Childcare costs force mothers in the capital to leave work

A new paper by the assembly’s economy committee, ‘Parental employment in London’, has warned that London is missing out on skills because parents, particularly mothers, are being forced into lower-paid, less secure part-time jobs or out of work altogether in a bid to reduce childcare costs.

Parental employment is lower in London than the rest of the UK, particularly for mothers in a couple, of whom 63 per cent are in employment in the capital compared to 73 per cent across the rest of the country, the study said.

According to statistics published by the assembly, London families spend a higher proportion of their income on childcare and travel than the rest of the UK, with some paying more than £20,000 a year for 50 hours of childcare weekly for a child under two. Holiday and after-school care costs in the capital are said to have risen by more than nine per cent in 2012.

The committee has suggested that pressure to meet childcare needs is perpetuating social imbalance, with men remaining in full-time employment while women either choose part-time jobs which do not make use of their skills or drop out of the labour market altogether. Twenty-one per cent of mothers said they would have been the main breadwinner in their family if they had remained in work, according to the paper.

Stephen Knight, chair of the economy committee, said, ‘London’s economy is vital to the UK and offers a wealth of opportunities for many people, especially those starting out in their careers. Yet for parents ­ many of whom have years of experience and substantial expertise to offer ­ it is just not working.

‘We need the mayor, borough councils and the Government to look at the barriers which are stopping parents who want to work from finding jobs that fit their needs, and help to overcome them. London’s parents have so much to offer and giving them a greater choice about when and how to work will be good for families and our economy as a whole.’

The paper highlights the danger of part-time work for parents in the light of the new universal credit. It suggests that some families that are eligible for universal credit may be excluded from the 15 per cent extra childcare support offered by the scheme if they do not earn enough to pay income tax, usually because one or both parents is in low-paid, part-time work.

The economy committee also expressed concern at reports that approximately 40 London nurseries closed in the past year.

'Fund nurseries directly'

Professor Helen Penn, co-director of the International Centre for the Study of the Mixed Economy of Childcare at the University of London and guest at the committee’s meeting in October on childcare and parental employment, suggested the Government should fundamentally review how it funds childcare.

She said, ‘Our system of funding of nurseries is very ineffective. It is a subsidy system which goes by the parents. They are offered so-called “choice” but there is not really that much choice when you look at the incomes. It is a very inefficient way of funding nurseries and most countries, even where there is a substantial private market, fund nurseries directly and so I think it would be very interesting to look more carefully at some of the direct funding system for nurseries’.

The report has recommended that the Government establishes a review into how it funds childcare, devolves more control over employment support and skills funding to London and its boroughs, and extends the proposed additional childcare support to all working families on universal credit, regardless of whether they earn enough to pay income tax.