Childcare affects hundreds of thousands of people – where was it in the Budget?

Proper funding is key to boosting equality and productivity for the nation’s working mothers. But it was nowhere to be seen among Rishi Sunak’s promises

Felicity Hannah
Thursday 12 March 2020 14:05
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Budget 2020 in numbers

Yesterday’s Budget was a spending spree. Rishi Sunak, the new chancellor, pledged to pump billions of pounds into the economy, tripling investment in transport and infrastructure.

In his speech to parliament, Sunak declared: “If the country needs it, we will build it.”

Yet one key area of infrastructure was almost entirely absent from his speech, an area that is essential to a huge chunk of the country’s workforce. Something that would ensure any “levelling up” happens across the genders as well as across the regions: childcare.

It is childcare that allows parents of babies, toddlers and pre-schoolers to go to work. It is breakfast clubs and after-school care that means parents of school-aged children can be at their offices for the eight hours a day most employers expect as a minimum.

It is as essential to the families that use it as roads, trains, buses and the internet. It’s a key part of how they get to work and it barely got a mention in yesterday’s Budget.

Yes, there was a small change to help parents – Sunak pledged to make tax-free childcare (TFC) compatible with school payment agents. That will make it easier for the parents of 500,000 school kids to pay for wraparound childcare.

But the latest data from HMRC shows that just 205,000 families are using TFC, despite an estimated 1.3 million families being eligible. In 2018, just £32m was spent on tax-free childcare, a long way short of the projected costs of £390m.

TFC is a step in the right direction but it isn’t exactly a silver bullet for the cost of childcare to parents.

In fact, the Budget failed to even include English nurseries in the tax holiday being given to small businesses to help them deal with the impact of the coronavirus outbreak. It’s hard not to conclude that this government simply doesn’t recognise how vital childcare services are to working parents and particularly to women.

Mothers are simply being priced out of the workplace by childcare costs. Just last month, the Coram Family and Childcare charity showed that the average price for 25 hours of nursery childcare for a child under the age of two has risen by 5 per cent. It now costs £6,800 per year even to work part-time.

So it’s no surprise that over a third of mothers who return to work either make a financial loss or only break even due to the unaffordable cost of childcare, according to research published this week by campaigners Pregnant Then Screwed.

Yes, ideally childcare should be a shared cost in two-parent households but it disproportionately affects mothers.

Last year the People’s Pension surveyed 2,000 mothers across the UK and found that after having children, 44 per cent of women reduced their hours, 36 per cent left work altogether and 15 per cent returned to work in a lower-paid role.

Meanwhile, the childcare providers themselves struggle to provide the current system of up to 30 government-funded hours for three- and four-year-olds. There have been increases in the rates but many providers say it is still underfunded.

Chancellor Rishi Sunak leaves Downing Street ahead of his first ever budget statement

Less than a fifth of childcare providers surveyed by the school leaders’ union NAHT said the funding they received was sufficient to cover the cost of delivering that childcare.

Properly funded universal childcare would largely pay for itself. Research from the Women’s Budget Group suggests that investing in high quality, free and universal childcare would increase women’s employment rate by 6.4 percentage points.

Yes, it would be expensive to properly fund it but it would also increase the tax take and cut spending on benefits, which the Women’s Budget Group estimates would cover between 89 per cent and 95 per cent of the cost.

Even without those returns, spending on childcare is simply the right thing to do. It improves outcomes for women, helping them work and making it less likely that their old age will be blighted by the persistent pension savings gap.

As the chancellor noted, investing in infrastructure will boost productivity and reduce regional inequalities. Childcare would do the same for inequalities between men and women.

Transport and communications networks are essential for getting people to work but so too is childcare. And it was woefully absent from yesterday’s speech.

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