Childcare plan 'up for consultation'

Nursery classThe UK has some of the highest childcare costs in the world

Plans to introduce a childcare voucher system are expected to be put out to a 12-week consultation on Monday.

Under the scheme, families with two working parents earning less than £150,000 each would be able to claim back up to £1,200 a year per child.

The government has said the scheme, which was first announced in March, will benefit 2.5m working families.

Labour said the government had already taken support away from parents and the plans proved it was “out of touch”.

Begins in 2015

The UK has some of the highest childcare costs in the world, with many people with two or more children saying it does not make financial sense for both parents to work.

When the scheme was announced, Prime Minister David Cameron said the plans, expected to cost £1.4bn, would be a “boost direct to the pockets of hard-working families”.

But some said it would penalise stay-at-home parents.

Lisa Frederiksen with her son, Casper

Lisa Frederiksen, from Epsom, Surrey, was “staggered” by childcare costs for her children Casper, four, and Elizabeth, two.

She said: “As a career-orientated woman, when I had my first child at the age of 40 I was staggered at the cost of childcare.

“My employer would not agree to a part-time role, so I was faced with childcare costs of £1,200 per month.

“After my second child, it became apparent that working was not going to pay. With two lots of childcare and the costs of commuting, it just wasn’t worth working.

“My Danish husband’s family cannot comprehend the cost of childcare here. They pay £300 a month for care in well-equipped, carefully staffed nurseries.

“This new scheme is a drop in the ocean, but we need a radical rethink.”

Deputy Prime Minister Nick Clegg was accused of unfairly targeting “stay-at-home mums” by a caller to his weekly radio phone-in on London’s LBC radio.

Details of the scheme will be set out following the consultation, but the new system is expected be phased in from autumn 2015, with children under five helped in the first year. The scheme will then build up over time to include all children under the age of 12.

Parents will be required to open an online voucher account with a voucher provider and have their payments topped up by the government.

For every 80p families pay in, the government will put in 20p, up to the annual limit of £1,200.

The vouchers will be valid for any Ofsted regulated childcare in England and equivalent bodies in Scotland, Wales and Northern Ireland.

To be eligible for the new support both parents will have to work – or the one parent in the case of lone parent families – and each parent must be earning less than £150,000 a year.

In two-parent families where one parent does not work, families will not receive support.

Half of the funding for the new scheme will come from the abolition of the previous system of employer-supported childcare vouchers, and in part by funding switched from elsewhere in Whitehall.

‘Costs spiralling’

The government said the new scheme would help significantly more parents than the current employer-supported childcare voucher scheme, which is provided by only about 5% of employers.

But Sharon Hodgson, Labour’s shadow minister for children and families, said: “Only David Cameron’s government could be so out of touch that they expect families to be grateful for help with childcare in 2015 when they’ve already seen costs spiralling and support taken away.

“This government has hit hardworking parents. Families with two children have already lost up to £1,500 in childcare tax credit.

“This government promised to be the most family friendly ever, but hardworking parents have lost out while millionaires get a tax cut.”

Tax-free childcare: Examples for two-child families


Annual claim back limit


Source: HM Treasury
KEY: Orange figures represent individuals not eligible for tax credits/universal tax credit.
Green figures represent individuals eligible for tax credits/universal tax credit.


One income of £120,000, one of £80,000

£1,200 per child

Two parents working full-time with annual salaries up to £150,000 each will be entitled to claim back 20% of childcare costs, with a maximum of £1,200 per child aged under 5, eventually rising to under-12s.


Single parent earning £60,000

£1,200 per child

A single parent working full-time, who does not qualify for tax credits or universal credit, earning up to £150,000 will be entitled to claim back 20% of childcare costs, with a maximum of £1,200 per child.


One income of £60,000


If one parent works and the other does not, and the family does not qualify for tax credits or universal credit, they will not be able to claim.


Two incomes of £12,000 each

85% of childcare costs

Two low-income workers who qualify for tax credits or universal credit and earn over the income tax threshold (set to be £10,000) will be able to claim 85% of childcare costs. The same applies to single parents.


One income of £12,000, one of £8,000

70% of childcare costs

Families where both parents work, who qualify for tax credits and universal credit and one parent earns above the income tax threshold (set to be £10,000) and the other does not, will be able to claim 70% of childcare costs.

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Childcare plan 'up for consultation'
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