Employers’ national insurance hikes will increase the cost of childcare and put nurseries out of business, making life for working mothers even harder than it already is, says Alys Denby
Governments are notoriously bad at picking winners, but Britain is about to find out what happens when leaders are more interested in picking losers. From Darren Jones agreeing that big businesses should “suck up” tax rises to Wes Streeting dismissing independent schools’ “crocodile tears”, Labour has made no secret of the sectors it holds in contempt. But there is one group the government may find harder to accuse of special pleading: working mothers.
It bears repeating (as ministers appear to have forgotten) that Britain has some of the highest childcare costs in the OECD. This entrenches the gender pay gap, curtails women’s choices and suppresses growth by making it simply unaffordable for many parents to work. And Labour’s tax rises are about to make things worse.
Nurseries, which tend to employ part-time staff on the national living wage, are warning that increases to employers’ national insurance and the lower salary threshold will dramatically increase their overheads. The government has committed to subsidise 30 hours a week of childcare for all children under five, however the fees it pays to providers were set before the Budget and therefore don’t account for the increased tax burden. Many nurseries will have to raise fees outside the government-funded hours to compensate and others will have to close. And it will be providers and parents in the most deprived areas – those most dependent on subsidies – who will be the worst affected.
No such thing as “free” childcare
The effects of the tax changes were entirely foreseeable, yet one senior figure in the childcare sector told The Times that “I think this blindsided the department for education as much as it blindsided us”. Early years providers have been saying that the “free” (read taxpayer-funded) 30-hours offer was unsustainable since it was first introduced for three- and four-year-olds in 2017. Yet the Conservatives and then Labour ploughed ahead regardless, even as nursery closures increased by 50 per cent in 2022-23.
And it’s not just the early years that are affected – anyone who employs a nanny will also see their wage bill increase. Hiring a Mary Poppins figure to look after your children may sound like a privileged lifestyle choice, but onerous regulation has essentially outlawed more casual childcare arrangements. Anyone who looks after a child for more than two hours a day must be registered with Ofsted and some childminders need planning permission to look after children in their own home. None of this translates into better pay or conditions for childcare professionals themselves, just ever higher costs for parents.
A society that turns having a family into an unaffordable luxury is an abomination against human nature
No wonder fertility rates have reached their lowest level since records began. A society that turns having a family into an unaffordable luxury is an abomination against human nature. And though women choosing to have fewer children is a feature of all developed economies, there are so many ways in which Britain makes motherhood harder than it has to be: a crisis in maternity care that means two-thirds of units are not safe places to give birth, a housing shortage and state systems still based on the assumption that only one parent works – including the absurdity of a school day that finishes at 3.30pm.
Labour can’t afford to continue making policy as if it’s only ever other people who pay. Mothers aren’t a minority interest or a wealthy elite – we are essential to the workforce of today and to perpetuating its future. When we lose out, so does everybody else.
Alys Denby is opinion and featured editor of City AM