This IPPR report argues that it’s time for a childcare guarantee to lower barriers for parents getting back into or getting on in work, to reduce costs for families with children, and to ensure every child has access to high quality early years education.
The complex and incomplete patchwork of childcare entitlements, benefits and allowances for working parents in England leaves many struggling in the face of spiralling childcare bills – with costs often outstripping potential earnings, especially for those receiving universal credit, the report says.
For example, in a two-parent family with a one-year-old, a low-paid second earner whose partner is on minimum wage could face ‘effective marginal rates’ as high as 130 per cent, meaning the household can become substantially worse off financially from increasing their hours. Researchers argue that rising childcare costs as parents increase their hours amount to a tax on workers.
Steep childcare costs also pose a challenge to higher-earning families, with parents of young children returning to the workforce facing effective marginal tax rates as high as 93 per cent as they step up their hours, where the partner earns minimum wage and has typical childcare costs.
The report points out that there are seven different childcare support schemes that hard-pressed parents need to navigate as they attempt to juggle the demands of work and family, while also trying to make ends meet.