Tariffs and childcare changes are not the answer to the UK’s cost-of-living problem

Tariffs and childcare changes are not the answer to the UK’s cost-of-living problem

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Good morning. Today’s newsletter spans birth to retirement: I look at one mooted solution to the UK’s high childcare costs, and at the success of auto-enrolment pensions. Get in touch via the email address below.

Today’s Inside Politics is edited by Sarah Ebner. Follow Stephen on Twitter @stephenkb and please send gossip, thoughts and feedback to [email protected].

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Another fine creche you’ve gotten us into

The Cabinet met yesterday to discuss ways to tackle the cost-of-living crisis without chancellor Rishi Sunak spending any new money — something I am very sympathetic to, as someone who is trying to return to the trim figure I had as a 20-year-old while maintaining the same (non-) exercise regime I had at that distant time.

One result of that, as George Parker Jim Pickard and Nick Peterson reveal, is that the Cabinet is split over whether or not to unilaterally lower tariffs on food imports, including items such as rice and oranges, which are not produced in large quantities in Britain. Boris Johnson and Jacob Rees-Mogg are pro, while Anne-Marie Trevelyan, the international trade secretary, believes doing so will make it harder to strike trade deals in the future. Other proposals include switching from yearly MOT checks on cars and other vehicles to biennial ones, and reducing the permitted staff-to-child ratio in order to cut childcare costs.

The amount saved by households through halving the number of MOTs is obviously pretty small, though it’s worth noting that it would not be a particularly lax regime by international standards. What about childcare ratios? Although the last government study, back in 2013, found there was a correlation between a country’s child-to-carer ratios and its performance in the OECD’s Pisa rankings, it also showed that the UK was in the middle of the pack on both metrics. So, in theory, you could reduce costs by cutting ratios, without having a negative impact.

Graph showing staff to child ratios in Pisa countries

There’s an important “but” here, though: while the UK is middle-of-the-pack in terms of child-to-carer ratios, it is not middle-of-the-pack in terms of net childcare costs. The UK has the second-highest net costs in the OECD.

A chart showing the UK with the second highest net childcare costs in the OECD.

As you can see from the chart, successive UK governments have managed to increase the amount spent on subsidising childcare while not doing much for the extra cost. In fact, the central assumption of UK policy is that in the average two-parent household, someone will have to give up their job to make the sums add up.

This is a big problem for any number of reasons but it is not obvious that shifting childcare ratios from “the upper end of the European average” to “the midpoint of the European average” is going to move the dial in a positive direction on cost any more than it is going to move it in a negative one on quality. The government is going to need to keep looking for measures to actually tackle UK households’ cost-of-living problem.

Let’s do the time warp again

In her column this week, Sarah O’Connor wrote about a public policy success: the UK government’s adoption of auto-enrolment workplace pensions back in 2012.

Chart showing % of UK employees with workplace pension (by type of pension)

The policy is not perfect, and, in her column, Sarah describes some ways it could be improved (you should read that in full here). But Mark Pack, the Liberal Democrat party president, made a good point about how the policy came to be that is also worth thinking about: we would not have auto-enrolment pensions without Steve Webb, the Lib Dem MP who served as pensions minister in the coalition government.

Of course, claiming credit for everything good that happened in the 2010 to 2015 period is what you’d expect the Lib Dems to do. But unlike, say, the party trying to claim that it was responsible for legalising same-sex marriage, which is a really good way to annoy people who worked for David Cameron (who took quite a big political hit internally with the Conservative party by carrying it forward) or the Labour party (without whose votes it would not have made it to the statute book), most Conservatives will hold up their hands and acknowledge that without Webb, the pension policy would very probably not have happened.

Another policy success that Tory MPs will happily concede to the Lib Dems is the proliferation of wind farms in the UK: without Chris Huhne and Ed Davey, who held the energy brief at the time, there would have been much less money spent on renewables.

What connects both those policy achievements is that a) they wouldn’t have happened had the Lib Dems opted for a looser confidence-and-supply style arrangement with the Conservatives and b) they did not do the Lib Dems much good in the 2015 election, when they slumped from 57 seats to just eight.

As a result of b) it is probable that the next time there is a hung parliament, the Lib Dem rank-and-file will not agree to a second full coalition. That means the party would be likely to have fewer achievements to point to at the end of it — something Davey, now the party’s leader, is known to privately regret. If the Lib Dem leader had free rein over his party, you can bet that he would take his party into a full coalition if the opportunity arose again.

This matters because the 2010 to 2015 period was not just a period where the Lib Dems got some of their biggest policy priorities through, it was also a period of Conservative legislative and policy achievement that, thus far, neither Theresa May’s nor Johnson’s governments have matched.

Given the economic backdrop facing the Conservative government and the very large number of seats Labour would have to gain to govern alone, some kind of hung parliament is, I think, the “central scenario” after the next election. That the Lib Dems are not going to want to do a full coalition but would instead demand some kind of looser arrangement means we should assume that the next parliament will have fewer Lib Dem policy achievements, but also fewer legislative successes for whichever of the Conservatives or Labour ends up in office next time around.

Now try this

I don’t usually go for wartime dramas but as Operation Mincemeat had so many of my favourite actors in it — Simon Russell Beale! Jason Isaacs! Penelope Wilton! Colin Firth! That bloke from Succession! — I decided to give it a go.

Russell Beale’s Winston Churchill is mystifyingly bad, and I wouldn’t watch it a second time unless I were on a very, very, very long plane journey, but it was an enjoyable way to spend an evening. Still, as Danny Leigh’s review describes it as a superior example of the form, I am not, quite yet, going to revisit my general scepticism towards the genre as a whole.

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