Cutting benefits to improve childcare?
John Hutton, Secretary of State for Work and Pensions, has put forward suggestions for a shake up to the benefits system with the intention of persuading more lone parents to seek work earlier than they are currently.
Britain’s present system sees our nation with the lowest employment rate amongst lone parents in Europe, as well as the highest number of lone parents. I staunchly defend the premise that the latter point is not an issue in the sense that the state should not intervene in people’s lives to promote supposed ‘benefits’ of cohabitation over raising a child independently, however there is a definitely room for improvement on the former; single parents can receive Income Support without having to seek work until their youngest child is 16.
Lone parents have to attend one “work-focused” interview with employment advisors a year and could lose benefits if they fail to turn up, but they do not actually have to look for a job. When a single parent’s youngest child reaches the age of 16, they are moved on to Job Seeker’s Allowance and have to look for a job, but many have been out of the job market for so long that up to one third move straight on to incapacity benefit.
Part of the proposals aimed at reducing this benefit dependency and increasing work incentive would be to adopt a Denmark-like system where lone parents’ benefits are cut after only three years. The idea here is not quite so hard-line, with the suggestion of a cut down to twelve years.
One of the key complaints of the proposition is that many lone parents statistically come from more deprived backgrounds. Many lack the skills or knowledge with which to both integrate into the world of paid employment as well and financially supporting childcare, which can prove costly.
The cost of childcare is indeed a major issue in this debate. Critics are right to highlight the lack of support many needy parents are lacking in accessing and affording such important services. At present lone parents are on average contributing around 70 per cent of childcare costs privately, in comparison to other European nations such as Scandinavia where the average contribution is closer to 30 per cent.
Nevertheless, with these proposed reforms, help could be at hand. The Liberal Democrats are rightly quick to point out that the savings made from cutting benefits coupled with a potential boom in the economy resulting from more people in work could together contribute toward increasing governmental investments in childcare for the disadvantaged.
The fiscal calculations stand to be complex, but the savings likely large. Of the 7.3 million families with parents of working age in Britain, 1.9 million are lone parents –nearly a quarter. Figures from the Department for Work and Pensions show that nearly half of all lone parents are out of work. In total that has led to £3.9 billion of the £92.8bn spent on benefits last year, going toward income support for lone parents. £3.9 billion stands to support a lot of children.
It stands to reason that the policy review due around March will support many of the ideas set out by Hutton recently. Not just with requiring parents to seek work when their children reach secondary school age, but importantly improving training and help to seek this work as well as improving access to childcare.
Obviously policymakers must be careful not to force parents to enter work through legal and fiscal coercion as circumstances will clearly differ between households with some, such as those with disabled children, will have greater need for support than others.
Parents should definitely remain free to decide when it is suitable for them to enter back into employment, but the incentives should be there to allow them to do this earlier as well as structures in place to reduce benefit fraud and parental indolence. Or, as the Institute for Public Policy Research has stated, increasing conditions attached to benefits would harm children unless flexible and affordable childcare is available.
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