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An encouraging report on childcare for Elizabeth Truss

By Paul Goodman
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Elizabeth TrussSince Elizabeth Truss is an Education Minister, I can't resist writing a school report for her - even though she hasn't been in the job for long, and we are a long way away from the end of term.  She is making a big speech about childcare at Policy Exchange - where else? - at lunchtime, but it's very clear what her ideas are, since they have been well-trailed over the weekend and on this morning's Today programme: indeed, she set them out on this site recently.  I would mark them, then, very high on the supply side and rather lower on the demand side - though, to be fair to her, the real decision-maker on the demand side is the Treasury.  Let me explain.

On the supply side, government should recognise that parents want to care for their children in different ways.  Schools that offer childcare have an advantage over private, independent and voluntary providers in that they don't pay rates or VAT, and are often better placed to cope with the burden of inspections.  Gordon Brown's childcare programme was, characteristically, to trumpet proclamations about "free places", and then not provide the money.  His Government and the non-state sector was thus soon at war over top-up fees.  And Brown's SureStart scheme was wastefully targetted.

Truss rightly pointed in her ConHome article that Brown's legacy is a high child-staff ratio, restricted salaries, fewer childminders, and some of the highest childcare costs for parents in Europe - classic symptoms of choked supply.  Her solution is to follow the path taken by other European countries, where better-paid staff care for a larger number of children: the Dutch agencies, the French Ecoles Maternelles.  She also has her eye on regulation, and aims, as she told Today, to "reduce the duplication of regulation and the gatekeeper role that local authorities play because local authorities decide which providers are allowed to use government subsidies".

This takes us to the demand side - familiar territory on this site.  Since parents indeed want to care for their children in different ways, how the tax and benefit system does and doesn't help families will always be its most important element.  The system should recognise that tax help for families with children reflects their ability to pay.  That means child benefit, or something not unlike it in principle - child tax allowances, say, which are transferable between married couples, with the social security system meeting the needs those who don't pay tax.

Truss is a liberal-minded woman (small "l', though she was once a Liberal Democrat) who, intellectually, takes no prisoners.  She has made it plain that her aim is to assist mothers who want to enter or return to the labour market - and that she is not all that interested in those who wish to stay at home.  This is in tune with George Osborne's instincts and the Treasury's drive to save money.  Thus, on the one hand, the Government is reducing child benefit for higher earners.  But, on the other, it is considering demand-side help, in some form, for childcare.

That could be vouchers.  Or it could be tax breaks.  The Liberal Democrats dislike childcare tax breaks for richer parents - so the Government's plans have been held up by wrangling between the two Coalition partners.  More to the point, suh tax breaks would be discriminatory, since mothers who work in the labour market can't get them.  Truss would be wrong to want to rig the demand side in favour of working mothers.  But I suspect the Chancellor will eventually square the circle and delight his party by making any childcare tax breaks transferable.


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