Thursday, 3 April 2014

Kindergarten Logic 4

In recent weeks I've written about the childcare proposals at the heart of the SNP's independence White Paper, pointing out various holes in the maths.

For instance, drew attention to a disclaimer buried in a Scottish Government paper analysing increased female participation in the workforce that showed the Scottish Government had based its calculations on wishful thinking.

Although, the White Paper seems to suggest that raising free nursery provision from 600 to 1140 hours a year would deliver a 6% rise in women in work to Swedish levels, raising £700m more in taxes, in fact the figures are just "illustrative". 

There's no evidence the specific childcare policy proposed would lead to a 6% rise in the workforce or generate the £700m pricetag of that policy.

Last month,  published a response to a freedom of information request showing the government hadn't even done any modelling on the impact of its own flagship policy. 

Today brings another development.

The Scottish Parliament's independent information centre (Spice) has just issued a paper on childcare covering the White Paper policy.

It's more subtle than this blog, but its conclusions are worse for the Government.

Not only does it say, like me, that the SNP haven't modelled their own policy, it shows there aren't enough economically inactive women with children in Scotland to hit that magic 6% target.

Reaching Swedish levels of participation implies an extra 104,000 women in work.

But in 2011, there were only 64,000 economically inactive women with dependent children under primary school age, of whom only 14,000 said they would like to work.

So Scotland seems at least 40,000 mums short of the number needed to pay for the policy.

That's not fatal - money can be taken from other areas to pay for childcare. 

But the government hasn't said who the losers would be.

The SNP could also argue that economically inactive women with no children or older children could take up new jobs as childcare workers to lift participation rates.

But you can see the numbers are looking tight.

Even if every single out-of-work mother in Scotland with children under 5 suddenly got a job, you'd still need two-thirds as many women again to decide upon - and qualify for - a career in childcare in order to make the policy self-funding. 

From the executive summary of the Spice analysis
In addition, the long term policy goal of childcare for all 1 to 5 year olds could cost £1.5bn - and that's before a single pound of capital costs to build new nurseries.

Spice is also unable to say how long it would be before extra taxes were generated to pay for this.

However, one clue in the Scottish Government literature suggests it could be more than 20 years.

"This may have implications for the funding of the policy, particularly over the short-term," it says with marked under-statement. 

The Scottish Government's work "does not provide a detailed assessment of the change in employment or wages or any indication of the composition of additional tax revenues," it adds.

For instance,  a rise in the labour supply could end up depressing wages, making it harder for women to enter the workforce.

As Spice says: "For example, given the increased supply of labour, the modelled results would be expected to show downward pressure on real average wages. This could have wider implications for the labour market and on incentives for women to enter the workforce." 

All in all, the "transformational change" touted in the White Paper is astonishingly evidence-lite.

1 comment:

  1. Great article.

    The other factor to factor in is that the SNP "policy" (use that word advisedly) assumes that all mothers (very sexist what about fathers) and children are spread in such a way that all can participate in an efficient and effective way in nursery provision. This is not the case and I would say that a conservative estimate might be a reduction in numbers being able to take up this offer in their area to be about 40% to 50%. This is also assuming that the capital provision of nurseries can be sourced as well as the upkeep costs of smaller venues.

    The other factor is that in addition to the costs of providing nurseries the local authorities and Educationscotland would need to increase their provision to oversee the nurseries and ensure that they were operating in the right way - this will be very expensive.