View from City Road: Childcare support could pay for itself

A study in the latest National Institute of Economic and Social Research review suggests public support for child care would make the labour market more efficient and could pay for itself.

British women suffer a larger loss of earnings through their lifetime if they choose to have children than their counterparts in Germany, Sweden and France, all of which subsidise child care. The potential of many British women may be wasted.

Having children involves a loss of earnings for several reasons. Most mothers leave work entirely for a while; they are then more likely to work part-time for less money. Periods at home make women less attractive to employers because they have less experience and fewer accumulated skills.

The study argues that childcare support confined to the mothers of pre-school children - providing nursery school places - may make little difference. Without support when children are at school, most women will have missed so much time in the labour market that the wage rates at which they could return to full-time work would not be worthwhile.

If women were encouraged to remain more active in the labour market because child care was subsidised, the Government would gain more tax revenue. The institute stops short of a full analysis of costs and benefits, but notes that some of the subsidy would be wasted on mothers who already pay for child care. None the less the idea is worth pursuing.