By Keith Aitken in Edinburgh | 4 April 2014
A report by the Scottish Parliament’s in-house research unit has cast serious doubt on the financial assumptions underpinning Alex Salmond’s promise of a ‘transformative’ expansion in childcare provision in an independent Scotland.
The plan, which featured prominently in the Scottish Government’s pro-independence white paper, Scotland’s Future, would give all pre-school children up to 1,140 hours of free childcare per year. The Scottish National Party has argued that costs would be substantially offset by increased tax revenues as more mothers returned to work, and by consequent growth in economic activity.
But the Scottish Parliament Information Centre (SPICe), asked by opposition MSPs to examine these assumptions, has identified a potential £1.2bn gap between costs and revenues. It argues that there are not enough potential returnees to pay the extra taxes needed to fund the expansion.
‘Scottish Government analysis suggests that, over the long term, increasing the labour market participation rate of women by six percentage points could increase economic output by £2.2bn and increase tax revenues by £700m,’ the SPICe report states.
‘The increased output and tax revenues suggested by this analysis rely on up to 104,000 women moving from economic inactivity into economic activity. At present, there are only 64,000 mothers of 1- to 5-year-olds who are economically inactive.’
Of those 64,000, SPICe says, only about 14,000 have indicated a wish to return to work. A further 15,000 unemployed mothers of pre-school children are already looking for work, but even adding these totals together falls short of the numbers required to generate the sort of exchequer returns needed to fund the policy.
Labour claimed the report showed a central tenet of the SNP’s agenda to be in tatters. Education spokesman Neil Bibby said: ‘No full costings, no economic analysis, no financial modelling and the fact that they’re at least 40,000 mothers short shows just how amateur and ridiculous the Scottish Government’s policy making has become. The SNP has misled Scottish parents.’
But the Scottish Government said that the report accepted that the policy would need to influence the future employment decisions of women beyond those currently looking after pre-school children. The policy, a spokesman said, was not a one-off event.
Meanwhile, a Bank of Scotland survey out today counters recent gloomy predictions of declining North Sea activity by reporting that the UK oil and gas sector expects to create nearly 40,000 jobs over the next two years, with the bulk based in Scotland. But, while almost 70% of executives surveyed expected employment growth, almost two in five were concerned about mounting skill shortages.
