The cost of childcare

Yesterday, on the eve of the launch of the cost of childcare campaign, I was interviewed by a couple of Scottish newspapers. I'm volunteering on the parent panel of the Daycare Trust which is why occasionally I get called with extremely short notice to speak to a journalist or two.

Initially I was a bit worried because I'm not up to speed what exactly the Daycare Trust is asking for. But I don't think this matters so much, it's just about having honest views of parents on the issues they campaign about, which bring the campaign to life. Even yesterday, I was very clear that I'm not the average case study because we don't spend the same amount other families spend on childcare. We're the lucky ones who have their kids in council nurseries for most of the hours that childcare is needed, which is about half the cost of private childcare.

It is interesting to see what of the interviews makes it into the papers. There was one sentence which I totally hadn't said, it read along the lines of having had to consider to give up my job because of the cost of childcare. Now, it is true that I considered if it was financially viable to work, but I never actually would have chosen the path of handing in my notice, my considerations were simply in the light of looming redundancy. There is more to a job than the financial gain, plus, why should it be me who gives up the job if it's not financially viable? Surely the childcare costs are split between two incomes in our case and it's not simply about whether mum works or not.

Other than that, the quotes were bang on but obviously left out quite a lot of detail and width that I had spoken about.

Both papers asked me for my solutions to the cost of childcare.
I explained how in other countries, childcare is subsidised so that the maximum cost to the parents is capped. This makes childcare affordable for all. Of course, it costs money but the theory is that because more parents will be in employment, the cost is offset by the tax the government gets from these working parents.

Another point I made was that the reduction of the childcare element of working parent tax credit to a maximum of 70% of childcare costs will be hitting the poorest parents most. Effectively it means that if you are on a low income, you will have to pay at least 30% of your childcare costs. If you are on minimum wage, have rent/mortgage to pay, council tax, heating, clothing, food, phone and electricity bills to cover, that is a lot. To put it bluntly, while I'm pretty happy with the help of the meagre tax credits we get (not for much longer, I think we'll lose them once I increase my working hours), I'd rather we didn't get them and the government had kept the 80% level.

One idea that didn't occur to me at the time was that it would really help if the childcare voucher amount was increased. Childcare vouchers are a system of salary sacrifice at source - if you are employed and your employer is signed up to it, you can sacrifice up to £243 a month of your salary which can then be paid for childcare. The saving is that  you don't pay tax or national insurance on this amount. It is available to both parents, so if both work, it can cover almost £500. The maximum amount has been static for a rather long time, so it would be a solution to increase this. This would also help those parents where only one parent is in employment (as was the case for us - while we've always paid at least £500 in childcare since Cubling was 5 months old, we've so far only been able to make use of one parent's allowance). It seems unfair that if 2 parents are in employment you can save twice the amount while in situations where either one parent is not in employment or where there is only one parent, you can only save the tax on £243. It is usually the case that families where there is only one employed parent could do with extra help, so why not have a maximum amount of, say, £500, which can be split between parents as they wish. Plus increase the maximum amount anyway as childcare regularly costs £600-£800 per child on a full time basis.

I personally also wouldn't have an issue if the full cost of childcare could be offset against tax. This would help, but of course it would still mean that childcare remains a massive burden for parents.

Of course there will be those who say that if you have kids, that's what you've bargained for. However, it has been shown that capping childcare costs and having universal childcare available to everyone leads to better maternal employment, better outcomes for children, and greater equality in society. This in turn means less expenditure for the failings of an unequal society (the cost of crime, vandalism, poor health and substance abuse). Sometimes spending more won't cost more, but less.

Do you have any ideas how parents could be better supported with the cost of childcare?

Childcare vouchers: keep them or lose them?

Childcare is giving me sleepless day, er nights. Once again. This time it's nothing to do with me or Cubling, well, at least not directly, but the issue is all the more important.

The Labour government, in an attempt to encourage mums to work (and I won't go into the pros and cons of that, but check out Being a Mummy for some useful insights), introduced tax credits and childcare vouchers to ease the burden of childcare. There's also some half measure of free childcare which is rather useless and doesn't really ease the financial cost of having kids while also working.

Now, the government is proposing to phase out childcare vouchers. I take issue with this. While I understand the spirit of it, I still don't think it's a good idea as the proposal stands. Here's the problem: There is actually a significant gap in support for childcare costs. In the case of a two parent family, if one partner works and the other is in training or education that does not qualify for Educational Maintenance Allowance, the couple cannot claim for working parent tax credits. Both parents have to be in work to claim working parents tax credits. I am in such a situation, unable to claim the childcare element of working parents tax credits because my other half is in postgraduate education. So while only I can only take advantage of the tax relief through childcare vouchers (if two parents are employed, the advantage is doubled to 100 pounds a month), it is still so much better than nothing (i.e. the amount I can claim through the childcare element of working parentstax credit).

Childcare vouchers are therefore the only way of getting some tax relief on the soaring cost of childcare, childcare which in this country is heavily privatised. Just compare the cost: in some countries childcare is free, in others it may put you down between 100 and 200 quid. Here it's at least 600 full time. What do you do if you have to children under 5? Maybe there are people out there with an income that would leave some spare, but surely this is rare.

Granted, most training providers may have some support available. But many don't. So for instance, there's the mum who wants to do an NHS training, her partner is on a very low income but working full time, and the NHS does not provide any support at all to cover her childcare costs. She will not be able to undertake the training, thus limiting her chances of future employment and moving beyond the poverty line. Then there is a young parents who is offered a basic and non-certified course at a college, a course that may re-engage him/her with education and with time lead to him/her undertaking a course leading to a qualification. A parent who, as her/his situation is, is extremely unlikely to become economically active without this access course, but who wants to, and is offered an opportunity to gain new skills and over time, qualifications and the hope of employment. It won't happen because the college cannot offer childcare and without childcare, the parent can't take advantage of the course offered.

Childcare vouchers and childcare support for parents in training are two ways of enabling parents to have choices. I do believe that childcare vouchers for parents on high incomes, especially if they are in the higher rate tax bracket, are unnecessary. However for those on low and middle incomes, they are more often than not a lifeline.

What's more, the system of available support for childcare is complex and hard to understand. If a child tax credit form does my educated head in, and it takes me a full working day to research support options available to the woman who contacted me (and I have the advantage of being in exactly the same situation as her, so I had some considerable previous knowledge), how hard must it be for the many most in need of support for childcare costs.

Whatever the new proposal is going to be, I'd like to see a shift of focus to ensure those in need of childcare for any form of education, training and employment that is suitable for them to get adequate financial support, and that life choices and chances are not ever determined by the ability to afford childcare or to understand and complete tax credit forms.

PS: Polly Toynbee put it much better than me in the Comment is free section of the Guardian: "But to pay for their (the most deprived two year olds) care by abolishing childcare vouchers (...) would mean that not very well-off mothers would pay to alleviate the plight of toddlers of even worse-off mothers."