Britain faces a major fiscal sustainability challenge over the coming years, exacerbated by the chancellor’s failure to secure growth and get unemployment down. This means all political parties will be faced by the reality of significant fiscal constraint. However, one way they will signal their differences is in the choices they make about how to allocate scarce resources. In this context, the centre-left should prioritise spending which helps families with the cost of living and boosts jobs and growth in the long term. And it is hard to think of something that meets these criteria more directly than high quality, affordable childcare and early years services.
First, parents with young children pay on average of £100 a week for childcare, a huge pressure on household budgets for all but the most affluent families. With wages flat and support with childcare costs through tax credits reducing, this squeeze is set to get worse. For many, the high cost of childcare prevents parents, often mothers, returning to employment. Research for the Department for Work and Pensions found that almost six in 10 mothers with young children who hadn’t gone back to work cited a lack of childcare or flexible working as the reasons (with just under a quarter saying it was a positive choice).
This links to the second argument. The rate of maternal employment in this country lags significantly behind those of countries like Sweden, Denmark and Netherlands that have more comprehensive childcare services. The most recent OECD data, prior to the full impact of the Great Recession, found that while 75 per cent of British women work, this drops to 61 per cent among mothers with children under 15. In Denmark, the difference between the rate of female and maternal employment is much lower: 79 per cent compared to 77 per cent. In Iceland, a higher proportion of mothers are in work than women overall.
A higher employment rate is an absolutely essential foundation of long-term fiscal sustainability and the only way we will be able to afford a strong welfare state and good public services in the years ahead. Combined with a return to sustained growth, moving towards a system of universal childcare would make a significant contribution to that effort, while also helping with the cost of living. As parental employment rose, such an investment would begin to pay for itself, through higher income tax and national insurance contributions. However it would also require spending to be reprioritised from other areas – starting with winter fuel allowances and free TV licences going to better off pensioners.
There is a very strong economic case for putting universal childcare at the centre of Labour’s political agenda – and sacrificing lower priority spending to make progress possible. However, high-quality childcare, alongside good parenting, can also make a major contribution to equalising life chances and ensuring children start school ready to learn. By providing institutions where families meet each other and spend time together it also strengthens local relationships. And it can also improve gender equality, especially if combined with more equal parental leave entitlements and the chance to work flexible hours.
For all these reasons, progress towards universal childcare – including the tough spending decisions that will be necessary – should be near the top of any future centre-left agenda.
Graeme Cooke is associate director for family, community and work at ippr, which has just published Making the case for universal childcare
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