuring that those children likely to

benefit most do so. The present

system already offers free care to the

40 per cent most disadvantaged two-

year-olds because they are the biggest

potential beneficiaries. Two thirds

don’t take up their full entitlement.

There is much to do to get

childcare policy right, but let’s not

mix it up with sorting out the

present cost-of-living crisis. The

first step to achieving that was, is and

will continue to be increasing

benefits in line with inflation. That

would provide

immediate help to

millions of poor

families with

children.

I am not normal.

Just ask my kids. I’m

not referring to my

odd mannerisms,

terrible driving or

practical incompetence, rather to my

experience of the economy, my

education and my earnings.

Ministers and members of

parliament are not normal, either.

They get to see more of life through

their constituency surgeries than

most of us, even if some of them seem

to forget it all too easily. I see it

differently, in the data that my

colleagues and I work with all the

time. I am in the unusual position of

having rather a good grasp on what

the income distribution looks like. I

know where I sit in it. And in the

distributions of health, wealth and

education.

Even so, I am sometimes surprised

at just how odd I am. Or was. You

may have noticed that one of the

ideas being put about by government

to ease the cost-of-living crisis is to

reduce the cost of childcare, perhaps

by loosening the constraints on how

many young children any one carer

can look after in a nursery setting.

Now it’s a very long time since my

children were in nursery — the

youngest are now at university — but

I clearly remember the staggering

amounts we used to pay. Childcare is

expensive and surely it would help

millions of families with young

children to reduce the cost.

Not so much, it turns out. More

than half of families with a pre-

school-age child pay precisely nothing

for childcare. That’s partly because

some, especially with very young

children, don’t use childcare at all.

More important is that a lot of “free”

childcare is provided by doting, or

perhaps put-upon, grandparents and

other relatives.

Among older pre-schoolers, the

vast majority, more than eight in ten,

do use some formal childcare. Even

so, two thirds pay less than £20 per

week for it. That’s because there is

already a significant free entitlement

of at least 15 hours a week for all

three and four-year-olds and 30 hours

where both parents are working —

sadly, not something that existed in

anything like such generous form

when my sons were small. Some

things do improve.

All of which suggests that cutting

the cost of childcare would make no

difference to the vast majority of

families with young children. It could

help some to gain access to more

childcare, if costs are putting them off

at the moment, but it is notable that

half the parents of three and four-

year-olds do not even use their

present full free entitlement.

Plenty of families do spend an

awful lot on childcare, but they are in

a relatively small minority. At the top

end, one in ten users of formal

childcare in London spend more than

£350 a week. Hardly anyone in any

other region of England pays that

much. Such figures may be more in

the minds of policymakers than

perhaps they should be. Frankly, they

are more in my mind than they

should be because that’s closer to my

experience and the experience of

many of my friends and colleagues.

That’s where the biggest numbers

are, but this is not simply a

metropolitan elite issue. A fifth of

middle-earners using formal childcare

report finding it difficult to manage

the cost. Among all families with pre-

school children, one in ten have

reported difficulty meeting costs. And

that was last year.

There is a problem, and it is a

growing one. In the decade before the

present inflationary spurt, the cost of

a part-time nursery place for the

youngest children rose more than

twice as quickly as overall prices. The

fact that we insist on more carers per

“

’’

Paul Johnson is director of the

Institute for Fiscal Studies.

Follow him on @PJTheEconomist

Many families do not make the most

of their entitlement to free childcare