Tories may pay mothers to stay at home

Mothers who want to stay at home to care for their children instead of going out to work could be paid by the state under radical plans being drafted by the Tory party for the next general election.

In a bold attempt to outflank Labour on the issue of child care, the Conservatives are determined to provide parents with a choice over how to combine work and family life.

Under the plans, a "child home care allowance" would be paid to all parents of children under the age of three who decide not to place them with a nursery or childminder.

As well as adopting the care allowance idea, which has been in place in Finland for the past 14 years, the party will look at the idea of transferable tax allowances to help mothers currently penalised for not going back to work.

The Independent understands that the Finnish scheme, which pays mothers the equivalent of £150 a month for the first child and an extra £50 for further siblings, is very likely to act as a model for the Tory proposals.

A means-tested supplement of £100 is paid to the poorest, but the essence of the scheme is that its basic rate is universal, paid to all parents regardless of income. Other stay-at-home allowances and tax breaks are paid by France and Norway.

Several polls and surveys have shown that the overwhelming majority of women would prefer to look after their young children at home if they could afford it.

Patricia Hewitt, the Trade and Industry Secretary, admitted last year that the Government had failed to meet the needs of those parents who wanted to remain at home. Ms Hewitt's remarks came months after she had labelled those who do not return to the workplace as "a real problem".

Other leading Blairites, such as Stephen Byers, the former cabinet minister, have called for a huge increase in maternity pay to help mothers spend more time at home before going back to work. Child care, from free provision for the poorest to allowing for parents to have more flexible working schedules, is seen by many ministers as Labour's "big idea" for its third term.

The Tories have traditionally been weak on family-friendly policies, but under Michael Howard they are determined to offer at the next election a choice for parents that avoids the "family values" stereotype of the John Major government.

While Mr Howard's remarks on gay partnerships grabbed the headlines last week, his "British Dream" speech also gave the first public hint of the new approach to child care. Crucially, the Tory leader said that the current framework for providing child care had led to "a narrowing of options available to parents".

As well as a homecare allowance and tax changes, the party will look at schemes to subsidise parents who pay family members and private or charitable nurseries to look after their children.

David Willetts, the shadow Work and Pensions Secretary, and Caroline Spelman, the shadow minister for Women, are expected to announce detailed policies later this year.

In Finland, homecare allowances were introduced in response to concerns about the inequity of subsidising daycare but not maternal care. Take-up rates are very high and the scheme is popular.

In France the Allocation Parentale d'Education is a flat-rate, non means-tested allowance that mothers can use as a "homecare allowance", if they have stopped work to look after children, or use to help to pay for a childminder.

The Tories believe that the working families tax credit has offered powerful incentives for mothers to return to work which penalise those who stay at home.

For families in which one earner stays at home to care for children, or who use informal or family-based care for their children, a weekly sum of just £10 may be claimed. But for those families putting children into registered daycare, another £140 a week is available to offset the cost of that care.