Tax-free vouchers are a step forward, but childcare needs more radical reform

To scrap over the details is to miss the broader point. When it comes to the root problem with Britain’s system of childcare, this latest wheeze is just more of the same


Few dispute that childcare in Britain is too expensive. Parents, on average, spend nearly a third of their income on it, more than their counterparts in any rich country except Switzerland. Meanwhile, the state pumps in £7bn every year. Despite the largesse, quality and availability are patchy.

A problem crying out for action, one might think. Even more so given that as many as a million workers – the vast majority of them women – are estimated to be missing from the labour market because the economics of taking a job do not make sense. Neither the drag on growth, nor that on female emancipation, can be ignored.

Sure enough, there is near-universal agreement that something must be done. The trouble is that successive governments have been loath to think sufficiently big. And what small changes they do propose provoke storms of protest.

The latest tweak is the Coalition’s plan to shift from a voucher subsidy provided through employers, to an online scheme administered directly. There are a number of pluses – substantially more people will be eligible, and the maximum amount that can be claimed will rise. As usual, however, there are cries of anguish.

There are two main beefs. One is that the ceiling is set too high. Two parents, both earning £150,000, can afford to pay their own way, critics say. But there is some sense in the simplicity of using a tax threshold as the cut-off, and the 40p band, which starts at £40,000, is certainly too low. The other, sillier claim, is that  stay-at-home mothers are penalised by a scheme that excludes them, although why parents who do not work need childcare is not explained.

Yet to scrap over the details is to miss the broader point. The new, upgraded scheme may be a marginal improvement on its predecessor. But when it comes to the root problem with Britain’s system of childcare – its fiendish complexity – the latest wheeze is just more of the same.

Decades of tinkering have left a nigh-incomprehensible tangle. Not only is the provision of services, particularly by individual carers, choked by over-regulation. Parents must navigate a thicket of schemes, subsidies and tax credits, provided by no fewer than four different parts of the government, in order to pay for them. No wonder that costs have soared and that the number of available places lags demand.

Only sweeping reform will do. That means making it easier to become a childminder, perhaps by adapting the Dutch agency system; it means upping the child-to-carer ratio (a plan scrapped earlier this year) to cut costs and boost wages; and it means establishing a single, streamlined payment structure with government subsidies that taper as income levels rise.

True, the Treasury price tag may rise. But it is a false economy to spend £7bn for mediocrity, even in straitened times. The prize is a stronger economy and a freer society. Yet the Government, radical in so many other ways, has ducked the challenge. The next must tackle it.

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