Childcare policy should support all parents with children – not just those who work in the labour market

It is good that the Conservatives are mulling childcare policy, which is a subset of families policy, on which the Party has had little to say or do since before Theresa May’s leadership.  That was back in the days when David Cameron was Prime Minister with a small majority, and wanted to improve life chances for children and parents.

It is not so good to read that they are considering providing more of it “free” – 15 hours of free childcare a week for parents of younger children, as a report would have it.  For, after all, nothing that government provides comes “free”: ultimately, taxpayers must pay the bill, unless politicians are prepared to mortgage the future on printing or borrowing.

So when Tories hear the word “manifesto”, “pledge” and “free”, they should reach for the delete button.  Especially since it is this kind of careless talk that costs progress, as the recent history of childcare policy in Britain will confirm.

The sum of it is that we have the worst of all worlds.  In other words, a system that pleases neither those who want more support for relatively informal care (that’s to say, childcare provided by parents, grandparents, other relatives, friends and members of other family networks); not those who back more provision for comparatively formal care (the “high quality, accessible, affordable childcare” of which we read so often).

The costs of childcare in Britain may or may not be among the very highest in the world (the figures are disputed), but reports that find us among the worst-off countries for family-friendly policies seem to be well founded.

The fundamental reason for these dismal outcomes takes us back to where we started.  Politicians – and particularly Conservative ones – have ducked discussing what childcare policy, and the families policy of which it is necessarily a part, is really for, especially when it comes to money.  Do we want to encourage parents to work in the labour market?  Or support the choices which they choose to make, including caring for those children at home?

Or, as our history and culture might suggest (the RSPCA was established earlier than our main children’s charities), are we disclined to believe that the costs of raising children should be supported at all?

Our own answer is that there is nothing much wrong with the traditional doctrine of what was until fairly recently the Inland Revenue doctrine: namely, that “the taxable capacity of those with children to maintain [is] lower than that of the childless taxpayer”, and that there is therefore a solid case for family allowances of some kind.  There are two main practicable ways in which this principle might be recognised.

The first is to build on the present system of child benefit, which has been capped for higher earners.  This is because child benefit isn’t really a benefit at all: it’s a transferred tax allowance, paid to “purse rather than wallet”.

The second is to revive the order which child benefit replaced – namely, those child tax allowances; and let what should properly be called the social security system support the family costs of those who don’t pay tax.  Most of those on the right would set the latter at a low level, many of those on the left at higher one.  But the principle behind such a settlement would be clear.

Since child benefit is paid to all parents with children, regardless of whether or not they work in the labour market, it would make sense for any system of revived tax allowances to be transferable.  This would presumably have the side-effect of supporting marriage in the tax system, but that would not be the aim of the policy.

Either way, such a system would be clear, simple – and, admittedly, expensive, because it would aim to support all parents rather than some.  But by putting money into the hands of parents, in effect, it would help to drive the demand for childcare of all kinds, formal and informal: that money could be used to pay other family members and friends; those formal high-quality settings, such as day nurseries; those less formal ones, such as childminders, and so on.

Or it could simply be spent by the parents themselves.  We apologise if such a system is too straightforward for politicians to get their heads round.  But this choice-based ideal is where any Conservative policy worth the name should be seeking to travel to.

The alternative, short of abandoning support for children in the tax and benefit system altogether, is to carry on down the present road of supporting some parents rather than all – with all the distortions that this implies, as chronicled elsewhere by our columnist Ryan Bourne and others.

Obviously, there is more to families policy than childcare – or at least the demand-side business of what to do with the tax and benefit system.  There is parental leave.  There is regulation, and the degree to which it distorts the childcare market.  There is flexible working – and more.  But since Team Johnson is looking at the demand side, it is worth the rest of us taking a squint too.

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Author: Paul Goodman


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