- £800m scheme has resulted in only 12,000 women moving into work
- Findings cast doubt on the claim that subsidies encouraged mothers to work
- Critics of subsidised childcare said money could be better spent elsewhere
By Steve Doughty: A childcare subsidy aimed at persuading mothers of young children to return to work has cost taxpayers an astonishing £66,000 for every woman who has taken a job, a study revealed yesterday.
It said the price of extra free nursery places for three-year-olds under the part-time pre-school places scheme will be £800 million this year.
But the scheme has resulted in only 12,000 women moving into work, and the majority of them are in part-time jobs working fewer than 30 hours a week.
Researchers from the respected Institute for Fiscal Studies said their findings cast doubt on the claim that childcare subsidies encouraged mothers to work.
Mike Brewer, of the IFS, said the subsidy was ‘very expensive’ and added: ‘The case for extending free entitlement is not as clear as political rhetoric might suggest.’
The report, based on information collected by official surveys, said most of the mothers who took advantage of free nursery places for their three-year-olds would have been paying for their own childcare if the State had not stepped in.
It found that for every six children whose free places were paid for by taxpayers, only one was a child who would not have been in pre-school education – whether or not they were subsidised by the State.
‘For the other five children, the policy effectively gave parents a discount on the early education they would have paid to use anyway,’ the report said. ‘Among the small number of women whose youngest child went to pre-school for the first time as a result of this policy, around one quarter moved into work.’
The subsidy was introduced in 1998, shortly after Tony Blair’s government came to power, and had been spread across England by 2005. It currently offers 15 hours a week of free pre-school, which can be taken flexibly, for 38 weeks of the year.
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Researchers said the policy increased the share of mothers who had a youngest child aged three and who were in work by 3 per cent, which meant 12,000 additional mothers took jobs.
‘For the majority of mothers who would have paid for childcare without the free entitlement, the policy simply cuts the cost of childcare without boosting employment rates,’ the report said.
It found that for every six children whose free places were paid for by taxpayers, only one was a child who would not have been in pre-school education – whether or not they were subsidised by the State.
It added: ‘There is a growing consensus in the UK, from across the political spectrum, that extending the free entitlement – either by making more children eligible or by offering additional hours per week or weeks per year to children who are already eligible – will help more parents to work.
‘But the extent to which such policies would transform parental labour supply – and whether universal entitlement offers good value for money – are far from clear.’
Critics of subsidised childcare said the money could be better spent elsewhere.
Laura Perrins, of Mothers at Home Matter, said: ‘The policy is ineffective at getting women into work. It would be better to use the money to pay for a transferable tax allowance to help married families.’
David Cameron is to introduce a limited tax allowance for lower-income married couples next year. It will benefit couples who qualify by between £200 and £300 a year and will cost about £700 million.
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