To the Point - Where is the vision?
Nick Pearce, director of the Institute of Public Policy Research
Friday, April 13, 2012
In his recent budget, George Osborne announced that Child Benefit will be removed gradually for those earning between 50,000 and 60,000 a year. This removes the sharp edges and shifts the pain slightly higher up the income distribution. However, it has required the introduction of a complex means test on a previously simple benefit and the loss of nearly a third of the savings it was supposed to generate - nearly 700 million less in 2013/14.
More important, the chancellor has tinkered at the edges for the sake of cost-cutting rather than going back to the drawing board to think about reforms that could save money and advance key national priorities. He should have put universal, high-quality and affordable childcare at the heart of his budget.
Giving parents access to good childcare means they can balance work with bringing up their kids. Children also stand to gain. Two working parents mean fewer children living in poverty. High-quality childcare provides an environment in which children's development can flourish.
The question remains though - how do we pay for more and better childcare? One solution would be to hold down rises in child benefit over a long period, say ten years, and channel the savings into building up childcare. This would could lead to an extra £2.5 billion a year by the end of the decade.
Shifting money from benefits to childcare services has been done before with great success - Quebec in Canada took a similar approach when it reduced income payments to families and increased early years provision. It reduced the costs of childcare to parents and helped increase employment. When public finances are tight, it is vital for policy makers to ensure resources are spent to their best effect.
