Govt £7bn childcare spending questioned by think-tank

There is no ‘proper rationale’ or ‘evidence base’ for the Government spending more than £7 billion on childcare, the Institute for Fiscal Studies (IFS) has said.

The IFS also noted that “remarkably little” is known about the impact of childcare policies which have been introduced in recent years.

Paul Johnson, director of IFS, said a £2,000 childcare tax break, announced in last week’s budget, has been made “more generous in its intended coverage but, magically, at no extra cost”.


And former Conservative Party Chairman Norman Tebbit said he is “not terribly impressed” by the tax break.

He said the Tories should “think about how we could encourage mothers, normally, or even fathers to look after their own children, bring them up in the family.”

“I think that would save a lot of money in the longer run as we look at the costs of family break-ups”, he added.


Mr Johnson warned that despite the fact many families will welcome the tax break, “we still lack a proper rationale and evidence base for the more than £7 billion a year of public money that is now spent on childcare”.

“Beware areas of spending with quite such unanimous cross-party support. It does not always lead to the best policy”, he added.

And three IFS researchers observed that although the Government’s aim is to get parents working, “we know remarkably little about the impact of the policies to support childcare that have been introduced in England in recent years”.


“And there is no consistent evidence from other countries that childcare support has large effects on parental labour supply”, the researchers commented.

Under the Government’s plans which were announced in the Chancellor’s budget last week, couples who both work will be eligible for tax free childcare worth up to £2,000 a year per child.

The Coalition says around 1.9 million families will benefit from the change, which will come into force from September next year.


Under the scheme, for every 80p parents pay in for childcare the Government will provide 20p.

Jill Kirby, a policy analyst, criticised the measure saying families with a parent who stays at home are being “repeatedly punished” by Government policies.

“As far as Cameron, Clegg and Osborne are concerned, childcare is only worthy of financial recognition if someone else does it”, she said.

Related Resources