Speaking at the party’s annual conference today, shadow chancellor Ed Balls announced plans to give working parents of three and four year olds 25 hours free childcare a week if Labour wins the next general election.
The additional hours available to households where all adults are in work, including single parent and couple households, would be funded through an increase in the bank levy.
Households not eligible for the 25 hours of free childcare would still be entitled to the 15 hours.
Mr Balls said that the additional hours would help families struggling with the cost of ‘living crisis’ and mean parents who want to work part-time would be able to do so without having to worry abut the cost of childcare.
He added, ‘Childcare is a vital part of our economic infrastructure that, alongside family support and flexible working, should give parents the choice to stay at home with their children when they are very small and to balance work and family as they grow older.
‘But for many families high child care costs mean that it doesn’t even add up to go to work. So to make work pay for families, we must act.
‘It is right that the banks make a greater contribution. I can announce today the next Labour Government will increase the bank levy rate to raise an extra £800 million a year.’
In June 2010, Chancellor George Osborne announced that banks operating in the UK would be subject to a levy, an annual tax on their balance sheets to help contribute to the economic recovery, given that the financial crisis began in banking.
Mr Balls' announcement follows plans set out by Labour’s shadow secretary of state for education Stephen Twigg at the weekend to guarantee childcare for all primary school children from 8am to 6pm.
Purnima Tanuku, chief executive of the National Day Nurseries Association, said, ‘While parents will welcome the extra help with childcare it is vitally important the funding for these extended hours is thought through properly and we look forward to hearing more details.
‘Childcare providers are already working with a system which is not fit for purpose and leaves the majority making a loss of £700 per child per year on funded places for three and four-year-olds.
‘It is these inherent problems which are pushing down pay for childcare workers and making the sector unsustainable for childcare providers. The only way forward is for enough funding to go to the front line, paid directly to childcare providers.
‘Extending the hours for three and four-year-olds also raises the question of the funding for under threes which is currently being rolled out. How this will be viable when childcare is more expensive and there is less support available?’
She added, ‘If any party is serious about providing good quality care the first thing it must do is look at the amount of funding invested in childcare and how much needs to reach the provider to cover the cost of the place.
‘It is only through proper support we will be able to pay the wages dedicated childcare workers deserve and develop the professional, highly-qualified workforce our children deserve.’
Neil Leitch, chief executive of the Pre-School Learning Alliance agreed that the 25 hours of free childcare needs to be 'adequately' funded.
He said, 'At the moment the Government’s subsidies for the 15 hours a week of the free early years entitlement do not fully cover the costs of providing these childcare places for three and four year olds and it is left to providers and parents to make up the shortfall.
'Should the number of hours increase by 40 per cent to 25 hours a week, this must not be costed at or near the current underfunded rate of around £3.79 per hour. To do so will further marginalise childcare providers across the country and exacerbate problems around childcare sustainability, which is currently a major issue in the sector.
Liz Bayram, chief executive of the Professional Association for Childcare and Early Years (PACEY), said, 'If Labour is elected, effective planning and funding will be key to ensuring the success of this policy. This will not only depend on the sector's ability to rapidly increase capacity but also to ensure that all new and existing childcare professionals receive the support they need to deliver quality of care.'
Ryan Shorthouse, researcher at the Social Market Foundation, said, ‘Labour’s plans have limited reach and their reliance on public funding will only lead to baby steps being made towards providing a universal childcare offer.
‘The Social Market Foundation’s childcare loan would be a much quicker and more responsible way of providing childcare for all.’
Alison Garnham, chief Executive of the Child Poverty Action Group, welcomed the news.
She said, 'All the main parties have given increasing recognition in recent years to the importance of investing in childcare, both the quantity of hours that allows parents to access work, and the quality of care that helps child development. This is a crucial step towards the universal childcare provision we need and it holds the promise of the much improved outcomes for children and parents seen already in countries with the best provision, such as the Nordic countries.'
Commenting on the proposals for before and after-school childcare, Anne Longfield, chief executive of 4Children said, ‘A cast iron guarantee to parents that their children will be well looked after from 8am until 6pm is precisely the kind of bold, relevant policy that 4Children has been campaigning for across all political parties.
'While the childcare challenges of parents with very young children have rightly rocketed to the top of the political agenda, relatively little attention has been paid to the vast array of difficulties that before and after school childcare throws up for working parents. Office hours and school days just don’t match and a guarantee of wrap around childcare would make an immeasurable difference for all those families who find themselves juggling up to three or four forms of childcare in order to work a standard 9-5 day as well as the increasing number of families who work shifts.
‘The detail will be important. Schools will need to work with local childcare providers and make sure that extended hours go beyond formal lessons and homework. Parents will also need help with childcare costs, especially those on low incomes. However, this is an exciting development for parents who will look forward to hearing more.’