Government should stop trying to get more parents to return to work, say MPs

Treasury has made little effort to calculate the economic impact of free childcare, select committee says

Play is hard to get: how it is that we pay so much for childcare in the UK, and yet it’s still not enough? (Getty)

The Government should stop trying to encourage more parents back into work, instead of staying home to care for their children, the Treasury Select Committee has said.

In a highly critical report, the influential group chaired by Conservative MP Nicky Morgan said it had seen no evidence that the Government’s various schemes for funding childcare increased UK productivity, as Liz Truss, Chief Secretary to the Treasury, has claimed.

The report rubbished both the aims of current childcare policy and the methods employed to deliver on those aims. The Treasury has made little effort to calculate the economic impact of financial support for childcare, the committee said.

Under the current policy, parents receive up to 30 hours per week of free childcare.

Ms Truss told the committee that this assistance increased employment rates and economic activity, but the report said there was little evidence of any marked effect in these areas.

Until further analysis is carried out, “it is impossible to determine whether the cost to the taxpayer of childcare support is outweighed by the economic benefits,” the committee said.

It said it had received evidence highlighting other, non-financial, factors that influence parents’ decisions about returning to work such as poor part-time opportunities, lack of flexibility, and family-unfriendly workplace culture.

It said the Government’s approach to the issue of childcare ignored the economic value contributed by parents who choose to care for their young children at home, rather than returning to the labour market.

“This is a legitimate choice that the Government should take care to respect in setting its objectives for childcare policy,” the report stated.

“In particular, the overriding policy objective should be to support parents who decide to return to the labour market, rather than to increase labour force participation among those who choose to stay at home to care for their children."

The annual economic value of childcare carried out by stay-at-home parents is £320bn, according to a 2016 estimate by the Office for National Statistics. If the Government paid parents an hourly rate instead of encouraging them to return to work by paying for childcare, this work would be brought into the formal economy, the committee said.

The committee also said it received evidence that the stated aims of overall childcare policy were not clearly articulated, and that individual schemes could sometimes come into conflict.

“The Government’s 11th-hour decision to postpone the discontinuation of the childcare voucher scheme by six months is no way to manage childcare policy,” the committee said.

If the Government wants to increase productivity through its childcare policy, parents of all ages should be given support when they are training to return to work, the committee recommended.

This would allow parents to re-enter the labour market at the appropriate skill level, it said. Currently, only parents aged 20 and under qualify for free childcare during training. These allowances should be expanded to parents of all ages, the committee said.

It also accused the Government of misleading the public by claiming that it provides £4.94 per hour to fund free childcare when the actual average rate passed on to providers for 2017-18 was £4.34.

The Department for Education’s own statistics on the costs of childcare are out of date, and fail to take into account increases to the national living wage, national insurance and pensions auto-enrolment, meaning that some providers are being paid less than the cost they incur.