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Childcare again – because it still makes no sense

Today was another day for shouting at the radio, and then shouting on the radio.

At last the Government has unveiled its plans for financial help for working parents.  It has been months in the planning and the subject of bitter negotiation (apparently).  All are delighted an agreement has been reached.  I shall dig out the bunting.

Cheers Dave!

Cheers Dave!

It was heralded as a major boost to ‘hardworking families’.

However, on closer inspection, all is not what it seems.  It seems that this is yet another ill thought out policy which ticks a box on the To Do list without actually giving any thought to how it will work out there on the coal face (where all those hard working families live).

To look at the maths.  Working parents will, from 2015, be allowed to claim back 20% of childcare costs up to £6,000.  Under the current system, parents can receive employer vouchers which are exempt from tax.  This means, in reality, a 32% saving on the first £243 a month, or £486 if both parents work.  This is about £1,800 saving on a cost of £5,800.  Most parents’ costs are far greater than this, but there you have it.

The new system will give a £1,200 saving on £6,000.  It’s less, but it will be per child.  So a family with 2 children will save £2,400 etc.

However, there are flaws and anomalies which cause the policy to make no sense, or at least, penalise as many families as it helps.

It doesn’t come in until after the next election, which is quite frankly no good to anyone.

It is only payable if BOTH parents work.  “But why would you need childcare if one parent doesn’t work?”  I hear you cry.  Well, maybe one parent has lost their job and is looking for work, but doesn’t want to lose a childcare place.  Maybe, one parent has been at home looking after children for some time and now needs childcare to retrain, or gain some qualifications, or work experience.  Under current regulations, the working parent would be able to receive vouchers to cover childcare costs.  Under the new system, they will get nothing.

Never mind the fact that it is also yet another policy that completely undermines the concept of Independent taxation.

Secondly, it will begin by only being applicable to those children under 5.  At the moment, childcare vouchers are available up until the age of 15.  Therefore every parent who currently uses childcare vouchers to pay for before and afterschool care, holiday clubs etc. will now receive no help.  It has been said that it will ‘expand’ to cover children up to 12 but no timescale has been given.

Single parents will benefit, and that is a positive result (just don’t tell The Daily Mail).  The only other beneficiaries will be working couples with two or more children under 5.  Everyone else will be worse off.

I’m known for my cynicism but I can’t help feeling that the Government has another agenda here.  It does nothing to tackle the underlying problem of soaring childcare costs.  It gives another excuse to trot out the rhetoric of hard working families and rewarding strife, whilst taking money out of the back pocket while they’re talking, hoping that no-one will notice.

However, I’m someone who’s all about the solutions not the problems, so here is my own little mini budget-recommendations.

  1. Increase the threshold of current voucher scheme to a realistic level and incentivise employers to register for schemes, including help for small businesses.
  2. Don’t bother introducing vouchers for the self-employed.  Just allow them to write it on the their tax return.

There, done.

But more important than that, there needs to be a fundamental shift in the Government’s, and society’s attitudes towards parents, especially those who work.  Accept the reality that, as an economy, we need people to be in work and we need people to raise educated and capable children.  Current thinking in the press and politics at large, is that parents are a burden on employers and the state and should be begrudgingly endured.  I know I shouldn’t read the Mail Online comments but I tire of comments along the lines of ‘you had children, why should we help you pay for them’.  Well because basic economics will tell you that the economy needs people to spend money if it is ever going to recover, and there is no group in society more easily parted with ready cash than parents.  They just don’t have very much left these days.  And because working parents and their children will be paying for your pensions love, and your winter fuel allowance, and your NHS care when that hip finally gives up the ghost.

What would be revolutionary is a culture that reduced the need for paid for childcare, rather than pitting generations against each other.  An expansion of flexible working for men as well as women, including incentives for more school hours, term time only contracts; affordable housing and a decent transport system which cuts down on commuting time; an investment in technology that promotes the ability to work from home.

Now there’s an idea.

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2 thoughts on “Childcare again – because it still makes no sense

  1. Good point regarding the pointlessness of scrapping rather than amending the scheme. It reminds me of CTF – if the government couldn’t afford it then why not just scrap the CTF vouchers but maintain the funds? Instead they created a situation which devalued existing CTF accounts and created unnecessary confusion. Why? Surely not just because they didn’t want to continue a scheme set up by the ‘other side?’

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