Editorial: Tax breaks alone won't transform our childcare

Hardly anyone disputes that childcare in this country is appalling, a "disgrace", as Nick Clegg rightly called it last month. The cost is prohibitive at an average of £5,100 a year – only for part-time care of 25 hours a week, which is not enough for many working women's needs. The regulations governing the ratio of permitted children per minder are also too tight. The results are damaging and unsurprising. A quarter of all working women in the UK who get pregnant do not return to work, often because they can't afford to. Companies are deprived of skilled employees and forced to pay to train up replacements. The exodus of pregnant women acts as a disincentive to employers hiring younger women in the first place, and part-explains why women remain under-represented in the higher echelons of many companies. A number of reports argue that Britain's GDP would increase significantly if we could only keep these mothers at work.

Back in June, the Government promised to change this dismal state of affairs and look at best practice in those countries that retain the highest number of mothers in work, such as the Nordic countries, The Netherlands, and Austria. That would mean upping the number of hours of free childcare from today's limit of 15 a week for pre-schoolers over three, which is what the Liberal Democrats have argued for and what the Children's Minister, Liz Truss, a Tory, also seemed to support at one point.

Half a year on, fearful of the size of the bill that this might entail, the Chancellor, George Osborne, is lobbying for the cheaper approach of making childcare tax deductible, which is the approach that will carry the day when the Government publishes its review on the subject in January.

Clearly, Tory leaders see a political minefield in explaining away a potentially large boost to spending on childcare while trying to slash public spending overall. As they confront a growing challenge on the right from the UKIP insurgents, the last thing Tories want to be seen doing is currying favour with the Liberal Democrats on a key issue of public policy.

But, as the Resolution Foundation think tank points out, Mr Osborne's proposed tax breaks will disproportionately favour the better off over the poor. Those earning more will be in line for the biggest breaks. In other words, the changes will most favour those who have the least problems in affording childcare. Women at the bottom end of the pay scale who don't take home much to begin with – but who might be tempted back to work by more free childcare – will feel less of an incentive from the promise of a tax break.

There are other reforms that the Coalition could make, which won't cost much, or will save money, such as increasing the ratio of carers per child from the current limit of three to five, and easing the red tape involved in registering child minders, which is one factor behind the fall in the number of childminders. If carers could look after more children, they could afford to charge parents less.

But there is no point in tempting more people to work as childminders, and tinkering around with the cost, if it is still well out of the financial range of many ordinary families on lower incomes, forcing women who have worked back into a life of domesticity that is not of their choosing – which is different from women voluntarily giving up careers to concentrate on raising children. The Prime Minister, David Cameron, at one point made much of his progressive Conservative credentials. This is one field in which he could walk the walk. But it will mean him siding with Mr Clegg over Mr Osborne.