The free entitlement to childcare for all parents in England should be scrapped in favour of a system aimed at disadvantaged children, a report says. The Institute of Economic Affairs study says the right to 15 hours free care a week has distorted the market price. It also argues regulations have made it more costly, with many families on average earnings spending more than a third of their income on childcare.
The report argues that despite this investment, families are still paying huge sums for people to look after their children.
The way early years care is funded means that those who need help the most do not receive it, while many affluent families are generously subsidised, the report found.
Currently, parents of three and four-year-olds in England are entitled to 15 hours free childcare a week, but this is due to increase to 30 hours from September.
And providers say that nursery costs for parents could "sky-rocket" in some areas as providers grapple with less funding for the scheme. The report also argues that attempts to improve the quality of childcare have ended up increasing the amount of regulation, while failing to produce better outcomes.
However, previous attempts by the government to change the ratio of children to carers were met with resistance from childcare providers, who said the changes would not lead to savings.
The report said the system has also limited choice for parents as alternative forms of care such as home-based childminders are priced out of the sector.
