Blog

The case for looser childcare ratios rests on confusion

James Plunkett

This blog originally appeared on the New Statesman

The government claims to want to reduce costs and increase quality. It can't have it both ways. This morning’s announcement on childcare ratios should be just the hors d'oeuvre before the government sets out its plans to increase childcare support for parents. According to the latest rumours, it now looks likely that the majority of any new money will be spent on tax relief for higher income households, making this a potentially important political moment. For now, though, today’s announcement merits some serious attention.

Gavin Kelly

This blog originally appeared on the New Statesman

Often it takes the deadline of an impending announcement to really expose underlying tensions about the future direction of policy.

The coalition’s recent sorry saga on childcare policy – breathless briefings about a major expansion in tax-relief meant to herald the coalition’s renewed vitality, followed by an awkward silence and then the inevitable stories about who is to blame for the lack of progress - is a case in point. Never mind what this tells us about the coalition’s aptitude for media management, it also reflects something important about underlying attitudes towards the nature of the tax and benefit system.

There have, of course, always been different objectives in our welfare system with different parties placing varying amounts of weight on them: social insurance or poverty reduction; targeting individuals or households.

Vidhya Alakeson

This post originally appeared on The Staggers blog

At present, there are almost no voucher recipients among the poorest 40 per cent of households.
In the week that parents earning over £50,000 saw their child benefit cut, the speculation is that the government intends to introduce tax relief for childcare, possibly making those who were worse off from the child benefit change, better off once again. In the absence of an announcement from ministers, we will not know what the government actually intends to do until next week’s announcement. But the talk is of the introduction of basic rate tax relief for childcare worth £2,000 a year per child.

James Plunkett

This post orginally appeared on The Huffingtom Post blog

There may have been few details in Monday's renewal of Coalition vows but one key policy continues to invite debate: the government's plans for childcare. Much remains uncertain but it does now seem clear that the government hopes to use tax relief as its key way of reducing childcare costs. While Coalition wrangles continue about the distributional impact of this choice, it now seems likely this will mean a shift of priorities away from Labour's focus on tax credits and universal free places for preschool kids. And if new tax reliefs are worth £2,000 per child as briefing suggests - roughly twice as large as those in the current system - a relatively big change may be in the offing.

Getting the measure of a better capitalism

Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

Today the Institute for Fiscal Studies has launched an Exocet at the Coalition's claims to be a one-nation government taking a lead on poverty reduction. Nearly all measures of poverty are set to rise over the next five to ten years and the Coalition's policies are part of the cause.

But underneath the headlines the IFS analysis serves a less likely purpose. It provides timely grounds for questioning some of the key measures we use to judge progress in our society. In particular, it raises difficult questions about our reliance on a formula that says 'GDP growth plus poverty reduction' is enough.

Child poverty: We need to rethink our 2020 target

James Plunkett

This post originally appeared on the Independent blog

This morning the IFS published its latest projections for poverty. The stats have been widely reported, with most coverage focusing on the ‘unprecedented’ seven percent squeeze on middle incomes. But perhaps the more surprising figures are those for long-term trends in child poverty. On our current path, 800,000 more children will fall into poverty by 2020, a rise in the child poverty rate from 19.2 percent today to 24.4 percent. That’s the kind of sustained increase in child poverty not seen since the 1980s – and an almost complete reversal of the 900,000 children lifted out of poverty under Labour. It’s a wake-up call for both parties and a chance to seriously rethink our approach to the 2020 target to abolish child poverty.

You might say that, given the current crisis, these gloomy figures aren’t surprising – things will take time to recover and we shouldn’t overreact. But this story, of an economy knocked down and slowly getting back on its feet, simply doesn’t fit the reality. On the contrary, relative poverty is perversely set to fall in the short-term because those in the middle are fairing so badly.

The coalition is actively increasing child poverty

Felicity Dennistoun

This post originally appeared on Left Foot Forward

As has been widely reported, new figures published today by the Institute for Fiscal Studies forecast that the number of children in poverty is set to rise.

Specifically, child poverty will rise continually during the first half of this decade and stay at approximately the same level until 2020, when there will be over three million children living in poverty in the UK. The figures about adults are similarly depressing; by 2015 6.6 million working age adults will be living in absolute poverty.

The coalition's woes with women

Gavin Kelly

This blog first appeared on the New Statesman.

If you want to see a fearful expression, talk to senior Coalition members about shifting patterns of support among women voters. Call it a cold-sweat, or a premature onset of mid-term jitters – they are distinctly, indisputably on edge. Which is odd, at least on the face of it, given that the Conservatives – if not their Coalition partners - are currently polling at broadly similar levels of support to the last election. So what explains this onset of nerves?

Taxing times for the coalition (contd...)

Gavin Kelly

This post originally appeared on the New Statesman blog

Just in case there was any risk of the coalition row on tax policy cooling down for a day or two, along comes a new report today, Tax and the Coalition, to fan the flames.

We do, of course, need to bear in mind that in this choppy pre-party conference period, there is bound to be a rash of publications appealing to the party faithful and burnishing the author's credentials in their eyes. Nonetheless, Lord Newby -- author of the report -- is a well connected Liberal Democrat peer and tax-expert, known to be close to Vince Cable. His report pulls no punches. The 50p rate must be preserved until fiscal consolidation is achieved; the Laffer-curve economics of those on the right calling for its abolition is dismissed; and a raft of tax raising measures are proposed that would hit the seriously affluent including a mansion tax on properties over £2m (served up with a swipe against Eric Pickles), an increase in capital gains tax, a land value tax, and further anti-avoidance initiatives.