CBI back free childcare – and why that makes more sense than tax breaks.

Today the CBI called on the Government to make childcare available for all children over one. Notice that they call for an investment in a supply side subsidy. This is interesting because as a free market organisation one might expect them to favour a demand side subsidy, like the Coalitions proposal for a tax break. Allowing consumers to use their purchasing power and chose the childcare they want.

But instead the CBI have called for an investment in supply. `John Cridland, Director General of the CBI said “To ease the pressure on families and people on low incomes, we want immediate action, including cutting employee National Insurance and making childcare more affordable.” They understand that the cost of childcare makes it difficult for women to work. They realise that it is a better use of money to improve the quality and availability of childcare for all.

Tax breaks only benefit those who pay tax. And as the tax threshold is raised, more of the poorest workers don’t pay tax so they don’t benefit from tax breaks. Therefore any effective investment needs to go into delivering childcare that is more affordable.

Read more about this from the BBC here

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