UK Politics

Labour would increase bank levy to fund free childcare

  • 23 September 2013
  • From the section UK Politics
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Working parents of three and four-year-olds in England would get 25 hours of free childcare a week if Labour wins the next general election.

Shadow chancellor Ed Balls plans to raise the banking levy by £800m a year to fund the move.

Three and four-year-olds currently receive 15 hours of free care a week, but Mr Balls wants to increase this.

Meanwhile, he has asked the government's spending watchdog to review his party's economic plans.

Money would be provided for Wales, Scotland and Northern Ireland, but it would be up to the governments there to decide whether to spend it in the same way as England.

Extra 10 hours

The extra 10 hours of free childcare proposed by Mr Balls would be made available to households where all parents are in work - whether single parents or couples.

At the Labour Party conference the shadow chancellor claimed families had lost £1,500 a year in childcare support under the current government.

In other Labour conference developments:

Ahead of his speech to the party faithful Mr Balls told the BBC the policy would be "a huge change and really welcome for families getting out to work".

"That's a clear and costed commitment showing that even in tough times, when there's going to be less money around, we will make a difference," he added.

He said that "for the first time" parents would be able to work part-time "without having to worry about the cost of childcare".

"Childcare is a vital part of our economic infrastructure that, alongside family support and flexible working, should give parents the choice to stay at home with their children when they are very small and to balance work and family as they grow older.

"But for many families, high childcare costs mean that it doesn't even add up to go to work. So to make work pay for families, we must act."

Bank levy

In his speech in Brighton Mr Balls also claimed the government's banking levy had raised £1.6bn less than expected.

He said: "At a time when resources are tight and families are under pressure, that cannot be right. So I can announce today the next Labour government will increase the bank levy rate to raise an extra £800m a year."

In June 2010, Chancellor George Osborne announced that banks operating in the UK would be subject to a levy - an annual tax on their balance sheets - in a joint move between the UK, France and Germany.

The idea was to raise more than £8bn for the Treasury over four years, and Mr Osborne it was "fair and right" that banks should contribute to the economic recovery given that the financial crisis began in banking.

Labour's policy pledge comes shortly after the government announced that all pupils at infant schools in England will get free school lunches from next September.

Economic 'stunt'

Labour has already promised all parents of primary school children will be able to get "wraparound" childcare - meaning children can be left at school from 8am to 6pm - if it wins the 2015 election.

On Saturday, Ed Miliband said he would "legislate for a primary school guarantee that every school is an 8am to 6pm school", although party officials said schools could band together to offer the opening hours between them.

They said the scheme would be paid for from existing schools budgets, which Labour said had already been raised for the purpose by the last government.

Speaking on BBC Radio 4's Today programme, Mr Balls reiterated his pledge not to increase borrowing to fund day-to-day government spending.

But asked about so-called capital spending - on building and infrastructure projects - he said: "We won't make that decision until we see where we are on the economy in a year and a half's time."

In a separate move, Mr Balls said on Sunday that he had written to the Office for Budget Responsibility to ask it to review his pledges for the economy - although it would have to have its remit changed to be able to do so.

Andrew Tyrie, Conservative chairman of the Treasury Select Committee, said such a review could "improve the quality of public debate" but Treasury minister Sajid Javid called Labour's request a "stunt".

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