Harriett Baldwin is the Member of Parliament for West Worcestershire and a member of the Work and Pensions Select Committee. Follow Harriett on Twitter.
Warren Buffett, the ‘Sage of Omaha’
and the world’s third richest man, knows a thing or two about economics and
wealth creation. He made his $44 billion fortune from scratch by
investing in companies for the long term.
On the BBC Radio 4 Today programme
between Christmas and New Year, he made some remarkable comments about women
and their untapped potential to help Western economies grow.
He told listeners:
"Women have been subjugated since time immemorial”. Speaking about his own
sisters, he noted they were: "Two human beings with enormous
potential and it was assumed they could be a nurse or a secretary or a flight
attendant. Or they could be a teacher – but not in upper education. What a
waste of human talent – 50 per cent of the population was pushed off into the
corner for two hundred years."
But he said he was now
upbeat. "I see how far we've come using only half the talent in the
country and now we're getting to the point that we are using 100pc. It makes me
optimistic but we still have a way to go".
Although the professions
Warren Buffett mentioned are vital and definitely not a waste of human talent,
he was spot on about the economic potential. My mother left her job the
day she married my father. Today, young women are getting often better results
than young men in our education system and moving into well paid jobs.
Women in their twenties now earn more than their male peers. [ONS 2010 Annual
Survey of Hours and Earnings] By equalising men and women’s retirement
age by 2018, we should begin to see an improvement in relative earning power
for older women too. Sharing parental leave should also help.
But around the age of thirty,
when women start families, we see a sharp drop in earnings and work participation
[ONS 2010 Annual Survey of Hours and Earnings].
The cost to the economy is
enormous. In the 2010/11 tax year, men paid £92 billion in income tax to
the Exchequer. The equivalent for women was £36.8 billion, a startling
£55 billion or 60% less. [Hansard: HC Deb, 30 January 2013, c796W]
So is it a childcare issue?
Many couples actively choose one partner to stay at home to raise a family –
often that is the mother – and this should be welcomed. But many parents, even
on professional incomes, find that the cost of childcare stops them being able
to continue to work. Their job progression suffers.
As a country, we are already
spending billions on childcare subsidies. Mothers get a year’s maternity
pay. Lower income parents can get up to 70 per cent of their childcare
paid, up to £300 a week for two children. Parents of three and four year
olds get 15 hours of free nursery provision. Lower income parents
will this year start receiving an entitlement to 15 hours for children from the
age of two. Some employers provide childcare vouchers which allow you to
spend about £1,000 on childcare out of pre-tax income. The total costs
the Exchequer £7 billion [DfE October 2010]
But this still leaves gaping
holes in provision, particularly for the reasonably well-paid professional
woman starting a family with a salary as high as £40,000 a year [IPPR Making
the case for Universal Childcare, December 2011]. For the sake of professional
career growth, female economic equality and economic growth, it must be worth
trying to think again about how we can better allocate taxpayer cash in this
Some will argue that the
subsidies should only help women in low wage work. I certainly think that
this subsidy is important, because of the extensive evidence that children who
grow up in a workless household are likely to suffer a lifetime of
poverty. But rather than focus this subsidy on just low wage parents,
let’s make it a universal full-time offer to all children aged between 1 and
rising 5 who choose not to be stay-at-home parents. Let’s make free
child care available just to those who will use it to work. And
let’s ask for a contribution for each child at a percentage of the parent’s net
earnings so that it’s a progressive scale.
By enabling more women to remain in
the workplace we will also gain the benefit of increasing the amount they
contribute to the Exchequer in income tax. There is a shortfall of £55 billion
a year of foregone revenue that can be found by helping more women into the
workplace. We working mothers won’t match men in our earning power immediately,
but in time removing this barrier to the full economic potential for women will
surely pay for itself.