The interaction of sky-high childcare costs and the rising cost of living in London is making the capital a more unequal and, ultimately, less prosperous city.
Four years ago, Centre for London explored why support for working couples and single parents in London was inadequate. What’s changed since then?
Although the city’s rates of maternal employment are relatively high inflated childcare costs, a complex benefits system, and expensive transport remain challenging.
There have been some positive changes. Many workplaces now provide more flexibility for working parents, and the language associated with childcare now recognises that not just mothers but fathers also have childcare responsibilities.
However, although the government has set up programmes like Family Hubs and Start for Life to make childcare more affordable and accessible, combining full-time work with caregiving is still impossible for many.
How childcare creates a poverty trap in London
The cost of childcare in London is disproportionately high – 25 hours of nursery care for under-2s is 50% more expensive in Inner London than in Yorkshire and Humberside, the highest price in the country.
Families with children are twice as likely to enter poverty as a result of rising fuel costs, while childcare costs have risen by £65 per month across the UK over the past year.
The benefits system should, in theory, provide a safety net and help to address these issues. However, Universal Credit forces parents to designate a ‘lead’ carer, in which one parent, often the mother, is discouraged from pursuing full-time employment.
The system also discourages parents who have been pushed out of work to re-enter the labour market. The “two-child limit” on child benefit deprives struggling parents, who are more likely to have a third child, of the necessary support to raise children.
Although this cap was originally introduced to encourage more parents to become more self-sufficient by joining the workforce, most capped households – especially mothers and single mothers – simply cannot enter the workforce without adequate childcare support. As of April 2019, 318,000 households equivalent to 1.1million children were impacted by the cap.
Such struggles faced by parents hurt children too. Household income is directly correlated to children’s educational attainment. Children eligible for Free School Meals still consistently achieve below others at GCSE level – a gap that affects them throughout their lifetime, as someone qualified with only GCSEs typically earns less than an average graduate.
Making London better for working parents
We urgently need an amendment to Universal Credit system, which traps both parents and children in poverty. And we need to lift the benefit cap associated with childcare and make both parents eligible for the ‘lead carer’ status.
In the current political climate, policies that involve increases in social spending may seem unrealistic. However, fiscal devolution to London – allowing the city to retain more of its tax revenue – could enable these changes.
Even reintroducing the equalisation grants system within London, which allows less affluent boroughs to receive additional funding from the GLA, could strengthen the existing benefits system.
Although this issue is multi-faceted and complex, it is essential to making London an equitable city.
Jimin Oh was a Research Assistant at Centre for London.