Free childcare! The New Labour election ploy …

Working parents of three and four-year-olds in England would get 25 hours of free childcare a week if Labour wins the next general election. Shadow chancellor Ed Balls plans to raise the banking levy by £800m a year to fund the move.

Three and four-year-olds currently receive 15 hours of free care a week, but Mr Balls wants to increase this.

Meanwhile, he has asked the government’s spending watchdog to review his party’s economic plans. Money would be provided for Wales, Scotland and Northern Ireland, but it would be up to the governments there to decide whether to spend it in the same way as England.

The extra 10 hours of free childcare proposed by Mr Balls would be made available to households where all parents are in work – whether single parents or couples. At the Labour Party conference the shadow chancellor claimed families had lost £1,500 a year in childcare support under the current government.

In other Labour conference developments:

Mr Balls cast doubt on a future Labour government’s backing for the high speed 2 rail project, asking if it was the best way to spend £50bn

Shadow Foreign Secretary Douglas Alexander said the coalition had “weakened” the UK’s international standing

Shadow Defence Secretary Jim Murphy said Labour wants to make attacking a member of the armed forces a “specific criminal offence”

Mr Miliband announced plans to make large companies train a new apprentice for each skilled worker they hire from outside the EU

Shadow education secretary Stephen Twigg said Labour will overturn any decision to scrap AS levels

Shadow work and pensions secretary Liam Byrne urged the government to sack Atos – the firm which carries out “fitness for work tests” on disabled people – over its “disgraceful” performance and failure to meet people’s needs

Shadow environment secretary Mary Creagh says Labour would force water companies to offer lower prices to poorer families

Ahead of his speech to the party faithful Mr Balls told the BBC the policy would be “a huge change and really welcome for families getting out to work”. “That’s a clear and costed commitment showing that even in tough times, when there’s going to be less money around, we will make a difference,” he added.

He said that “for the first time” parents would be able to work part-time “without having to worry about the cost of childcare”. “Childcare is a vital part of our economic infrastructure that, alongside family support and flexible working, should give parents the choice to stay at home with their children when they are very small and to balance work and family as they grow older. But for many families, high childcare costs mean that it doesn’t even add up to go to work. So to make work pay for families, we must act.”

In his speech in Brighton Mr Balls also claimed the government’s banking levy had raised £1.6bn less than expected.

He said: “At a time when resources are tight and families are under pressure, that cannot be right. So I can announce today the next Labour government will increase the bank levy rate to raise an extra £800m a year.”

In June 2010, Chancellor George Osborne announced that banks operating in the UK would be subject to a levy – an annual tax on their balance sheets – in a joint move between the UK, France and Germany. The idea was to raise more than £8bn for the Treasury over four years, and Mr Osborne it was “fair and right” that banks should contribute to the economic recovery given that the financial crisis began in banking.

Labour’s policy pledge comes shortly after the government announced that all pupils at infant schools in England will get free school lunches from next September.

Labour has already promised all parents of primary school children will be able to get “wraparound” childcare – meaning children can be left at school from 8am to 6pm – if it wins the 2015 election.

On Saturday, Ed Miliband said he would “legislate for a primary school guarantee that every school is an 8am to 6pm school”, although party officials said schools could band together to offer the opening hours between them. They said the scheme would be paid for from existing schools budgets, which Labour said had already been raised for the purpose by the last government.

Speaking on BBC Radio 4’s Today programme, Mr Balls reiterated his pledge not to increase borrowing to fund day-to-day government spending. But asked about so-called capital spending – on building and infrastructure projects – he said: “We won’t make that decision until we see where we are on the economy in a year and a half’s time.”

In a separate move, Mr Balls said on Sunday that he had written to the Office for Budget Responsibility to ask it to review his pledges for the economy – although it would have to have its remit changed to be able to do so. Andrew Tyrie, Conservative chairman of the Treasury Select Committee, said such a review could “improve the quality of public debate” but Treasury minister Sajid Javid called Labour’s request a “stunt”.

As you can probably imagine, an election is on it’s way, hence big pledges are rife, particularly as it’s Labour Conference time. I actually quite like the idea of an increase in free childcare, particularly as the huge costs of childcare is hitting a lot of families very hard at this present time. I also like the idea of legislating so schools become ‘8am to 6pm schools’ as described by Mr Miliband. My concern is the labour required to take it on. With more hours means more hours of work for staff, meaning more wages, which will then lead to a decrease in budget available for other areas of the school’s needs. All this isn’t to mention the equipment needed for activities to do in those extra hours. I would love to know if wages will be on the rise as well under a Labour government because of the increased pressure on costs of living under this current government.

There is one other question we need to answer: Is this childcare really free? The answer to this is very simple, most probably not. The first rule of thumb of any offer of free childcare in England is that it is seldom totally gratis at the point of use – despite protestations to the contrary. Unless you are lucky enough to live close to a state-maintained nursery, attached to a school or children’s centre, you are more than likely going to be asked to pay an unofficial top-up fee.

A straight extra hourly fee is not strictly legal, as nurseries are not allowed to charge parents who take up the free entitlement any extra for doing so. But, as with many cases in the legal system, there are loopholes for nurseries to get around this. The most common technique is requiring parents to take more than the set number of free hours, and charging a set fee for the extra time. This extra time can be as little as 15 minutes on top of a three-hour session. One nursery in south-west London requires parents of three- and four-year-olds to pay £28 per three-and-a-half hour morning or afternoon session. So that’s £28 for the extra half an hour’s care each day. At five mornings a week that’s a weekly total of £140. There are also registration fees and one-off administration charges. It all seems a bit unfair, until you realise that the average value of the hourly Nursery Education Grant is only about £3.75 an hour. That’s less than the minimum wage for Pete’s sake, in fact it’s just over half the minimum wage. It’s because of this that nurseries in the independent and voluntary sectors are being put in the position where they need to subsidise a little bit to parents to make up the difference in costs.

This would always be the problem with free entitlements. Chief executive of the National Day Nurseries Association Purnima Tanuku points out that since the “free” entitlement for three- and four-year-olds was introduced in the mid-2000s, the hourly average has not increased. “It was inadequate when it came in and it was not even linked to inflation,” she says, adding: “We are still fighting these battles even now. This has been the biggest problem with the free entitlement, and the more hours they then extend it to, the more difficult it will be to provide.”

She adds: “While parents will welcome the extra help with childcare it is vitally important the funding for these extended hours is thought through properly. Childcare providers are already working with a system which is not fit for purpose and leaves the majority making a loss of £700 per child, per year on funded places for three- and four-year-olds. It is these inherent problems which are pushing down pay for childcare workers and making the sector unsustainable for childcare providers.”

It would seem to me the childcare issue will always be a theory vs practice battle, and we’ve seen many of those in the past haven’t we?

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