Wednesday 20 November 2019 4:23 am

DEBATE: Will more government subsidies help solve the childcare crisis for working parents?

Harini Iyengar is the Women’s Equality Party spokesperson for equal representation.
and Annabel Denham
Annabel Denham is director of communications at the Institute of Economic Affairs

Will more government subsidies help solve the childcare crisis for working parents?

Harini Iyengar, GLA candidate for the Women’s Equality Party, says YES.

I am answering “yes” to this question — but I would first reframe it as greater government investment, not a subsidy.

While childcare is traditionally framed as a cost, raising the next generation is a crucial investment in our future. It is also an equality issue: childcare is part of the social infrastructure that women rely on more than men, and women are more likely to perform unpaid childcare when the state falls short.

The cost of childcare in the UK is among the most expensive in the world. It is impossible for many parents to make work pay, particularly in the capital — maternal employment rates in London are eight per cent lower than elsewhere in the country as a result.

While other parties have made their own pledges to increase childcare provision, the Women’s Equality Party calls for an investment of 40 hours a week, 48 weeks a year, from when children are nine months old.

This flexibility would transform women’s lives, and help close the maternal employment gap, adding £21.5bn to London’s economy alone by 2025.

Annabel Denham, associate director at The Entrepreneurs Network, says NO.

Childcare policy centres around three oft-conflicting objectives: educational outcomes, parental employment, and affordability. With good intentions, the government has introduced rules that have restricted supply‚ such as strict teacher-child ratios, while subsidising demand through the 30 “free” hours.

The government already spends £7bn a year subsidising childcare, while parents still pay on average three times those in France or Germany. Expanding “free” provision to two year olds, as the Tories and others are considering, risks further constraining the market, driving costs up and providers out.

In the year after the subsidy was introduced, nursery closures soared by 153 per cent. Evidence suggests that the state pays below market rate, so more subsidies will either put nurseries under further pressure, ultimately leading to closures, or else require more funding. If it’s the latter, we could witness greater state involvement in exactly how children are cared for, reducing parental choice, and limiting what little innovation still exists in the sector.

Main image credit: Getty

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.