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Report reveals tax blow to SNP’s childcare policy

There are not enough mothers who want to return to work to deliver the tax revenues needed to fund the SNP's childcare policy, according to official figures. Picture: Phil Wilkinson

There are not enough mothers who want to return to work to deliver the tax revenues needed to fund the SNP's childcare policy, according to official figures. Picture: Phil Wilkinson

  • by TOM PETERKIN
 

SCOTTISH INDEPENDENCE: Alex Salmond’s flagship childcare policy has been dealt a major blow after official figures revealed a massive shortfall in the tax revenues he forecast it would bring.

The Scottish Parliament Information Centre (SPICe) has said there are not enough Scottish mothers who want to go back to work to deliver the dramatic increase in revenue predicted in the Scottish Government’s white paper for independence.

Generating a childcare revolution that would increase tax revenues by getting more mothers back to work was the key announcement when the blueprint for independence was launched last year. Mr Salmond argued that independence was the only way of achieving his vision for a “transformative” expansion of childcare.

Since then, MSPs across the parties have contacted SPICe asking for an analysis of the calculations made by the government to cost the policy, which ultimately aims to provide 1,140 hours of free childcare a year to all pre-school children by the end of the second parliament after independence, which would be 2024.

In response to those demands, SPICe, which acts independently from ministers or political parties, produced a paper, published yesterday, scrutinising the Scottish Government’s figures. SPICe’s analysis found that implementing the policy in full would cost an independent Scottish Government an additional £1.2 billion – a figure that was not included in the white paper.

The briefing also looked at government claims that the policy would increase economic output by £2.2bn and result in an extra £700 million in tax revenues.

The Scottish Government’s output and tax predictions were based on increasing the female work participation rate by six per cent – a figure that was in turn based on the assumption that Scotland would raise female employment rates in the same way that Sweden has. SPICe calculated that achieving a six per cent female participation rate would require 104,000 women becoming economically active.

According to SPICe, Scotland only has 64,000 mothers of one to five-year-olds who are economically inactive. Of those, only 14,000 have said they would like to go back to work.

Even when 15,000 unemployed mothers of one to five-year-olds already seeking work were added to the equation, there was still a substantial shortfall in the number of mothers who would be required.

The SPICe paper said: “The increased output and tax revenues rely on up to 104,000 women moving from economic inactivity into economic activity. At present, there are only 64,000 mothers of one to five-year-olds who are economically inactive.”

Labour claimed the SPICe paper showed the SNP’s childcare proposals were “shambolic” and had misled parents.

A Scottish Government spokesman pointed to an extract from the SPICe document, which said that the policy would “need” to influence the labour market decisions of a larger group of women, including those without children, those with children under one or over five, and women who have yet to have children.

The spokesman said: “The key point about the policy is that it doesn’t happen on one day or one year and then cease.

“The estimate of 104,000 women is not for a single moment in time. Women continue to have babies and drop out of the labour market. The problem is too many then don’t come back in.”

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