House of Representatives asks UU researchers for advice on childcare allowance

From 2025, the Dutch government plans to greatly increase the childcare allowance and make it independent of income: all parents will be reimbursed for 96% of the costs, regardless of the number of hours the parent or parents work. Another important change is that, rather than being provided to parents through the Tax and Customs Administration, the allowance will now be paid directly to the childcare provider. While the government intends this to make things easier for parents, the change does entail a number of complexities. It is expected to lead to a decrease in the costs of childcare for high-income households, while those with a low income will face a sharp increase in childcare costs. Thomas van Huizen and Janneke Plantenga were invited to the round-table discussion to answer questions from members of the House of Representatives.

Childcare can promote equal opportunities

Thomas van Huizen, photo: Maarten Kip

Van Huizen provided the members of the House with various recommendations on designing the system in a more just and more efficient way. “It is vital to thoroughly consider any new system for childcare and to allow plenty of time for this transition. The introduction of a 96% reimbursement can also lead to inequality in terms of opportunities. Larger reimbursements can drive up the prices, making care more expensive for those with lower incomes.”

A second recommendation involved making it more attractive to take parental leave for the first year. “Childcare for infants is expensive and demands more capacity than caring for toddlers. If you free up carers from the infant stage, they will be available to provide care for other age groups instead.” Van Huizen also recommends the gradual introduction of a universal right to childcare. “For example, you could make it so that children aged two and up are entitled to sixteen hours of care per week, regardless of their parents’ employment status. A simple and universal system can help close the opportunity gap.” Lastly, Van Huizen noted the importance of quality. “Invest in quality by pursuing experimentation. Educational policymakers and coaches can take on a vital role in this area. A systemic evaluation can be useful to those efforts.”

Universal right to childcare

Simone Richardson (VVD) expressed doubts about Van Huizen's advice to grant every child aged two and up the right to 16 hours of childcare per week. Because how will this be possible in light of today's severe labour shortage? Van Huizen responded: “Right now there are all kinds of schemes in place, such as pre-school education and toddler day care, but the rules on the number of hours and minimum age for eligibility differ from one municipality to the next. I'd prefer to see a universal system rather than five days of childcare for the high-income groups. That would be more effective from a societal standpoint. And it wouldn't require much of an increase in capacity – you’d simply distribute the existing capacity in a different way.”

A big experiment

Portretfoto van Janneke Plantenga
Janneke Plantenga

Two rounds later, it is Janneke Plantenga's turn to talk about her position paper. “I hear a lot of people here saying that we need to conduct experiments into the effectiveness of the existing childcare. But we could also look at the past twenty years as one big experiment, from which we have learned a number of things. Childcare is an important condition for labour-market participation; it can be extremely vital to children from underprivileged communities and the quality of childcare is essential.”

Plantenga continued her presentation by describing the situation in the Netherlands. “We make extensive use of our childcare system, as labour-market participation is high and we have relatively short parental leave in this country. We don't have a legal right to childcare, as is the case in Scandinavia. In the Netherlands, the right to childcare is linked to labour-market participation, resulting in a higher concentration of non-childcare-users in the lower income brackets.” Plantenga noted that the quality is reasonable to good and continued by listing the strengths of the Dutch system: “We have an extensive reach, the system is flexible and customer-oriented and we have earned a favourable score for quality. The weaknesses, on the other hand, are a complex financing structure, a strict correlation to paid labour and the disconnect between private childcare and public education.”

Childcare can be extremely vital to children from underprivileged communities

Advice

Plantenga suggested three potential ways to promote equal opportunities. “You can establish a maximum price that childcare providers are allowed to charge parents. Another option is to invest more heavily in parental leave. Fewer very young children would make use of care, leaving more capacity available for older children. And lastly, you could make the fourth or fifth day in the week more expensive, as a way to dissuade mid and higher-income households from using it.”

Childcare tailored to the parent's needs

The members of the House had several questions for Plantenga as well. Hilde Palland (CDA) asked about one of the flaws in the system: “Where does the problem lie when it comes to the difference between private childcare and the public schools?” Plantenga answered: “As it stands now, education is primarily child-oriented and the main purpose of childcare is to allow parents to go to work. But in the last twenty years, we've learned that something good happens at those childcare facilities. Children benefit from going to them.” While all manner of partnerships arise between schools and after-school care facilities, Plantenga explained that such collaboration is not always easy to establish. “Looking back and knowing what we know now, the vast majority of people would design a childcare system very different than the one we have today.”

In the last twenty years, we've learned that something good happens at those childcare facilities. Children benefit from going to them.

Fixed price

Jacqueline van den Hill (VVD) seemed sceptical about the idea of a fixed price. How do you go about setting that price? And how do you take the differences between the coastal metropolitan areas and rural areas into account? Plantenga wanted to first be clear about the fact that the change currently being proposed brings a risk of price increases. “Provider will now be able to charge a price higher than the established maximum hourly rate. This will have virtually no negative impact on demand, because households with higher and mid-level incomes will be paying much less for childcare – previously, after all, they were reimbursed for only a portion of the costs. With the new policy, however, they will be reimbursed for a full 96%! Low-income households, on the other hand, were already being reimbursed for 96% of their costs and will now find themselves facing price increases from providers. They are therefore likely to end up paying more rather than less. As a consequence, professional childcare will become unaffordable for families with a lower socio-economic status – precisely the families whose children we want to see attend day care. Which is why I advocate for price regulation by the government.”

The member of the House did not yet seem satisfied by this answer. Plantenga continued: “The cost of childcare dropped in 2009 as well. Even though the Netherlands Bureau for Economic Policy Analysis (CPB) had predicted that the demand for childcare would not increase – supposedly because the Dutch had a ‘maternal culture’ and would be hesitant to outsource their childcare to others – this demand nevertheless increased dramatically. The reason was that informal babysitters were replaced by professional day care.”

Van den Hill tried to find a positive message: “What can we do to preserve the existing strengths?” Plantenga responded: “Make sure your reach extends to the largest possible group of children. Right now, 25% of families do not use professional childcare and most of these are families from the lower socio-economic classes. Something you should definitely watch out for are displacement effects: if childcare becomes less expensive for higher socio-economic classes, they might be more inclined to send their kids to day care for an extra day (or two) each week. This serves to further increase demand and make it even less likely that lower-income families will be able to avail themselves of childcare.”

A child-oriented system that benefits every child

In conclusion, Senna Maatoug asked Plantenga what advice she would like to give the ministers. “I feel that the ultimate goal, the dot on the horizon, is what's important. To me, that goal is a child-oriented system that benefits every child. Make sure the changes you implement today don't move you farther away from that dot on the horizon. Try to be consistent with regard to policy. If we want something now, we should set it as a firm goal for 2050 and then stick to it.”