The Simpsons, childcare and the UK economy...
Interesting new research + Podcast bonus content + Other stories that matter
In episode 12 of season three of The Simpsons, Homer and Marge tell their family the story of how they found out Marge was pregnant for the first-time and then gave birth to Bart. During the episode it emerges that news of the pregnancy prompted Homer to worry about the cost of raising a child. He quit his dream job at the local mini-golf course and instead applied to work at Springfield Nuclear Power Plant, where the pay was better but the work was awful, and his boss was the tyrannical Mr Burns. This all makes Homer miserable, until Bart is born and Homer realises how much he loves his family. The story ends on a happy note and concludes that your family is everything. But there is another core message in the episode - raising a family is expensive and you need to make sacrifices to afford it.
That episode originally aired in 1991. Thirty-one years later the cost of childcare is still a big concern. A new report out this morning by Onward, the think-tank, shines a fresh light on the issue in the UK. I want to flag the report because its findings are eye-opening, some of the proposals are radical, and the former director of Onward, Will Tanner, is now Rishi Sunak’s deputy chief-of-staff, which means the research will get noticed at the highest levels of government. As a family with one child already at nursery and another one on the way, I had a personal interest in the report too…
Onward, for those who don’t know, is a think-tank that describes itself as developing “bold and practical ideas for the next generation of centre-right thinkers and leaders”. It has had a special focus on levelling up.
The key findings of the report are:
A poll of 1,037 parents with children under five found that 92 per cent said that childcare costs have impacted their standard-of-living. This is not that surprising, or that new, as shown by The Simpsons episode above…
30 per cent of parents say that the cost of childcare has forced them or their partner to consider leaving work to care for their children. This is more alarming and it matters to everyone, not just parents. That’s nearly one-in-three mothers or and fathers potentially leaving the workforce
65 per cent of parents not in work said they agreed with this statement: “The main reason I do not work is because the demands of childcare are too great." As above, that is an alarming finding
More than half of parents - 52 per cent - oppose proposals to relax childcare rules so that professionals can look after more children at the same time. Liz Truss had suggested this while prime minister.
The cost of childcare ranks fourth behind housing, energy, and food and drink as the biggest outgoing for a family. That cost is rising, like it is for other goods and services, due to surging inflation. However, the difference is that childcare is something most families cannot cut back on (indeed, just 9 per cent have, according to the survey). Also, the UK is already spending more on childcare than most other developed countries, way more in some cases, as the graph below shows…
So, in short, the Onward report suggests that the cost of childcare is so significant that some parents have quit their jobs or are considering doing so. That means that childcare is an issue for the whole economy, not just parents, because it is taking skilled people out of the workforce when entire industries are warning of labour shortages and many businesses are struggling to find staff. It is also a pivotal issue for diversity in the workplace, because women are more likely to stay at home to look after their children than men, according to the report.
To improve the situation, the proposals from Onward include:
An overhaul of maternity and paternity leave so parents are instead offered a shared entitlement of 12 months that they can divide as they wish
A simpler childcare credits system and a front-loading of benefit payments to the start of a child’s life, allowing parents more choice over what support works for them
Better community hubs for parents and a boost to childminder numbers through new regulation and encouraging highly-skilled graduates into the sector
The Onward report has been covered by The Telegraph here, with the story leading on that proposal to replace separate maternity and paternity leave with a shared entitlement. You can find out more about the report through the link below…
Although the cost of childcare is a historical challenge, the UK does appear to have structural problems that are not only hurting parents, but the broader economy…
Podcast bonus content…
The latest episode of our Business Studies podcast features an interview with Richard Tang, the founder and chairman of Zen Internet. Tang and Zen are unusual for multiple reasons, which is why I wanted to interview him and the episode is so interesting.
Tang has never sold any shares in Zen and has said he never will. He also says that the way we judge the success of a business and the economy by tracking data like GDP is wrong and that other statistics like happiness are more important. What makes Tang’s comments so fascinating is that he also says he believes in capitalism and is happy to take dividends from his business. In other words, these are not the comments of a far-left-wing campaigner trying to bring down the global economy. Tang wants to help steer capitalism in a better direction and encourage businesses to understand what actually matters…
Zen itself is an interesting business. It is a tech business in the north of England and is the biggest employer in Rochdale, Greater Manchester, with around 550 staff. It is the oldest independent internet service provider in the UK having been founded in 1995 and has won a string of awards for its service (Which? ranks it as the best in the UK and is the magazine’s only recommended provider). However, as Tang says, his approach has meant that Zen has probably grown slower than it could have done given the lack of external investment or M&A. Nonetheless, his ambition is that Zen becomes part of a “big five” of internet providers in the UK alongside BT, TalkTalk, Sky and Virgin
You can listen to the episode in full on Substack here, Apple here and Spotify here.
I also spoke to Tang about what advice he would give to other entrepreneurs and the biggest mistake he has made as a founder. I want to share his answers with Off to Lunch members here because they were great. If you aren’t already a paying member you can sign up below…