Our Children Deserve the Best, So We Must Be Prepared to Pay Up

This story is a paradigm for too many government policies. It is about knowing what works and how to do it, yet after nine years still not doing it. Why? Because it is a Swedish dream built on the sands of American tax phobia, wishing for the ends without daring to will enough means.

Ruth Kelly this week went to a spectacular new children's centre on the Aylesbury estate in south London. This stunning Mediterranean building has a beach with palm trees in the atrium and a rolling park outside the wide windows, paid for by the lottery.

For launching a childcare action plan, there could be no better backdrop. Remember the Aylesbury? It's the impoverished estate where Tony Blair stood on a balcony in 1997 and promised: "No forgotten people and no no-hope areas." Cheers from residents greeted him that day; this centre is part-delivery on that promise. Just two miles from Westminster, here is a place for Labour MPs to remind themselves what Labour is for: the Sure Start children's centre programme is the jewel in Labour's crown; the 800th opened this week, and there will be 3,500 by 2010.

This is the the dream: every child from birth finds here everything necessary to thrive, especially for those who never see a book at home or learn to count, and barely talk. Here speech therapists, social workers, health visitors and high-calibre nursery teachers help all children reach primary school ready to learn. Here working mothers are guaranteed affordable childcare, in a place where parents of all classes create a hub for the local community. That's the dream and in some places it's all there.

But the host of directors of children's services who gathered to hear Kelly all warned of the utter impossibility of rolling out her plans on present funds. It can't be done. 4Children, the charity hosting Kelly's press conference, says it needs twice as much money to get close to her ambitions. Every expert in the room agreed. By 2008 we will still only spend 0.8% of GDP, much less than half of what Sweden and Denmark spend. (UK defence costs 5.8% of GDP.)

The hidden reality is that most childcare is delivered by state-subsidised private and voluntary nurseries, often of dubious quality. Ofsted finds only 28% of them are "good"; disgracefully, it doesn't even check them unannounced.

It's no surprise that most private nurseries don't make the grade. In all but rich areas with high fees, they only survive by hiring cheaper staff. The education department confirms that the average salary for a childcare worker is £6,100 and even "senior managers" earn only £11,800. Most private nurseries have no teacher at all. Labour boasts that three- and four-year-olds now get 12 hours' free "nursery school", but it turns out that private nurseries drawing state funds to provide it don't need to hire a teacher. Unqualified or barely qualified 16- and 17-year-olds, themselves school failures on rock-bottom wages, can't give children the boost they need.

Making money out of a nursery is precarious: most are local ventures that fold easily. Of 623,000 new childcare places opened by 2003, some 301,000 closed. Officials say this is "the usual failure rate for small businesses". Maybe, but it's no way to treat young children. Why spend state money moving young children through frequent closures of inadequate nurseries with rapid staff turnover when all research shows they need stability?

What's more, because the government is nervous of the private lobby, the childcare bill now going through parliament says local authorities must never open their own (better) provision if a private or voluntary nursery in the area could run it. The Lords should throw out this clause. Unlike some services, public nurseries are overwhelmingly the best, the beacons where nursery teachers train. A new profession is being created - the early-years professional - that could be a brilliant combination of nursery teacher, social worker and health visitor, steeped in child development, with graduate status and teachers' pay. Without money, they risk becoming cheap sub-teachers.

Private nurseries are the same hybrid as Britain's railways: the state pays most of the costs without controlling them, while shareholders either draw profits or nurseries go bust, wasting the state's investment. Private nurseries get money from state childcare credits that parents draw, covering up to 80% of fees. They get money to give their staff better training. Private neighbourhood nurseries were given big start-up money, but now that it has run out, many may close. This is no way to build universal gold-standard wraparound children's centres.

There are other strange perversities. The children who most need intensive help when very young are those with depressed, out-of-work, addicted or mentally ill parents. Yet they are denied childcare because credits go only to working families, not the workless. There are long waiting lists for a few free places for children at acute risk, yet in the same centres there are empty places because families can't afford the 20% of the fees they must pay. So the vulnerable who need good care away from home don't get it, while empty places create funding crises.

Young children's brains are being formed and their destinies fixed by the age of three, yet we spend least on them. We spend more on primary school, even more on secondary and most per capita on university. That is in exact inverse relation to the amount of good the money does.

The large-scale EPPE (effective provision of pre-school education) study follows the results of different kinds of nursery schooling. It shows beyond doubt that stimulating, teacher-led nurseries make a huge difference later in primary school - but bad childcare proved by the semi-skilled doesn't. Anyone surprised?

Bids for the comprehensive spending review start soon. Kelly says making children's centres the best they can be is top of her agenda; she accepts that her grand strategy remains just a plan without the cash to pay for it. But all this needs a serious rethink too. Funding it through the market, with childcare credits acting as vouchers, is bad value for money.

The danger is that children's centres are not yet embedded in the national consciousness. The programme has taken too long and been done on the cheap, often cheating by rebadging existing inadequate services; all centres should be as splendid as the Aylesbury.

Would the programme survive a change of government? Probably not. The Tories are vague, but David Willetts says ominously that the government should "make more use of the private sector". Perhaps he doesn't know that it's mostly private, which doesn't make it cheap, only shoddy. Labour must now make children's centres so good and so well-loved by every family that the Tories could no more scrap them than they could abolish primary schools or GP surgeries. It can be done.