Latest Public Sector News

31.10.12

Commission calls for £1 an hour childcare

Britain is at an “equality crossroads” on issues such as low pay and childcare costs, the Commission on Living Standards has warned.

A new report by the commission states that “the balance of income growth now needs to shift away from rising state support towards increasing employment income”.

Proposals to increase this include helping women back into the workforce by offering an extra 10 hours of childcare a week at £1 an hour. The move could cost £2.2bn. Data shows that the UK is currently 15th on the OECD scale of females in employment.

Other recommendations are that the Low Pay Commission should suggest an ‘affordable’ wage that could be set without damaging jobs and students should be required to study English and maths to 18.

If current trends continue, the average working-age household in the middle of the income distribution range will have 3% less disposable income in 2020 than in 2008. For the bottom 10% of households, the projected decline is 15%.

The report states: “Historic circumstance, policy choice and global trends mean the UK has arrived at an economic model in which only a relatively small proportion of overall GDP growth trickles down to the bottom half of the population.

“UK wastes vast amounts of potential productive capacity because work too often simply does not pay.”

The authors argue that it is “untenable for the UK workforce to contain such a long tail of people without basic literacy and numeracy, leaving so many to languish in elementary service roles with little chance of progress on”.

Proposed funding for the recommendations include restricting tax relief on pension pots for the most affluent from £1.5m to £1m; means-testing of the free universal winter fuel allowance and TV licences for pensioners; and extending national insurance contributions to those working beyond state pension age.

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