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Childcare policy sums are just not adding up

IT'S hard to overstate the importance of the SNP's pledge to provide free, full-time childcare for all youngsters aged from one until they start school.

The pledge is at the very heart of the party's referendum campaign. From a political point of view it is seen as a key "offer" to win the support of women voters who, polls show, are significantly less likely to vote Yes in September. But the policy has a much bigger place in the SNP's economic vision for an independent Scotland. As the Institute for Fiscal Studies (IFS) think tank has shown, Scotland's finances will come under greater pressure than the UK's in the coming decade as a result of declining North Sea Revenues and a faster-ageing population. So just to stand still (never mind provide an improved benefits system, more generous pensions and better public services, as promised in the White Paper), the SNP must have a convincing package of measures to grow the economy once it is unshackled from the Westminster decision-making that, Mr Salmond insists, is holding it back. The childcare pledge, along with proposals to increase immigration and attract investment with a 3p cut in corporation tax, is a vital part of that package.

A report this week raised serious questions about its chances of success. In a detailed assessment, Holyrood's politically neutral research unit SPICe (the jazzy acronym for the Scottish Parliament Information Centre) suggested the cost to the taxpayer would be higher than expected and the impact on jobs considerably smaller. It reignited a row that has been rumbling quietly since the publication of the independence White Paper last November and, since it's only going to get louder, it's worth having a closer look at the numbers.

The proposal is to provide children from the age of one with 1140 hours per year of nursery care (the same time youngsters spend in primary school) by 2024. The policy would be phased in. It would be extended to all three- and four-year-olds by 2020 at a cost of £700 million. Ministers have never put a cost on the full policy but they have hinted it would pay for itself by allowing tens of thousands of women to take jobs, boosting the economy and generating extra tax revenues. It could only be delivered under independence, Mr Salmond insists, because under the present arrangement the extra tax would "disappear into the maw of the Treasury", as he put it. A month after the White Paper came out, the Scottish Government produced a new economic analysis of the policy. It again failed to estimate the cost but it did consider the "potential effects" on the economy.

If, the analysis said, it increased the number of women in the labour market to the same level as Sweden, equivalent to a 6% rise or 104,000 extra workers, the economic boost would increase the government's tax take by £700m. That "if" turned out to be a big if. It emerged subsequently that the Scottish Government had done no modelling to assess whether the policy would, in fact, draw 104,000 women into work.

The SPICe paper attempted to fill some of the holes. It put the cost at £1.2 billion and pointed out there are only 64,000 women in Scotland with children under the age of five who were economically inactive as a result of looking after their kids. In response, the Scottish Government insisted that getting mums back into work would happen "over successive years" but a spokesman for the First Minister admitted on Thursday there were no official estimates.

Faced with a potential £1bn-per-year scheme and no readily apparent way of paying for it, ministers have been accused of taking an extraordinarily slapdash approach to policy making. And that's putting it mildly. "Amateur, ridiculous and shoddy," was the astonished reaction of Labour MSP Neil Bibby to the SPICe report. But before the SNP's plan becomes another political football it's worth remembering the IFS's take on free childcare which, in more limited schemes at least, is backed enthusiastically by both Labour and the Coalition Government at Westminster. The evidence that any expansion of free childcare would boost the labour supply, the think tank's director Paul Johnson told a Holyrood seminar last month, is "remarkably poor".

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