The Sunday Times

September 11th, 2011

Scrap this childcare subsidy — it’s no use to mothers

Things have improved since Friedrich Engels’s famous report of 1844, when working-class women in Britain’s industrial cities had to tie their children to their bedsteads for safety before going out to labour in the factories and mills because they couldn’t afford childcare.

All the same, the problem hasn’t gone away. Childcare is still not affordable, at least not for most parents, and never could be.

Ignoring this glaringly obvious reality, feminists, activists and politicians have all cried out for decades for affordable childcare, as of right. But there is no such thing.

Last week the cry went up again. A report published by Save the Children and the Daycare Trust revealed that the poorest families are getting into debt because of the high cost of childcare; a third are turning down jobs and 40% are thinking of leaving work because they can’t afford such care. Nearly half of the poorest families have cut back on food to pay for someone else to look after their children and 58% said they were, or would be, no better off working once they had paid for nurseries and childminders.

These problems are not restricted to the poorest families. The research found that parents across all incomes cannot afford not to work, but at the same time struggle to pay for childcare. Many are cutting back other spending. Most strikingly, nearly one in four of all working parents is in debt because of childcare costs.

Another study, published last week by Haliborange, claimed that four in 10 working mothers admit sending their children to school when they are ill, because they cannot take time off work to look after them or pay someone else to do so. One woman explained that after she had paid for childcare and her rail fares to work, she had almost nothing left.

There’s nothing new in that, even among people on above-average incomes. I discovered it myself years ago when I had both a baby and a reasonably paid job and when childcare was cheaper. Only the well paid and the rich can afford to pay for wall-to-wall childcare.

According to the Daycare Trust, a nursery place for one child under two for 25 hours a week costs on average £4,670 a year and £6,164 in London. That, of course, does not cover a full working day, so more childcare would be needed for any parent working full-time — about £12,000 per child in London. The average gross wage is £25,000, so the sums do not add up for most people. This ought not to be a surprise.

Yet activists and outraged parents continue to claim that the costs of childcare are unacceptably high. They’re missing the point. For most people, childcare is necessarily uneconomic in an open market. A mother of two or more on a modest or low income cannot hope to pay to replace herself and still have money left over. Any mother substitute she hires will need to earn at the very least what she earns herself, net.

Although a paid carer can look after up to four children, she will have to get a minimum of a quarter of the mother’s pay per hour per child, so three-quarters of it for three children and so on. Only if a mother of two or more earns significantly more than a childcarer will she gain by working. And, of course, many don’t.

In any case, paid childcare is always more expensive in real terms than a parent’s care of their own child. Parent carers, who don’t get paid to do it, don’t have the burden of National Insurance or tax. Nor do they pay for police checks or insurance or training, or maternity leave or sick pay, all of which are factored in to the high cost of paid carers. Nor do parent carers have to pay rent and repairs for nursery space, or for installing the remarkably high number of lavatories that are statutorily required in nurseries.

I suppose one could regard looking after one’s own children as an “opportunity cost”, financially speaking, but I would say that handing tiny infants over to nurseries is an “opportunity cost” for the children, developmentally and emotionally speaking. This is something that is always ignored in the frenzies of successive governments to get both parents working.

Because paid childcare is genuinely uneconomic, huge numbers of parents can afford it only with massive support from the hard-pressed taxpayer. Until recently some parents were entitled to get 80% of their childcare costs subsidised by the taxpayer. That has now been reduced to 70% and the whole system will soon be overtaken by a new universal credit, which will not reduce the subsidies overall.

Parents are still gigantically subsidised to go out to work and are then heavily taxed on the proceeds. Even families earning about £62,000 a year — among the richest 3% of households — can get some tax credit help. We are spending £2 billion a year on childcare subsidies in tax credits, housing benefit and council tax benefit.

The glaringly obvious question is why should society subsidise childcare and all its bureaucratic costs? Why should taxpayers stump up for all the mind-numbing, unreliable churning of rebates and entitlements and credits and employer vouchers and paperwork and administrators and appeals systems? The obvious answer is that they shouldn’t.

It is doubtful whether it is good for young children to be given over to strangers. It is not doubtful at all that many nurseries are barely satisfactory. It is certain that children benefit from one-to-one, consistent, long-term attention, which they cannot get from nurseries; and that the majority of mothers wish to be with their young children. Leaving aside the case of feral children, who arrive at nursery or primary school unable to recognise their own names and without even being toilet-trained, but thinking only of perfectly adequate families, I think it is an absurd waste of money to push mothers out to work with huge subsidies when it is wholly uneconomic.

What’s needed is a revolution in tax and benefits. Two-parent families on low incomes should be taken out of income tax (they will still pay many other taxes) so that they can afford to look after their own children. Families on better incomes should get large tax rebates for stay-at-home mothers (or fathers).

Young, single, problem mothers, however, should be dealt with differently: it’s clear that chaotic families with generations of non-working mothers should not be encouraged to stay at home with lots of babies. But equally, respectable mothers should not be pushed out to work by childcare subsidies or treated the same way as the most difficult welfare queens.