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Monday, March 25, 2013


  In the recent budget George Osborne called for a tax rebate to parents to ameliorate the cost of child care. I did previously say in passing that i assumed 3/4s of childcare costs in the UK are state parasitism but this is perhaps the time to look more closely.

  Here is a list of childcare costs around the OECD countries, calibrated in terms of average wages which I think is a good comparison because, with little technology required, that really should be what makes up childcare costs.


Switzerland 77.7
UK  40.9
Ireland 45.2
USA 38.1
New Zealand 28.6
Canada 29.5
Japan 28.1
Australia 22.5
Slovenia 19.9
OECD, all 18.
Austria 16.8
Germany 14.1
Israel 18.3
Norway 10.8
France 16.5
Netherlands 13.2
Denmark 11.2
Korea  8.5
Finland 12.2
Czech Republic 10.6
Luxembourg 8.7
Iceland  7.9
Portugal 7.7
Poland 7.1
Spain 8.2
Belgium 5.8 
Sweden 7.1 
Hungary 6.2
Slovak Republic 7.4 
Estonia  6.6
Greece  4.9

  That is what I call a wide disparity. Note that Sweden, Belgium, Iceland, Luxembourg and Finland are all countries as wealthy as us or slightly more and all countries with good welfare systems so it is not credible that they are keeping costs down by allowing ill-treatement - even if the state were not to notice the parents would.

  Note also that all of least expensive 13 except Iceland are EU members so, for once, the EU regulatory regime cannot be to blame.   

   The basic rule here is that if something is being done abroad at a certain price it is possible to do it at that price and if it isn't being done here it must, other things being equal, be that our government is more restrictive than abroad's. This applies with costs of nuclear plants, housing, building projects, tunnelling. It must also apply yo childcare.

  The cost of the last 13 averages 7.7% of average income. With Britain at 40.9%, that must mean the level of state parasitism is 81% of the total cost.

  Obviously not only is this cruel to parents it produces a strong discouragement to the birth of children, particularly among the middle class, who are neither rich enough to afford it, nor poor enough to be due it for free. It is difficult to think of something more likely to, over generations, destroy our nation. And  keeping a significant proportion of parents out of the workforce has major economic effects. And there is the extra money Osborne is paying in government tax deductions to ameliorate the costs of government regulation.

  How to solve it:

  Rather than spend a lot of time fighting over each regulation and slowly hacking away at the bureaucracy, why not simply introduce a new class of child care. Say that anybody is allowed to set up as a "Childminder" (as o[pposed to Childcarer) so lang as all their advertising includes "not government regulated" and that such childminders are allowed to include any sort of liability waiver. I assume liability law is why the US costs are almost as high as Britain's. Any parents are free to choose. Current law on everybody includes the need for public liability insurance and that would remain and might well become the basis of free market, if not regulation, at least quality listings, just as France avoids most of our housing regulation by requiring builder's insurance on all new housing.

Note also that in Scotland, almost all regulatory powers are held by Holyrood. Thus this reform could be carried out here without any interfernece from either Westminster or Brussels. 

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