Childcare and subsidies for families, say CBI

10 November 2014

HAPPY FAMILY The government has to upgrade living standards for Britain's hard working families with £7bn of tax cuts and childcare subsidies, otherwise they will rescind the right to bang on about 'hard working families', according to the CBI.

The group reckon that some fairly radical ideas need to be dreamt up and implemented, as families and low-income workers are forever at the wrong end of the crap-stick, financially.

It is calling for changes to national insurance, an extension of free childcare and extended maternity pay as measures that would make an immediate difference.

In a new report called A Better Off Britain, John Cridland, the director general, said: “The financial crisis and the slow recovery have hit people’s finances hard. Living standards will gradually improve as the economy does. But growth on its own will not be the miracle cure.”

The CBI is also calling for a gradual increase in the threshold at which employees pay national insurance to £10,500 – bringing it line with the income tax personal allowance – over the next parliament.

It is estimated that this would bring in an extra £363 a year. While not staggering, it's better than nothing.

The CBI is also calling for an extension of the 15 hours a week of free childcare for three and four-year-olds to all one and two-year-olds, saving the average family with a one-year-old £3,430 a year. As well as recommending statutory maternity pay be extended from nine to 12 months, closing the gap between when maternity pay ends and financial assistance for childcare kicks in.

Cridland went on to say that despite the expense to the Treasury – about £7bn over the next parliament – the measures did not amount to the government abandoning its deficit reduction plans.

“Tackling the deficit is an absolute priority, but I don’t think it’s an either/or debate. We need to be more ambitious about the ways we tackle the deficit. Deficit reduction doesn’t have to be cut and slash.”

The average couple with two children saw their real income fall by £2,132 a year between 2009-10 and 2012-13 according to the CBI. Inflation has outpaced wage growth for much of the period since 2008.

He also hit out at large companies who refuse to pay the minimum wage: “The National Minimum Wage is about ability to pay. The Living Wage is what people need to earn. Should companies pay the Living Wage if they are able to? Yes. I would encourage them to. Can it ever be more than an encouragement? No.”

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