To the Point - Where is the vision?
In his budget last month George Osborne announced that Child Benefit will now 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.
At a time of austerity, we are compelled to closely scrutinise what we want to achieve from our welfare state and think of creative, efficient and long-sighted policies that can meet these goals. A focus on early years and children is indisputably the best place to start.
The Chancellor should have put universal, high quality and affordable childcare at the heart of his budget. This may seem fanciful when we are striving to cut public debt, but it is actually an efficient use of public funds and has a multitude of benefits for the state, society and families.
Giving parents and children access to good childcare means they can balance work with bringing up their kids. So often, the decision about whether to return to work is clouded by the high costs of childcare which can make the financial gain just too small. Increasing the availability of childcare and reducing the costs to parents would boost employment – increasing tax revenues and household incomes.
Children also stand to gain. Two working parents mean fewer children living in poverty. High quality childcare delivered by well qualified staff provides an environment in which children’s social and emotional development can flourish – helping to close attainment gaps between children from different backgrounds.
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. This takes more than either slashing spending or defending the status quo. It requires vision and tenacity – something which was sadly lacking from the budget.