We must grasp the nettle on Childcare

It has been a good week for parents, children and Labour’s front bench Education team. However, the chaotic position of the Government on childcare ratios has distracted from the wider debate about how we deliver affordable, high quality, flexible childcare.

Labour has a proud record on childcare – improving access, places and affordability for parents. In contrast this Government has created a triple whammy childcare crisis. Costs are rising, places are plummeting and financial support has been slashed.

Families with small children have seen costs of childcare soar by 6% in the last year. The severe reduction in available places due this Government’s slashing of funding is making it worse. The choice for families has dropped and with this shortage of supply we are seeing costs going up and up.

The government is slashing financial support for low and middle income families, losing a family with two children £1560 a year. The introduction of Universal Credit will make the situation even worse for the lowest paid families. The lowest income working families will have to pay up to seven and half times as much towards their childcare costs, leaving many unable to continue working.  For many middle income families, tax credits have been cut completely.

This crisis is creating disincentives to work or work more. For lower to middle income families, the extra income generated by a second earner is almost entirely lost on childcare costs, leaving some households no better off in work.  A lone parent family with two pre-school children working 16 hours a week would be zero pounds better off if they increased their hours to full time. This just can’t be right.

This is a crisis for many families and it is a crisis of this government’s making. The scale of the crisis we face and its impact on the economy requires radical thinking.

It is of vital importance to the economic future of the country that we enable as many women, and in some cases men, to return to work at a level and pay they were receiving before having children.  Not only would this pay for itself, but there would be wider social benefits to society from more early years development.

Starting with what we currently spend on childcare, we need to look at how much more the economy would benefit from more women returning to work immediately following maternity leave.

All the evidence shows us that women, and I’m afraid it is still women, who take a break from work and their careers suffer a pay gap for the rest of their lives, very rarely returning to the level, hours and pay they were on previously.  In many cases, they work part-time on low pay for years after having children and not returning to their previous job.

So, not only do we need to eradicate the disincentives to work in the current system, but we need to make the case to the Treasury of the added tax-revenue over the long-term of women returning to their existing jobs.  IPPR argue that over a four year period there would be a net return to the Exchequer of over £20k per parent of a returning mother, even when 25 hours a week free childcare is provided over that same 4 year period.

Once this case is made, we should look at investing up-front the extra tax generated from parents earning more and working more, in more radical childcare support.  This, in my view, should be focussed on the points at which parents make the decisions about how and when to return to work, especially when their maternity leave comes to an end, or when they have had their second child.  These are critical moments of choice, but too often childcare policy is centred at older children, by then you have either chosen not to return to work or have already managed to struggle along and the extra support, albeit extremely welcome, doesn’t always change your work pattern.  We need parent centred childcare. Critical to this parent centred approach is improved parental leave and flexible working.

Childcare will be at the centre of the cost of living election we face in 2015. This Government has a dismal record. Labour must grasp the nettle of childcare reform and show we continue to be on the side of working parents.

Lucy Powell is the Labour Member of Parliament for Manchester Central