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12 July 2013

Childcare: the gaping hole in the government’s growth plans

High-quality childcare should be seen by government as an issue for business and a key infrastructure priority. But ministers have nothing to say on the subject.

By lucy powell

As the dust settles on the 2013 Spending Round, it is perhaps no surprise given this government’s abysmal record on supporting families – and mothers in particular – that the Chancellor failed to mention childcare. This is a key issue at the centre of the cost of living crisis yet it is absent from government plans for growth.

Parents face a childcare triple whammy of this government’s making. Prices are rising year-on-year, outstripping earnings and inflation; places are plummeting as a result of cuts to Sure Start and early years funding; and support for parents to make childcare affordable has been slashed since this government came to power.  This crisis is creating disincentives to work, or work more, and the lack of affordable childcare has a negative impact on women’s participation in the labour market.

Government proposals will create more problems than they solve. We’ve already had the debacle over childcare ratios; childminder agencies could increase costs for business and parents, rather than reduce them; and quality could also suffer with the loss of individual inspection of childminders. Tax-free childcare will not be introduced until 2015 and will benefit the richest the most.

Childcare is a vital part of improving the economic prospects of this country, of critical importance to the economic future of many women, and in some cases men so they can return to work at a level and pay they were receiving before having children. 

It’s time for a new deal for parents and mothers particularly, to make work pay and to improve the prospects of women in low paid limbo-jobs after they return to work. Research this week shows that more than three quarters of part time workers feel trapped in jobs unable to get promoted and on low pay. Childcare should support women back to work immediately after maternity leave if parents choose this with help at six, nine, twelve or eighteen months. 

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All the evidence shows us that 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. 

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Labour needs to think big and to think BIS. Childcare is not just a Department for Education issue. It should be a Department for Business, Innovation and Skills issue too. While early years education is vital for child development and early intervention, childcare should be seen by government as an issue for business and a key infrastructure priority to promote growth and get people back to work, linking in with BIS responsibilities for flexible working and shared parental leave. That’s why I’m proposing that a future Labour government should have a Childcare and Early Years Minister with cross-departmental responsibilities in the Department for Business, Innovation and Skills and the Department for Education coordinating support for working parents across government including working with Ministers in the Treasury and Department for Work and Pensions. Support for families should be shaped by what parents need rather than falling between the silos of government. Ensuring good quality early years education and child development goes hand in hand with getting the quality parents want to have so they feel happy leaving their children to return to work.

Sufficient high quality childcare should be used as an engine for growth. It is as important for a strong local economy as transport infrastructure and skills. This government has nothing to say on this. Labour needs to make the infrastructure and growth case for childcare to support women back to work linked to a radical agenda of real shared parental leave, flexible working and childcare to meet the needs of all families, particularly those working anti-social or unusual hours. Business has a big role to play in this and we should look at how we can incentivise workplaces to support wraparound childcare.

A Childcare and Early Years Minister working across DfE and BIS needs to make the case to the Treasury of the added tax-revenue over the long-term of women returning to their existing jobs as well as eradicating the perverse work disincentives that exist today. IPPR argue that over a four year period there would be a net return to the Exchequer of over £20,000 per parent of a returning mother, even when 25 hours a week free childcare is provided over that same period.

We should then look at using the extra tax generated from parents earning more and working more to increase up-front investment, in more radical childcare support focused 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. 

Labour should make it our business to make the case for better support for mums and dads to balance family life. Childcare will be a key battleground at the next election.

Lucy Powell is Labour MP for Manchester Central