Note to Keir Starmer: delaying investment in childcare would be bad economics – and bad politics

First published in the Guardian on 2 August 2023

As politicians strategise before what are likely to be the final party conferences before the general election, parents are turning their hands to magic tricks not just to entertain their children, but to juggle the costs and availability of childcare.

Labour should be paying attention, because it too often falls to mothers (and grandmothers) to pick up the slack where childcare support falls through, affecting women’s work prospects and in the process making a large dent in the potential productivity of UK plc. At the same time, it is women’s votes (women make up the majority of “floating” and total voters) that Labour needs to win for the victory sought by Keir Starmer and his team.

Telling women to wait until the economy has improved before investment in public services is possible not only risks their votes, it is also bad economics. Analysis by the Women’s Budget Group and the Centre for Local Economic Strategies found that barriers to paid work for women in Great Britain cost £88.7bn  gross value added a year.

Unleashing women’s untapped contribution could hold the key to boosting the economy and clinching women’s votes.

It is not only the impact of women taking time out to provide unpaid care for children and adult relatives that contributes to these economic costs, but also the impact on their productivity when they cannot work at their full skill and qualification level. The Office for Budget Responsibility estimates that the plans to expand free childcare for working families, announced by the government in March 2023, could become the most important policy to boost overall employment.

Unpaid care and domestic work, primarily undertaken by women, are the invisible pillars supporting our society. According to the latest Office for National Statistics (ONS) Time Use survey, women carry out an average of an hour more unpaid care and domestic work a day than men, adding up to 10 working weeks a year more. These activities, though not assigned market value, are vital for the functioning of the economy and the overall wellbeing of individuals.

Traditional economics misses out the value and impact of this unpaid care and domestic work, and so economic models are built and run on incomplete data. This leads to policies that have concrete effects on both paid and unpaid labour, but which rarely show up in forecast GDP. These effects include, for example, the rise in levels of economic inactivity including among older women: 2 million women aged 50 to 64 were categorised as “economically inactive” by the ONS last year, over half of whom were out of the labour market due to long-term sickness or because they were looking after their home or family.

When we do not spend enough on social infrastructure like health and adult social care, it doesn’t just reduce a number in a budget spreadsheet. The need is still there and partners, relatives and friends do their best to meet that need, even if it means reducing their own hours of paid work to do so, which is likely to affect their own health and wellbeing.

By expanding early-years education, childcare and social care, on the other hand, we can generate jobs, especially for women, and enable them to participate more fully in the labour market.

The role of fiscal policy – the government’s approach to taxation and allocation of public money – is crucial in achieving these gains for women, for wider society, and for the economy. But a succession of rigid and arbitrary fiscal rules have been a roadblock to the current government and opposition’s investment plans. There have been six sets of fiscal rules in the last nine years, created and then changed by chancellors when they seemed likely to miss their targets – undermining any claim that their purpose is accountability.

The main problem with the government’s – and opposition’s – fiscal rules however, is that having fiscal consolidation (a falling debt-to-GDP ratio) as a goal is not the best approach for the economy or people. During economic downturns, as we are experiencing now, borrowing to invest in critical sectors is necessary to support people, workers and businesses, and to boost the economy. An arbitrary and rigid debt-to-GDP ratio or deficit cap is not good economic policy.

Any future government committed to boosting the UK’s economy should be planning on investing in social infrastructure and recognising the value of unpaid care and domestic labour. This can and will lead to better policies and outcomes. Labour needs a vision that appeals to everyone and in which women can see themselves. Unleashing women’s untapped contribution could hold the key to boosting the economy and clinching women’s votes.