The case for universal childcare in Britain

A policy of extensive, affordable childcare would have far-reaching benefits for working mothers and the economy.

The debate over welfare reform in the last few years in Britain has primarily focused on the cost and fairness of unemployment benefits. The Conservative and Liberal Democrat Coalition Government have primarily focused on punitive policies, punishing those out of work who they believe to be ‘scrounging’ off the benefits system. Instead, what the Government should be focusing on is welfare policies which actively support people into work. One of these policies would be the provision of childcare for all children aged between 1 and 4 years old. This would enable mothers, who are otherwise be constrained by the cost of childcare, to find work or increase their hours.

A small provision for free childcare currently exists: the Government provides 15 hours of free childcare for all three and four year-olds, which has just been extended 20% of the most disadvantaged 2 year-olds. This is certainly a step in the right direction, but the provision of childcare needs to be far more extensive in order to make a real difference. 15 hours simply does not cut it for the average working mother. Considering that the average part-time job takes up 15.5 hours a week and the average journey time is 42 minutes there and back, you would need at least 18 hours to sustain a part-time working mother with one child. Not only is the current provision not extensive enough, but the childcare costs beyond the free provision is so expensive that it often prices women out of work. A recent study by AVIVA showed that a mother with two children under the age of 15, working part-time and earning the minimum wage, would be £98 worse off every month due to the high childcare costs.

British mothers are particularly impinged by the cost of childcare. It is higher than the OECD average and much higher than in the Nordic countries (Sweden, Denmark, Finland, Norway and Iceland), who are beacons of affordable, extensive childcare. Across the OECD a dual-earner family will spend 12 per cent of their family income on childcare, whilst in Britain the figure is 27 per cent, the second highest rate in the OECD. To add to that, childcare costs in Britain have risen by 6% in the last year whilst wages have stagnated, adding to the squeeze on working families.

The lack of affordable childcare is clearly an obstacle to a mother wishing to join the workforce or increase her hours. A recent report by the Women’s Business Council estimated that 2.4 million more women want to work and 1.3 million want to boost their hours, for many this was due to lack of affordable childcare. Also, while the percentage of British women in the workforce is relatively high, it is much lower than the OECD average for mothers with children aged three to five – and far lower than the best countries like Denmark, Sweden, Iceland, Estonia and Slovenia. It is clear that in Britain there is a pay penalty for women who have children, which would be to some extent be alleviated by a greater provision of childcare.

There is also a clear business case for a policy of extensive, affordable childcare. It will increase tax revenues by supporting mothers, who would otherwise be unable to, into work. The Institute for Public Policy Research (IPPR) have shown that the net return to the Treasury over four years would be £20,050 for a mother working full-time earning the average salary and £4,860 for a mother working part-time. Also, according to the House of Commons Library Research, it is estimated that tax revenues would increase by £1.7 billion if Britain enjoyed the average mothers’ employment of the best five OECD nations – all of whom enjoy extensive childcare provision. Over time an extensive childcare policy would likely pay for itself, so we would be investing today to save tomorrow. It would also help drive GDP growth, as by enabling hundreds of thousands of women into work it will increase their disposable income and increase consumer demand. These are the kind of policies which the Government should prioritise in order to bring the budget deficit down in the long-term. It is much more efficient to support people into work, rather than punish them for being out of work

A realistic target for Britain is to provide 25 hours of free childcare for all children aged between 1 and 4. The IPPR have estimated that would cost an extra £3.735 billion. Clearly in an era of financial restraint some tough political decisions would have to be made to find the savings, such as cutting the winter fuel allowance and free T.V licences for wealthy pensioners. But for a policy like this, which would have far-reaching benefits for women and the economy in Britain, it would be worth it.

 Jonny Ross-Tatam is a Young Fabian Member

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