The London Development Agency (LDA) claims that improving childcare is critical to the success of the capitals businesses.

Th LDA has warned that failure to meet childcare needs will seriously affect business competition and is delivering Mayor Ken Livingstone’s London Childcare Strategy, designed to tackle child poverty and social exclusion.

In order to meet the need for 30,000 new childcare workers by 2006, the LDA is investing £4 million into the East London Childcare Institute, based in Stratford, with extra funding helping to create local neighbourhood nurseries.

Livingstone said, “One way to address this problem is by working with employers as partners.

“The London Childcare Strategy highlights the importance of businesses supporting their employees through providing information and guidance on government support available, reviewing their policies to move towards family friendly working practices and supporting the childcare needs of employees.”

The government is also introducing tax and National Insurance exemptions on childcare vouchers and employer-contracted childcare to provide help for female staff.

Concern by the LDA comes as the issue of childcare hits the headlines. Under radical proposals by the Tory party, new mothers would be paid £150 a week for up to a years maternity leave, while Labour hit back with plans to encourage more ‘after-school’ care.

Stephen Burke, Director of the Daycare Trust, said: “Good employers know that flexible working and family friendly policies are cost-effective. They improve recruitment and retention, lowering costs and reducing turnover, as well as widening the pool of candidates available for recruitment.”