Free child care would boost female employment

Tax revenue generated by working mothers would far outstrip the cost of free nursery places for all argues the Institute for Public Policy Research (IPPR) in its latest report, Making the Case for Universal Childcare.

At just over 60 per cent, the employment rate of women with children in the UK is much lower than in many other OECD countries. It ranks 19th behind countries such as Iceland, Sweden and Denmark, which tend to have affordable, high-quality childcare provision. Many women in the UK, especially those on low to middle incomes, stop work after having children because of the high cost of childcare. In the UK a couple who are both earning average wages spend  27 per cent of their income on childcare while the average for the 34 developed nations of the OECD is 12 per cent.

The IPPR estimates that the cost of universal childcare would be £6.7bn, which could be funded, it suggests, by restricting tax relief on pension contributions to the basic rate. Money could also be raised by means testing winter fuel payments, free travel passes and television licences for pensioners.

Some critics have argued that the costings fail to allow for the fact that with the lack of available jobs, helping more women into work will simply mean more competition for jobs in some areas, with less extra tax revenue.

The full report is available from the Institute for Public Policy Research website.