The Benefit System

Childcare subsidies

Childcare subsidies

The increasing cost of childcare has become a major issue in recent years, with one in eight having left a job and one in five having turned down a job due to the cost of childcare[1].

The government has announced a major increase in childcare support in the 2013 budget. Under new rules, the government will cover 20% of a families childcare bill up to a maximum of £1,200 per child[2]. The government argues that the plans are progressive as no support goes to parents earning above £150,000 a year and the new subsidies will support five times as many families (2.5 million) and will come at a net cost of £1 billion[3].

               The Institute of Economic Affairs have criticised the childcare subsidies for trying to solve a supply-side issue with demand-side solutions. In plain English: they argue that the government should look to reasons why childcare costs so much (such as regulation) instead of higher subsidies[4][5]. It should be noted that the government has been working on supply-side reform as well as greater subsidies[6], though opponents claim that deregulation will damage quality[7], accusations the government reject[8].

  • Are subsidies the correct policy?
  • Are they adequate?

By Will Archdeacon

Quoted links









Conservative Party statement

Liberal Democrat Party statement

Other links for further reading

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