U-turn on childcare cuts: is the coalition waking up to its women problem?

Ministers have rightly backtracked on a regressive cut aimed directly at working women.

Sooner or later something had to give. And today it has. Following much speculation the government has finally announced a change in its planned cuts to childcare, a key area of concern for many working mothers (and fathers). The recent heat about fast falling support for the coalition among key groups of women voters is starting to take its toll.

So £300m has been found to ensure that more part-time workers can claim tax-credit support for childcare without necessitating a further cut in provision for existing claimants. Up until now there had been widespread fear that any extension in support for part-timers would mean yet another cut in childcare support for everyone else.

To get perspective on these changes requires some background. Under Labour those parents on low and modest incomes working more than 16 hours a week were eligible for support covering 80 per cent of their childcare costs. Last April the coalition cut this support to 70 per cent. That may sound a small change - it isn't. It meant a major hike in the share of childcare costs low-income working parents have to pay. On average this has translated into a £450 loss for half a million parents, with some losing a staggering £1300.

Since then there has been much well informed speculation, based on meetings between ministers and children's campaigners, about another significant reduction in support for working parents currently claiming childcare support (as part of the move to towards the Universal Credit). The implications of this further cut were going to be devastating for many families, as lone parents and second earners - overwhelmingly women - would have been left with little if any incentive to work more than a few days a week.

Today's announcement removes this threat. Importantly, it extends for the first time eligibility for childcare support to those working less than 16 hours a week, without any offsetting cut for other parents to pay for this. This is genuinely good news for many families struggling on low incomes looking for slivers of work to help make ends meet. What it completely fails to do, however, is reverse April's cut.

For those involved in the technicalities of this policy debate, today's news feels like a bit of a victory - something awful has been averted and something positive secured. That's why there has been a fair bit of relief, and positive reaction, to the announcement. But for working parents already claiming support, still smarting from April's cuts, there isn't going to be any gratitude. You don't get prizes in politics for avoiding making a bad situation worse. In fact the money made available today almost exactly matches the cut made in the spring. The net result has been a shift in support away from those working more than two days a week, towards those working less than this. And this extra money comes from the £2bn set aside for introducing the Universal Credit; we don't yet know what else this money might have been spent on.

And let's not forget that, particularly following April's cut, the system of childcare support has some truly miserable features. Donald Hirsch, the leading welfare expert, has pointed out that someone on the minimum wage weighing up whether to work an extra hour will keep only about 35p of the extra £6 they earn (once they take account of additional childcare costs, the extra tax paid and reduced tax credits). Work hardly pays.

Today's shift on childcare is, nonetheless, significant in that it represents a clear decision to back-track on what was going to be an incredibly regressive cut aimed directly at working women. It also reveals something of the internal discussion going on within the coalition.

Above all it confirms that they have been rocked by recent polling showing plummeting support amongst female C2 voters, as well as other work by campaign groups showing how severely childcare costs are hitting family living standards. In the face of these concerns, abstract apologies from David Cameron to women voters were never going to suffice.

It also reflects the fact that Nick Clegg, who absented himself from debates on welfare and work for too long, has woken up to the fact that what was happening on childcare made a total mockery of his claim to champion 'alarm clock Britain'.

On closer inspection his team realised that further cuts would have risked the death of full-time work, or anything near full-time work, for women in low-income families relying on tax credits to pay for the childcare they need to hold down a job. This is obviously a major economic issue - but it's a massive electoral and gender one too. The Liberal Democrats, who were disproportionately reliant on female votes last May, realised during the summer that they couldn't sit this one out. Over recent weeks Clegg forced the hand of IDS and George Osborne and vetoed the idea of the announcement being made to the Tory faithful in Manchester this week.

Less easy to discern are the other changes this new found concern with working women might result in. Many expect a watering down of the coalition's proposed axing of Child Benefit for all higher rate tax-payers in 2013, though pressure for this will come from Conservative backbenchers (worrying about the impact on middle income stay-at-home mothers) rather than the Liberal Democrat leadership. Another flashpoint is likely to be the new and severe charging regime for parents using the Child Support Agency.

Either way the coalition's woes with working women on low-to-middle incomes are set to grow not diminish. The wider economic, fiscal and social forces underpinning them are hardly going to be reversed by one announcement on childcare. But at least today's announcement was more than warm words. And that's a step forward.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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