For many parents, it makes no financial sense to return to work, curtailing already squeezed disposable income.The cost of childcare in Britain is soaring, far outstripping both inflation and wage increases.
New research by the TUC shows that grandparents already provide invaluable informal childcare, but are limited by inflexible working arrangements. With the government facing a growing bill for childcare subsidies, could grandparents be the key to solving Britain’s childcare conundrum?
The cost of childcare
Britain has some of the highest childcare costs in the world. The average cost of childcare is £5,000 per year for 25 hours of nursery time a week, with costs reaching as high as £14,000 per year for a child under two in some parts of London.
The problem is so pronounced that for some lower-income families, the cost of childcare, combined with tax obligations and the loss of benefits mean that they are financially worse off returning to work.
This is a national issue. The loss of tax revenue and the cost of benefits for non-working parents is something an austerity government could do without. As such, the coalition is introducing a new scheme whereby tax relief is afforded at the basic rate of 20% on all childcare costs up to £6,000 per annum – worth up to £1,200 per family – in a bid to making work affordable.
Aside from the cost to the Treasury, Child Poverty Action Group (CPAG) research from earlier in the year highlighted how finances are a significant factor in a child’s happiness. Disposable income is important. If childcare costs eclipse pocket money (among other things), the child may be well looked after, but is much less likely to be happy.
A survey conducted by the TUC has revealed 3 in 5 grandparents providing regular childcare, “mainly so the child’s parents could work without having to pay costly nursery fees.” Grandparents helping with childcare is nothing new – it takes a village – but the report continues to highlight the difficulties working grandparents face.
Grandparents in work are more likely to help with childcare than retirees. But those surveyed said they had either been refused unpaid leave to help look after children, or were afraid to ask. With more people working into their late 60s than ever before, this inflexibility is leaving a huge resource for reducing childcare costs relatively untapped.
The government recognises this, and is extending the right to ask for flexible working – currently enjoyed by parents – to all workers from April 2014, in a move they hope will save both families and the public purse thousands in childcare.
Of course, the right to ask for flexible working is not the same as being granted unpaid leave. And if they are working, grandparents can’t be there the whole time. Although grandparents can and should be a valuable part of childcare, there will inevitably still be the need for paid care if both parents are working.
The left-of-centre think-tank Institute of Public Policy Research (IPPR) recently published a report recommending childcare to be made free for all pre-schoolers in a massive shift towards universal public funding. The report argues that returning 280,000 to the workforce would generate £1.5bn for the Treasury in extra tax revenues and reduced tax credit and benefit spending. In the long-term, the scheme would pay for itself.
The IPPR is closely associated with Labour, and the party is thought to want a big promise on childcare for their election manifesto. With Labour ahead in the polls, this Scandinavian style childcare scheme could become a reality.
The generation game
Universal childcare or no, involving grandparents more in the upbringing of a child is undoubtedly a good idea. Either way it will save both the family and the taxpayer money. There is no doubt that given the current situation, families need help with childcare, and encouraging flexible working amongst grandparents is an excellent way of shifting responsibility for providing that help away from the government.
What is particularly interesting is the shift back towards a more integrated family. If, as Labour contend, there is a cost of living crisis (hard to deny when disposable income is falling) then it is partly attributable to the atomisation of society. House supplies are squeezed as more people live alone. Demand for childcare is astronomical as families live further away from relatives. Care homes are filled by grandparents who once would have spent their twilight years living with their children.
People may accuse the last government of introducing a ‘nanny state’ (something the coalition has actually done little to reverse, despite their rhetoric), but in many cases, it was merely stepping into a role that used to be filled by relatives. It may seem old fashioned, but perhaps family really is the solution to Britain’s childcare conundrum.
by Elizabeth Grey