Saffron Walden Labour Party is calling on Uttlesford District Council to partner with a local credit union to introduce an affordable childcare loan for local parents so that they can return to work without ending up out of pocket.
Currently, parents who meet the qualifying rules may be able to get up to 85% of their childcare costs with a maximum of 85% of £760.42 per month for one child (£646.35) or £1,303.57 (£1,108.04) per month for two or more children.
In Saffron Walden Labour’s proposed childcare loan scheme, Uttlesford could act as reinsurers, protecting credit unions from the risk of loan default to maintain their involvement. The council could also contribute towards the administrative costs of running the scheme as well as act as intermediary between claimants and the lender.
Labour spokesperson Jane Berney said: “We want to incentivise work and support parents. Many women want to go back to work after having children but find local childcare too expensive. A low-cost loan with a long repayment period would help local working families. We believe this innovative, yet common-sense approach should receive cross-party support at UDC.
“The advantage of using credit unions as opposed to commercial insurers is that they emphasise best value for stakeholders, whereas commercial operations seek to maximise profits for shareholders and investors. A partnership between Uttlesford, a credit union and parents requiring childcare loans would emphasise meeting needs, as opposed to profit chasing.
“While non-performing loan rates are likely to be higher than the market average due to the insecurity of work and low incomes, such a scheme would pay for itself in the long-term by helping working parents to get back into work and raise their income levels. Ultimately, this would reduce the welfare costs and create a net benefit in terms of tax revenue.”
In Uttlesford, according to the childcare.co.uk website, average nursery costs are around £750 per month for children in full-time childcare, so the maximum that a Universal Credit claimant can receive in support is £637.50 for one child. This leaves parents needing to find £112.50 per month in costs, equating to over 14 hours work per month on the minimum wage. It amounts to an annual cost of £1,350, a cost that some low-income families would struggle to meet. Families with more than one child would be even worse off with a family with two children in childcare requiring an extra £392 per month, the equivalent of over £4,700 per annum.