Universal children’s services must be part of the state’s duty to families

Andrew Harrop is the General Secretary of the Fabian Society

The position of childcare in our national life was transformed during Labour’s time in office. What was once a purely private affair, for a small minority of families, moved into the public sphere. Over 13 years there was a vast extension in the state’s funding, regulation and facilitation of childcare. In the process, the left showed that it can still win popular support to push out the boundaries of the welfare state, when social change demands it.

Now those boundaries are changing again, through a combination of spending cuts and welfare reform. This year’s cuts have reduced work incentives for families who need childcare and the current plans for Universal Credit fail the childcare test.

With more money, defects in the design of the new mean-testing system can be remedied, but this begs a bigger question. Should the left not aim for universal children’s services rather than the rationalised targeting of childcare subsidies?

The 2010 Spending Review gave with one hand, but took a lot more away with the other. In came the promise of free nursery places for disadvantaged two year olds; but this was more than offset by a significant cut to the childcare tax credit.

Parents with low earnings now need to pay a minimum of 30% of their childcare costs, up from 20% under Labour. This move adds £30 a week to the bills of many struggling families. It’s also bad for work incentives. Fabian Society research for Gingerbread suggests that, for single parents, the effect of the April tax credit cuts was to reduce the average gain from being in work by almost £500 per year.

The introduction of Universal Credit will be another mixed blessing.

It is excellent news that Iain Duncan Smith is sweeping away the ’16 hour rule’, which currently leaves parents with childcare needs worse off in a mini-job than not working at all. But as things stand, this new entitlement to childcare is to be paid for from within the current childcare budget. The effects of spreading the same money more thinly would be truly perverse. Lone parents will gain almost nothing from increasing their working week beyond around 20 hours.

For couples with low incomes the situation is worse still, as there will be almost nothing to gain from a second earner taking a job. Has the ‘family values’ wing of the Tories found a way of forcing poor mums to stay at home, without anyone noticing?

The left can sign-up without hesitation to the principle of welfare reforms that make work pay, and make progression in work pay as well. If the coalition cannot deliver on this, there will be ample opportunities for Labour attack. Universal Credit will not work without the money for childcare. But the left should do more than just tell the coalition that it is not delivering its own intentions.

Families spend more on childcare in Britain than in any other OECD country. Improving the operation of means-testing is necessary but not sufficient, for it still leaves mid-income families facing huge bills. Why should we tolerate this? Childcare expenditure is a predictable spike in our lifetime spending profile, whether you are rich or poor. The left should build the case for doing far more to smooth these costs across our lives, through the machinery of the welfare state. That’s what we do for health costs after all.

Labour needs to remake the case for a universalist approach to childcare. That means building on our legacy and promising to prioritise spending on nursery places, Children’s Centres, extended schools and summer placements. Our ambition should be for universal children’s services to become as intrinsic a part of our lifelong deal with the state, as the NHS is today.

See also:

• Childcare double whammy: help is cut as costs soar – Felicity Dennistoun, September 8th 2011

• How hard is it for families to keep their heads above water? – James Plunkett, July 5th 2011

• Women lose out under Universal Credit proposals – Moussa Haddad, June 13th 2011

• Universal Credit – we still haven’t been told who will lose – Nicola Smith, January 13th 2011

• Many will be worse off under Universal Credit – Nicola Smith, November 15th 2010