Tuesday, 4 March 2014

Childcare Costs

From the BBC

Anand Shukla, chief executive at the Family and Childcare Trust, said: "When even part-time childcare costs outstrip the average mortgage for a family home - and many parents have to spend more than a quarter of their income on childcare - it's clear that our childcare system isn't fit for purpose.(1)

"We need a... system that helps parents who want to work and contribute to the economy and gives children the best start in life."(2)

And he called for all political parties to commit to a long-term strategy that delivers for parents, providers, and children.(3)

The report called for better use of school premises and children's centres to provide childcare, and for the government's contribution to costs to increase.(4)

1. Well, considering that Anand Shukla doesn't seem to support increasing ratios and seem to be opposed to deregulation, the system is as good as it's going to be. The ratio is currently 1:4. Even if you're paying someone minimum wage to look after kids, there's still the thing of running the business, providing facilities following all the bureaucracy etc. So, let's say double minimum wage. In which case, 1/4 of the average salary doesn't sound too far wrong.

2. Define "economy". For a lot of women, it makes more economic sense to be a housewife, and once the kids go to school, to get a part-time job. Houses have to be cleaned, meals cooked etc. That's all productive work.

3. As the Family and Childcare Trust don't want any sort of reduction in ratios or deregulation, I presume they simply mean subsidy.

4. Why should government contribute more? If it's more economical for women to stay at home and raise the kids in early years, what's wrong with that? Sure, for some women the economic value of going to work outstrips the value of being at home, but for a lot of them, it doesn't. And a lot of couples value spending time in early years with the kids rather highly (I know a programmer who quit for 5 years and is now trying to get back in).


Kj said...

Agreed. Without going full on CI, the best solution for maximum choice would be liberalisation, combined with increased child benefit and fully transferrable personal deduction.

Mark Wadsworth said...

Ah yes, but at present, our tax system is based on taxing earned income, out of which subsidies are funded.

So looking at it from the point of view of the government (as a proxy for 'the taxpayer'), if Mum puts kids in a nursery and goes to work and earns (say) £15,000 she's generating (say) £5,000 in tax revenues, so if she gets a £5,000 'subsidy' towards nursery place, that is cost-neutral.

The calculation is much more complicated than that, because the wages and profits of the nursery are also taxed etc, so what exactly the break-even subsidy/tax position is for the government can only be guessed at.

Kj said...

MW: yeah it all depends on the subsidy amount. Hereabouts nursery places for 1-3 year olds costs govt 20K GBP (at ca 90% of cost), and a minority of working mums rakes in that much in tax revenue.

Mark Wadsworth said...

Kj, that sounds stupid expensive.

In the UK it costs about £7,000 - £10,000 for a full time place, and we have an excellent system of nursery vouchers which reduces that by about £4,000 a year, in other words, to something "just about affordable".

We also have two shit subsidies for childcare called "Working Tax Credits" and "Employer Childcare Vouchers". If we got rid of those and increased the value of the old-fashioned vouchers to £5,000 per child, as well as deregulating again, the problem would sort itself out.

Kj said...

Yes, a simple system like that would suffice. Unfortunately we also have a credit that distorts a bit. The reason for the cost is a 3 kids per adult requirement at most LA nurseries, and the costs are half that from 3-6.

Bayard said...

"I presume they simply mean subsidy."

They always mean subsidy. There's no point in someone from a fakecharity appearing on TV or radio if they don't ask for more taxpayers' money. Whenever I hear these people on Radio 4, I'm always waiting for them to get to the point of suggesting that the government either give them, or the group they purport to represent, more money. I seldom have to wait long.
Mind you I was impressed this morning when, in a discussion about business rates, the man from the pressure group confined himself to a perfectly reasonable request that re-rating be carried out more frequently.