Research by the IPPR calculates that up to 500,000 more mothers could be working if childcare was more flexible and affordable.
The report argues that universal childcare should be provided through community institutions, such as children’s centres, rather than cash benefits or tax-free vouchers.
Its analysis shows that maternal employment rates for mothers, with their youngest child aged between three and five, are lower than the OECD average (58 per cent, compared to 64 per cent).
If this was to rise by 5 percentage points, an extra 150,000 more mothers could be in work.
Increasing the number of women in work by this proportion would generate £750m, split between savings of £450m in lower tax credit and benefit spend and £300m of extra revenue.
If the maternal employment rate matched women without dependent children, 570,000 more mothers could be in work.
The report also found that the UK has very high levels of mothers working part-time, earning around 22 per cent less per hour than women working full-time.
Its analysis showed that the pay gap is due to many women changing employers and occupation, as they usually move from full-time work to part-time, less skilled jobs.
The research, ‘ChildMind the gap: reforming childcare to support mothers into work’, also highlights the problems faced by mothers who work outside the typical working day, because free early education place funding does not cover care provided before 7am or after 6pm.
Dalia Ben-Galim, associate director at IPPR, said, ‘We know that 43 per cent of parents with children aged 3-4 who want to work or work longer hours find affordability of childcare a barrier, rising to half among parents with a youngest child between 0-2 years old. Universal childcare is the solution that will make Britain better off and help families deal with the squeeze on incomes and rising care needs as a result of the aging population that means both parents and grandparents are increasingly called upon to provide care rather than remain in employment.’
The IPPR said that the largest savings as a result of higher maternal employment comes from benefits savings - reduced spending on housing benefit and reduced spending on income support and contributory job-seekers allowance. The other economic benefits come from increased revenue through income tax and national insurance contributions. This amounts to a substantial return to the public purse when maternal employment increases.
The report also warns that the Government’s plans for Tax-Free Childcare may not lead to more affordable childcare.
‘Analysis shows that the scheme is skewed towards benefiting higher income families, and that childcare costs will probably continue to outpace the Government’s tax relief proposals in the coming years, ‘ Ms Ben-Galim added.
Liz Bayram, chief executive of the Professional Association of Childcare and Early Years, said, ‘IPPR have set out a compelling argument to build on the success of the current free entitlement which we know almost all families with young children use. PACEY welcomes this bold proposal so long as any extension is funded properly and embraces all forms of childcare – both in home and group settings – so parents can choose the childcare setting that best suits their family’s needs.
‘PACEY agrees that childcare should be channelled through community institutions, rather than cash benefits or tax free vouchers. But this doesn’t mean just children’s centres – flexibility is also needed in how other childcare settings are funded, for example a home-based childminding business, as well as for the particular type of care that setting provides.
‘Appropriate levels of funding are critical to ensuring registered childcare providers can invest in highly qualified staff and help to support their continuing professional development. It’s vital that families not only receive flexible, affordable childcare, but that children receive a high quality experience too.
‘Children’s centres, nurseries, childminders and schools all have a part to play in helping to raise standards and offer children and families the best quality of care possible.’
Anne Longfield, chief executive of 4Children, ‘While this report focuses on the childcare challenges of parents with very young children we should remember that there are also millions of working parents of school children who are also being held back by a lack of affordable childcare. ‘Office hours and the traditional offer of free education entitlement don’t run on the same timetable. A guarantee of wrap-around childcare would make a real difference for working families right across the country.
‘We now need to see political parties coming forward with ambitious plans which support all families while prioritising those in the greatest need. As a first step the chancellor should use his forthcoming budget to extend the pupil premium to the early years sector as a way of increasing investment to support childcare for those most in need.’