Tax breaks for childcare is a bad idea

By Paul Goodman
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In opposition, George Osborne believed that the Conservative Party's family approach was part of its image problem.  He thought that key groups of voters think that the party wants women in the home, if not in the kitchen: that they suspected it wants to wrestle the hands of the clock back to the 1950s, and thus to load modern policy in favour of one-earner couples.  As James Forsyth suggests over at Coffee House, David Cameron's remarks in Sweden today seem to dovetail with Osborne's approach, and are a reminder that he hasn't changed his mind in government.  As Chancellor, he will also want to get and keep more women in the labour market.

However, smart politics can make for bad policy, and so it is in this case.  Poorer women don't pay tax.  Nor do mothers who stay at home.  To introduce tax cuts for childcare would therefore be to tilt the system away from such women - a move that is both regressive and anti-choice.  Some better-off women are already set to lose out from the removal of child benefit from higher-rate taxpayers.  (I wish Osborne luck with smoothing out the anomalies and injusticies which arise from the move without creating a new bureaucracy.)  Tax breaks for childcare would simply create a new set of complainants.

The best course the Chancellor could take would be to look at radical ways of improving childcare supply - and forget about demand-side initiatives that are fraught with political perils and unfair consequences.