WBG’s response to the Spring Statement 2023
Date Posted: Wednesday 15th March 2023
WBG: ‘investment announced today is an important first step in tackling the crisis in early education and childcare’
Responding to the announcements on childcare in the Spring Statement today, Dr Mary-Ann Stephenson said,
“The funding announced today is a really important first step in tackling the crisis in early education and childcare. We are delighted that the Chancellor has listened to the coalition of organisations we are proud to have been working with, including the FSB, Gingerbread, the Early Years Alliance, Save The Children and Pregnant Then Screwed, calling for urgent investment in the sector to rescue it from the cliff edge it’s teetering on. We welcome the fact that a ‘back to work’ budget recognises early education and childcare as vital social infrastructure that supports and educates future generations, supports parents – particularly mothers – to work – and boosts economic prosperity in a cost of living crisis.”
“However we are concerned about the challenges for delivering the expansion of provision announced today. We estimate that to fund the current hours at their true cost will cost an additional £1.82 billion, which includes the impact of inflation and paying at least the national living wage to early years workers.
“Any expansion has to come with a plan to recruit, train and pay early years workers properly. The early years workforce, predominantly women, are some of the worst paid people in the labour market, with 45% relying on benefits to supplement their income, leading to over a third leaving the sector within two years. We are also concerned about the ratio changes for 2-year-olds, particularly given the existing pressures on workers.”
“Restricting the eligibility criteria for the full 30 hours to working parents risks embedding inequalities for future generations. High quality provision is particularly important for children from disadvantaged backgrounds and in closing the attainment gap, yet years of under-funding has led to more providers closing in disadvantaged areas where it is harder to charge parents high fees to cross-subsidise ‘free’ hours.”
“The expansion announced today will help parents, but it is still far short of the full-time, year-round provision working parents need to juggle full-time work, including parents doing shift work and weekend working. Many families rely on informal care including their parents who are often ‘sandwich’ carers, and who make up a significant number of the economically inactive generation the Chancellor is aiming to entice back into formal work.”
“Beyond addressing the current crisis in the sector, in the medium to long term we need to see much greater investment in the early years. Investing 0.8% of GDP (£15.5bn in 2021-22 figures), would fund free universal provision year-round and on a full-time basis for children from age six months, paying at least minimum living wage and more for those with higher qualifications.”
“Working conditions in the sector are poor, compromising the quality of provision. The early education and childcare workforce (which is 98% female) is among the lowest paid in the labour market. Research conducted before the cost of living crisis found that one in eight workers in early education and childcare earns below £5 per hour with 45% relying on state benefits to supplement their income. Only 17% receive training and 37% leave their role within two years.”
“A low paid workforce also impacts on social security spending requiring low salaries to be topped up by working tax credits and other in-work benefits.”
“It should sound an alarm to the Chancellor that neither parents nor providers nor workers in the early years sector want the ratios to be relaxed. This risks reducing the quality of provision, which is so vital to young children and especially in closing the attainment gap In addition, the Early Years Alliance reported that only 2% of providers actually said it would help lower fees.”
Reforms to Universal Credit
“We have called on successive governments to address the failings in the Universal Credit system, so the announcement today on advance payments to help low-income parents with the costs of childcare and the increase to the amount they can claim is good news. Implemented properly could help unlock work opportunities for more than 300,000 eligible families.”
“We are concerned however that the Chancellor also announced stricter requirements on parents to seek work or increase their hours as a stick to the carrot of advance payments. A five year academic study of welfare conditionality published in 2018 found that not only were sanctions ineffective, they caused stress, anxiety and depression and pushed people into poverty and sometimes crime.”
“Social security is a safety net for people during hard times, such as the current cost of living crisis. Because of their unpaid caring responsibilities, women are more likely than men to rely on benefits and have been made poorer by the regressive changes to social security since 2010 with Black and minority ethnic women, disabled women and single mothers hit the hardest.”
“While we welcome the change to the childcare support element of Universal Credit, other elements such as local housing allowance levels have not kept pace with inflation. This means claimants have seen a real terms cut while homelessness has risen and child poverty is soaring.”
“The Chancellor’s promise to ramp up benefit sanctions in a bid to get people back to work is not only punitive and uncaring, it defies all the evidence about how effective sanctions have been, and risks having the opposite effect than intended. Several reports have shown the adverse impact on some claimants’ mental health, when it is ill health, both physical and mental, that is the biggest reason for working age people being out of work.”
“During the pandemic, the Government paused benefit conditionality, but a report by IPPR in April last year found that the use of sanctions had returned to pre-pandemic levels, despite the cost of living crisis that followed. The current system requires work coaches to exercise discretion in relation to vulnerable claimants, which several reports have found is not reliable.”
“Automating sanctions would remove the element of discretion and along with it the potential for compassionate and personalised responses. While we would like to see sanctions removed from the system entirely, any moves to automation should be thoroughly piloted and tested before implementation.”
Work capability assessments
“Work capability assessments have caused disabled people tremendous stress and anxiety. Along with disability charities, we therefore cautiously welcome the move to scrap them. However, assessments for Personal Independence Payments are equally flawed, with particular problems for people with mental health problems. Any move to a combined assessment for both work related and additional costs disability benefits should be developed in close consultation with disabled people and disabled people’s organisations.”
“Disabled single parents, most of whom are women, were the group worst hit by austerity measures between 2010 and 2021, losing 21% of their income through changes to taxes and benefits rising to 32% if they had a disabled child. “Disabled women are also particularly vulnerable to economic and financial control, and supporting their access to work and earning an independent income is important.”
“However, any further punitive measures brought in with support for disabled people – including those with mental ill health – are not only cruel but also risk having the opposite effect than intended as evidenced by the five year study of welfare conditionality.”
“The move to equalise energy bills for those on prepayment metres with households paying by direct debit is the right one. People on prepayment metres are some of the most vulnerable; Citizens Advice reported that nearly one in five households that ran out of credit on their prepayment metre last year included someone who was disabled or living with a long-term health condition.”
“Energy suppliers should be footing the costs of managing the metres instead of paying debt agents to break into people’s homes, rather than funding the costs out of public funds.”
“The continuation of the Energy Price Guarantee for three months is also welcome, given the ongoing pressures on household income. We also support the calls by the End Fuel Poverty Coalition to wipe household energy debts.
“Instead of incremental and partial support the Government should now be moving to permanent reforms to energy policy. The current energy crisis has surfaced the flaws in the system and in addition to long-term investment in clean energy supplies, the Government should work with suppliers to implement variable energy tariffs that include a basic energy allowance for everyone to eliminate energy poverty.”
“Meanwhile, excess profits of oil and gas companies should be taxed at 100% and current tax exemptions and reliefs abolished.”
“We commend the Chancellor for sticking to his promise of increasing Corporation Tax to 25% in this budget, despite pressures to scrap this measure. However this has to be set against the £9bn tax break for the biggest businesses announced today”
“Taxes are a necessary function of a healthy economy, and while we need a thriving private sector to invest in the UK, we also need a flourishing public sector for a healthy workforce – which Corporation Tax contributes to. We would call on the Chancellor to go further – returning the rate to 26%, the level it was at in 2011/12, would raise around £19bn a year.”
“The Chancellor reaffirmed the commitments he made to freezing income tax thresholds in the Autumn Statement. This is the least progressive way to increase taxation, as we said last autumn it would be better to increase the overall taxation rate, and also increase taxation on wealth.”
“The Government could increase revenues to the public purse and tackle gender inequality by introducing wealth taxes. Of those who in 2019-2020 received more than £100,000 in income from property, interest, dividend and others, 75% are men. At the same time, Tax Justice UK polling shows that almost three quarters of the public support a 2% annual tax on people with more than £10 million in personal wealth, which could raise £22bn a year.”
“The tax giveaway on pension savings announced in the budget will benefit those at the top end of the pension bracket (mainly men), losing valuable income that could support those at the bottom. Among 65–74-year-olds median private pension wealth is £182,400 for men and £25,000 for women (meaning these women have just one-seventh of the private pension wealth of men).
“The gender pension gap reflects the gender income gap over a lifetime for women, peppered with breaks in paid work, shift work, working fewer hours, and juggling several jobs to balance their caring responsibilities, and with some women opting out of auto enrolment schemes in tough times to use what would be pension savings to feed and clothe their children.”
“This results in higher rates of pensioner poverty for women, who are also likely to live longer than men and in poor health for longer. Figures published by Age UK in 2021 showed that one in five UK women pensioners were living in poverty, rising to one in three for Black and Asian UK women pensioners.”
Health and social care
“If the Government is serious about supporting all ages back to work or to work more hours, they should focus less on the stick of sanctions, and more on the carrot of investment in public services and pay increases for people working in them. Too many women in their 50’s and 60’s – the generations the Chancellor is keen to entice back into work – are balancing caring for relatives and grandchildren, while at the same time seeing their own health deteriorate. Over two million women aged 50-64 are economically inactive, more than half due to long-term sickness or looking after their home or family.
“Given that women are more likely to work in public services as well being the ones filling the gaps through unpaid care, it will take serious investment in our social infrastructure – health, education, and adult social care as well as early education and childcare to support these women into work that pays.”
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About the Women’s Budget Group
The Women’s Budget Group is an independent network of leading academic researchers, policy experts and campaigners working towards a gender equal economy. WBG hosts the Early Education and Childcare Coalition, a group of 30 organisations representing parents, children, providers, early years workers and the business community. Together they are campaigning for reform of the early education and childcare sector so that it delivers for all.
Notes to Editors
- The coalition of organisations representing the interests of parents, children, providers, the early years workforce and the wider business community includes the Federation of Small Businesses, Pregnant Then Screwed, Children England, Save the Children, Early Years Alliance, PACEY, Oxfam, Fawcett, London Early Years Foundation Gingerbread, and the Fatherhood Institute.
- WBG modelling for the policy we recommend:
In the immediate term we recommend a system of free, universal early education and childcare provision year-round and on a full-time basis, from the age of six months onwards. In the short term this would involve:
- 30 hours of free childcare
- High qualifications 45% staff with degree and 55% with Level 3
- Minimum pay at Real Living Wage for Level 3 workers and £13.18 for degree holders
The total annual spending required for England in 2021-22 prices: £15.5bn (0.8% of English GDP). An increase of around £10.4bn on current spending on free childcare hours and childcare tax credits.
In the longer term we recommend:
- Same requirements as recommendations for immediate term
- Higher wages (based on primary school teachers’ rates, for corresponding qualifications)
- 35 hours offered rather than 30 hours.
The total annual spending required: £25.8bn (1.4% English GDP). An increase of £20.7bn above current spending in England.